##### 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, 2003       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                          |  | 33-0627520                          
|(State or other jurisdiction      |  | (I.R.S. Employer Identification No.)
|of incorporation or organization) |  |                                     

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. [  ]

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

|        |  |        
|------- |  | -------
|Yes [X] |  | No [  ]

The aggregate market value of voting stock held by non-affiliates of the
Registrant, as of September 19, 2003 was approximately $25,882,000 (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 19, 2003, 5,458,665 shares of the Registrants Common Stock,
$.01 par value, were outstanding of which 2,258,451 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 2003
Annual Meeting of Shareholders.






---



##### Table of Contents



THIS PAGE
INTENTIONALLY LEFT BLANK

2



---

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           
|              | Item 9A. Controls and Procedures                                                                       
|Part III     
|              | Item 10. Directors and Executive Officers of the Company                                               
|              | Item 11. Executive Compensation                                                                        
|              | Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
|              | Item 13. Certain Relationships and Related Transactions                                                
|Part IV      
|              | Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K                              
|EXHIBIT INDEX
|SIGNATURES   
|EXHIBIT 23.1 
|EXHIBIT 24.1 
|EXHIBIT 31.1 
|EXHIBIT 31.2 
|EXHIBIT 32.1 
|EXHIBIT 32.2 



---



##### Table of Contents



ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS

|                 |  |                                                                                        |  |     
|---------------- |  | -------------------------------------------------------------------------------------- |  | ----
|                 |  |                                                                                        |  | Page
|                 |  |                                                                                        |  |     
|                 |  | PART I                                                                                 |  |     
|Item 1.          |  | Business                                                                               |  | 4   
|Item 2.          |  | Properties                                                                             |  | 7   
|Item 3.          |  | Legal Proceedings                                                                      |  | 7   
|Item 4.          |  | Submission of Matters To a Vote of Security Holders                                    |  | 7   
|Additional Item: |  | Executive Officers of the Company                                                      |  | 8   
|                 |  | PART II                                                                                |  |     
|Item 5.          |  | Market for the Companys Common Stock and Related
Shareholder Matters                  |  | 9   
|Item 6.          |  | Selected Consolidated Financial Data                                                   |  | 10  
|Item 7.          |  | Managements Discussion and Analysis of Financial
Condition and Results of Operations  |  | 12  
|Item 7A.         |  | Quantitative and Qualitative Disclosure About Market Risk                              |  | 19  
|Item 8.          |  | Financial Statements and Supplementary Data                                            |  | 19  
|Item 9.          |  | Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure   |  | 20  
|Item 9A.         |  | Controls and Procedures                                                                |  | 20  
|                 |  | PART III                                                                               |  |     
|Item 10.         |  | Directors and Executive Officers of the Company                                        |  | 20  
|Item 11.         |  | Executive Compensation                                                                 |  | 20  
|Item 12.         |  | Security Ownership of Certain Beneficial
Owners and Management and Shareholder Matters |  | 20  
|Item 13.         |  | Certain Relationships and Related Transactions                                         |  | 20  
|                 |  | PART IV                                                                                |  |     
|Item 14.         |  | Exhibits, Financial Statement Schedules and
Reports on Form 8-K                        |  | 20  
|Signatures       |  |                                                                                        |  | 23  

3



---



##### 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.
The Company additionally manufactures shock absorbers under private label
brands that utilize its own shock-valve technology. 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. (now referred to as Edelbrock Motorcycle
Carburetor) 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 the 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 2003, the Company paid a cash
dividend of $109,000.

The Company markets internal engine, exhaust, and suspension
components for import aftermarket products that were developed pursuant to
a license agreement with JG Engine Dynamics, Inc. and Automotive Systems
Group, Inc. (collectively the Licensor). The Company pays the Licensor a
percentage-based royalty based on the net revenues derived from the sale
of such products.

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 close to 4,000 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% to 5% which resulted in an effective price
increase of approximately 3.5% overall. In January 2003, the Company had
a small price increase that averaged approximately 2%.

4



---



##### Table of Contents



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 automation and process improvements                                                                          
|
| |  |  | Acquire other companies whose products will complement the
Companys existing product offering and make use of its
management and infrastructure

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 pursuant to a license agreement with JG Engine Dynamics,
Inc. and Automotive Systems Group, Inc. In December 2000, the Company purchased
certain assets of the aforementioned Russell Performance Products, Inc., a
manufacturer of performance plumbing and brake lines. In 2003, the
Company introduced its first turbo charger (forced induction) system for
the Honda Civic EX. This complete kit is street legal and represents the
Companys first entry into the forced induction market for sport compact
vehicles.

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 products division and shock absorber/Russell 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 may 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,
2001, 2002, and 2003 research and development expenditures totaled
$3,651,000, $3,852,000, and $3,827,000, respectively.

5



---



##### Table of Contents



Products

The Company offers over 7,900 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, aluminum
automotive intake manifolds, which accounted for 25.0% of the Companys
revenues for fiscal year 2001, 23.5% for fiscal year 2002, and 22.4% for
fiscal year 2003; and automotive carburetors, which accounted for 39.7%,
37.8%, and 36.7% of the Companys revenues for fiscal years 2001, 2002, and
2003, respectively.

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 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 including New York Air Brake Corporation and IHI Turbo America
Co.

The Company has one of the oldest affiliations with NASCAR and is
recognized as having the only officially licensed manifold of NASCAR. In
addition, Edelbrock was the first manufacturer to enter into a long term
sponsorship agreement with NASCARs contingency money decal program. The
long term sponsorship program commences in 2004. The Company is also a
strong supporter of the automotive racing industry with contingency
sponsorship programs with such organizations as NASCAR, NHRA, IHRA, NMRA,
PRO, NMCA, PSCA, ARCA, UDTRA, NCRA, USAR, NOPI, IMCA and Fun Ford.

The Company has four display trailers that support the Companys
distribution and dealer network, interact with the end consumer, and promote
product at over 100 automotive and motorcycle events per year.

The Company maintains its corporate website to provide consumers with a
range of information including an online product catalog, installation tips,
technical support database, and FAQs.

Edelbrock maintains a highly trained technical service department to
support the Companys end consumer. The technical service department assists
consumers with technical issues, post sales support, and add-on sales.

One customer, Auto Sales, Inc., accounted for 14.5%, 15.5%, and 15.8%
of the Companys revenues for fiscal years 2001, 2002, and 2003
respectively. Another customer, AutoZone, Inc. accounted for 10.5%, 10.6%,
and 8.7% of the Companys revenues for fiscal year 2001, 2002, and 2003.

6



---



##### Table of Contents



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 48.5% of the
Companys revenues for fiscal year 2003 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 2003, representing
approximately 36.7% of the Companys revenue for that fiscal year. The
agreement extends through calendar year 2009 and is renewable at the option
of the parties. See Note 9 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 aftermarkets. 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
Barry Grant, Inc. 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, Goodridge, 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.

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 2021.

Employees

As of June 30, 2003, the Company employed 691 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 four buildings totaling approximately 290,000 square
feet in Torrance, California, and three buildings for its foundry
operations totaling approximately 100,000 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 that may 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.

7



---



##### Table of Contents






Executive Officers of the Company

The following sets forth the name, age and business experience of the
executive officers of the Company as of June 30, 2003:

|                    |  |     |    |          |  |                                                                 
|------------------- |  | --- | -- | -------- |  | ----------------------------------------------------------------
|Name                |  | Age |    | Position
|                    |  |     |    |         
|O. Victor Edelbrock |  |     | 66 |          |  | Chairman, President and Chief Executive Officer                 
|Jeffrey L. Thompson |  |     | 50 |          |  | Executive Vice-President, Chief Operating Officer and Director  
|Aristedes T. Feles  |  |     | 35 |          |  | Vice-President of Finance, Chief Financial Officer, and Director
|Steve Whipple       |  |     | 45 |          |  | Vice-President of Sales                                         
|Wayne P. Murray     |  |     | 51 |          |  | Vice-President of Manufacturing                                 
|Jack B. Mayberry    |  |     | 56 |          |  | Vice-President of Research & Development                        
|Cathleen Edelbrock  |  |     | 43 |          |  | Vice-President of Advertising, Secretary and Director           
|Christina Edelbrock |  |     | 42 |          |  | Vice-President of Purchasing                                    
|Nancy Edelbrock     |  |     | 66 |          |  | Treasurer                                                       
|Ronald L. Webb      |  |     | 69 |          |  | Executive Vice-President of Edelbrock Foundry Corp.             
|Rodney T. Teraishi  |  |     | 37 |          |  | Corporate Controller                                            

O. Victor Edelbrockhas been Chairman, President and Chief Executive
Officer of the Company since 1962. Mr. Edelbrock has been actively involved
in the automotive aftermarket industry. He was president of the Specialty
Equipment Market Association (SEMA) from 1970 to 1974 and served on the SEMA
board of directors from 1967 to 1989. In addition, Mr. Edelbrock is a
member of the SEMA Hall of Fame. Mr. Edelbrock is the husband of Nancy
Edelbrock and the father of Cathleen and Christina 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 SEMA from 1993 to
1999 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 1996
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 1996.

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 and Christina
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 the Corporate Controller of the Company
since August 1998. Mr. Teraishi is a Certified Public Accountant and was
previously employed at BDO Seidman, LLP and Deloitte & Touche, LLP in various
capacities (since 1990).

8



---



##### Table of Contents






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 2002 and 2003. On September 19, 2003, the
Company had 102 holders of record of its Common Stock with 5,458,665
shares outstanding and a closing price of $11.46.

|                           |  |                             |       |     |  |   |       | 
|-------------------------- |  | --------------------------- | ----- | --- |  | - | ----- | 
|                           |  | Price Range of Common Stock
|                           |  |                            
|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 | 

|                         |  |      |       |     |  |   |      | 
|------------------------ |  | ---- | ----- | --- |  | - | ---- | 
|Year Ended June 30, 2003 |  | High |       | Low
|                         |  |      |       |    
|First Quarter            |  | $    | 12.45 |     |  | $ | 9.90 | 
|Second Quarter           |  | $    | 11.00 |     |  | $ | 9.65 | 
|Third Quarter            |  | $    | 12.00 |     |  | $ | 9.95 | 
|Fourth Quarter           |  | $    | 10.42 |     |  | $ | 9.60 | 

During fiscal year ended June 30, 2003, the Company paid a cash dividend
in the amount of $.02 per share on June 13, 2003. 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 a 10% stock dividend on June 7,
2002. All references to share amounts, per share amounts, and stock
prices for the year ended June 30, 2002 were retroactively adjusted to
reflect this stock dividend. See Note 10 of Notes to Consolidated
Financial Statements of the Company.

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

9



---



##### Table of Contents






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, 2002 and 2003 and the Income Statement Data and the Other
Data for each of the three fiscal years in the period ended June 30, 2003
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, 1999, 2000, and 2001 and the Income Statement Data and the
Other Data for each of the two fiscal years in the period ended June 30,
2000 have been derived from audited financial statements not included
herein.

|                       |                                       |                    |              |                          |         |                     |             |            |   |            |             |            |   |            |             |            |   |            |             |            |   |            |            | 
|---------------------- | ------------------------------------- | ------------------ | ------------ | ------------------------ | ------- | ------------------- | ----------- | ---------- | - | ---------- | ----------- | ---------- | - | ---------- | ----------- | ---------- | - | ---------- | ----------- | ---------- | - | ---------- | ---------- | 
|                       |                                       |                    |              |                          |         | Year Ended June 30,
|                       |                                       |                    |              |                          |         | 1999                |             | 2000       |   | 2001       |             | 2002       |   | 2003      
|                       |                                       |                    |              |                          |         |                     |             |            |   |            |             |            |   |           
|Income Statement Data: |                                       |                    |              |                          |         |                     |             |            |   |            |             |            |   |            |             |            |   |            |             |           
|Revenues               |                                       | $                  | 108,943,000  |                          |         | $                   | 121,173,000 |            |   | $          | 115,630,000 |            |   | $          | 123,579,000 |            |   | $          | 115,225,000 |           
|Cost of sales          |                                       |                    | 65,881,000   |                          |         |                     | 74,315,000  |            |   |            | 72,734,000  |            |   |            | 78,074,000  |            |   |            | 73,409,000  |           
|                       |                                       |                    |              |                          |         |                     |             |            |   |            |             |            |   |            |             |            |   |            |             |           
|                       |                                       |                    | Gross profit |                          |         | 43,062,000          |             |            |   | 46,858,000 |             |            |   | 42,896,000 |             |            |   | 45,505,000 |             |            |   | 41,816,000 |           
|                       |                                       |                    |              |                          |         |                     |             |            |   |            |             |            |   |            |             |            |   |            |             |           
|Operating expenses:    |                                       |                    |              |                          |         |                     |             |            |   |            |             |            |   |            |             |            |   |            |             |           
|                       | Selling, general and
administrative   |                    |              | 27,564,000               |         |                     |             | 30,762,000 |   |            |             | 31,607,000 |   |            |             | 33,151,000 |   |            |             | 33,648,000 |  
|                       | Research and development              |                    |              | 3,237,000                |         |                     |             | 3,688,000  |   |            |             | 3,651,000  |   |            |             | 3,852,000  |   |            |             | 3,827,000  |  
|                       | Write-off of uncollectible
receivable |                    |              | 400,000                  |         |                     |             |           |   |            |             |           |   |            |             |           |   |            |             |           |  
|                       |                                       | Settlement expense |              |                          | 190,000 |                     |             |            |  |            |             |            |  |            |             |            |  |            |             |            |  |           
|                       |                                       |                    |              |                          |         |                     |             |            |   |            |             |            |   |            |             |            |   |            |             |           
|                       |                                       |                    |              | Total operating
expenses |         |                     | 31,391,000  |            |   |            | 34,450,000  |            |   |            | 35,258,000  |            |   |            | 37,003,000  |            |   |            | 37,475,000 | 
|                       |                                       |                    |              |                          |         |                     |             |            |   |            |             |            |   |            |             |            |   |            |             |           
|Operating income       |                                       |                    | 11,671,000   |                          |         |                     | 12,408,000  |            |   |            | 7,638,000   |            |   |            | 8,502,000   |            |   |            | 4,341,000   |           
|Interest expense       |                                       |                    | 203,000      |                          |         |                     | 196,000     |            |   |            | 283,000     |            |   |            | 96,000      |            |   |            | 48,000      |           
|Interest income        |                                       |                    | 304,000      |                          |         |                     | 385,000     |            |   |            | 227,000     |            |   |            | 53,000      |            |   |            | 54,000      |           
|                       |                                       |                    |              |                          |         |                     |             |            |   |            |             |            |   |            |             |            |   |            |             |           
|Income before taxes    |                                       |                    | 11,772,000   |                          |         |                     | 12,597,000  |            |   |            | 7,582,000   |            |   |            | 8,459,000   |            |   |            | 4,347,000   |           
|Taxes on income        |                                       |                    | 4,344,000    |                          |         |                     | 4,549,000   |            |   |            | 2,790,000   |            |   |            | 3,099,000   |            |   |            | 1,377,000   |           
|                       |                                       |                    |              |                          |         |                     |             |            |   |            |             |            |   |            |             |            |   |            |             |           
|Net income             |                                       | $                  | 7,428,000    |                          |         | $                   | 8,048,000   |            |   | $          | 4,792,000   |            |   | $          | 5,360,000   |            |   | $          | 2,970,000   |           
|                       |                                       |                    |              |                          |         |                     |             |            |   |            |             |            |   |            |             |            |   |            |             |           

10



---



##### Table of Contents



|                                                |  |                     |           |      |  |      |           |      |  |      |           |    |  |   |           |  |  |   |           | 
|----------------------------------------------- |  | ------------------- | --------- | ---- |  | ---- | --------- | ---- |  | ---- | --------- | -- |  | - | --------- |  |  | - | --------- | 
|                                                |  | Year Ended June 30,
|                                                |  |                    
|                                                |  | 1999                |           | 2000 |  | 2001 |           | 2002 |  | 2003
|                                                |  |                     |           |      |  |      |           |      |  |     
|Per Share Data:                                 |  |                     |           |      |  |      |           |      |  |      |           |    |  |   |           |  |  |   |           | 
|Basic net income per share *                    |  | $                   | 1.29      |      |  | $    | 1.41      |      |  | $    | 0.86      |    |  | $ | 0.98      |  |  | $ | 0.54      | 
|Diluted net income per share *                  |  | $                   | 1.27      |      |  | $    | 1.41      |      |  | $    | 0.86      |    |  | $ | 0.98      |  |  | $ | 0.54      | 
|Basic weighted average shares
outstanding *     |  |                     | 5,776,000 |      |  |      | 5,697,000 |      |  |      | 5,585,000 |    |  |   | 5,492,000 |  |  |   | 5,452,000 | 
|Effect of dilutive stock
options
and warrants * |  |                     | 56,000    |      |  |      | 7,000     |      |  |      |          |    |  |   | 1,000     |  |  |   | 6,000     | 
|Diluted weighted average
shares outstanding *   |  |                     | 5,832,000 |      |  |      | 5,704,000 |      |  |      | 5,585,000 |    |  |   | 5,493,000 |  |  |   | 5,458,000 | 
|Other Data:                                     |  |                     |           |      |  |      |           |      |  |      |           |    |  |   |           |  |  |   |           | 
|Capital expenditures                            |  | $                   | 5,760,000 |      |  | $    | 1,285,000 |      |  | $    | 7,595,000 | ** |  | $ | 3,998,000 |  |  | $ | 5,715,000 | 
|Cash dividends                                  |  | $                   |          |      |  | $    | 207,000   |      |  | $    | 203,000   |    |  | $ | 101,000   |  |  | $ | 109,000   | 
|                                               
|                                                |  | June 30,           
|                                                |  |                    
|                                                |  | 1999                |           | 2000 |  | 2001 |           | 2002 |  | 2003
|                                                |  |                     |           |      |  |      |           |      |  |     
|Balance Sheet Data:                             |  |                     |           |      |  |      |           |      |  |      |           |    |  |   |           |  |  |   |           | 
|(In thousands)                                  |  |                     |           |      |  |      |           |      |  |      |           |    |  |   |           |  |  |   |           | 
|Working capital                                 |  | $                   | 35,423    |      |  | $    | 34,273    |      |  | $    | 39,581    |    |  | $ | 46,262    |  |  | $ | 49,020    | 
|Total assets                                    |  |                     | 94,252    |      |  |      | 100,247   |      |  |      | 101,918   |    |  |   | 107,862   |  |  |   | 107,400   | 
|Total long-term debt                            |  |                     | 2,065     |      |  |      | 148       |      |  |      | 563       |    |  |   | 527       |  |  |   | 494       | 
|Shareholders equity                            |  |                     | 68,651    |      |  |      | 75,443    |      |  |      | 80,024    |    |  |   | 84,177    |  |  |   | 87,038    | 



|*  |  | Earnings per share and share amounts for the years 1999 through 2002
have been retroactively adjusted to account for the Companys 10%
stock dividend distributed in June 2002. See Note 10 of Notes to
Consolidated Financial Statements.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|** |  | Includes approximately $3.3 million for the purchase of certain assets of
Russell Performance Products, Inc.                                                                                                                              

11



---



##### 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, 2001, 2002, and 2003. 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 four-cylinder domestic and 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 7,900 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 close to 4,000
parts includes street-legal brake lines, oil lines, fuel lines, and
filters for both automotive and motorcycle use.

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 automotive aluminum intake manifolds and
automotive carburetors. For the fiscal years ended June 30, 2001, 2002,
and 2003 approximately 25.0%, 23.5%, and 22.4% of revenues were derived
from the sales of intake manifolds and 39.7%, 37.8%, and 36.7% from the
sales of carburetors, respectively. The Company sells automotive
carburetors which are purchased from a sole supplier (See Note 9 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 quarter because a significant
portion of operating expenses is fixed throughout the fiscal year.

12



---



##### 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.

|                              |                                     |              |                          |      |                   |      |               |      |                   |      |               |     |       |     |               |      |      |      |       |      |      |      |       |      |      |     | 
|----------------------------- | ----------------------------------- | ------------ | ------------------------ | ---- | ----------------- | ---- | ------------- | ---- | ----------------- | ---- | ------------- | --- | ----- | --- | ------------- | ---- | ---- | ---- | ----- | ---- | ---- | ---- | ----- | ---- | ---- | --- | 
|                              |                                     |              |                          |      | Percentage of     |      | Year Ended    |      | Percentage of     |      | Year Ended   
|                              |                                     |              |                          |      | Revenues for Year |      | June 30, 2002 |      | Revenues for Year |      | June 30, 2003
|                              |                                     |              |                          |      | Ended June 30,    |      | As Compared   |      | Ended June 30,    |      | As Compared  
|                              |                                     |              |                          |      |                   |      | To Year       |      |                   |      | To Year      
|                              |                                     |              |                          |      |                   |      |               |      |                   |      |               |     | Ended |     |               |      |      |      |       |      |      |      | Ended
|                              |                                     |              |                          |      | 2001              |      | 2002          |      | June 30, 2001     |      | 2002          |     | 2003  |     | June 30, 2002
|                              |                                     |              |                          |      |                   |      |               |      |                   |      |               |     |       |     |              
|Revenues                      |                                     |              | 100.0                    | %    |                   |      | 100.0         | %    |                   |      | 6.9           | %   |       |     | 100.0         | %    |      |      | 100.0 | %    |      |      | (6.8  | )%  
|Cost of sales                 |                                     |              | 62.9                     |      |                   |      | 63.2          |      |                   |      | 7.3           |     |       |     | 63.2          |      |      |      | 63.7  |      |      |      | (6.0  | )   
|                              |                                     |              |                          |      |                   |      |               |      |                   |      |               |     |       |     |               |      |      |      |       |      |      |      |       |     
|                              |                                     | Gross profit |                          |      | 37.1              |      |               |      | 36.8              |      |               |     | 6.1   |     |               |      | 36.8 |      |       |      | 36.3 |      |       |      | (8.1 | )  
|                              |                                     |              |                          |      |                   |      |               |      |                   |      |               |     |       |     |               |      |      |      |       |      |      |      |       |     
|Operating expenses            |                                     |              |                          |      |                   |      |               |      |                   |      |               |     |       |     |               |      |      |      |       |      |      |      |       |     
|                              | Selling, general and administrative |              |                          | 27.3 |                   |      |               | 26.8 |                   |      |               | 4.9 |       |     |               | 26.8 |      |      |       | 29.2 |      |      |       | 1.5  |     
|                              | Research and development            |              |                          | 3.2  |                   |      |               | 3.1  |                   |      |               | 5.5 |       |     |               | 3.1  |      |      |       | 3.3  |      |      |       | (0.6 | )   
|                              |                                     |              |                          |      |                   |      |               |      |                   |      |               |     |       |     |               |      |      |      |       |      |      |      |       |      |      |     | 
|                              |                                     |              | Total operating expenses |      |                   | 30.5 |               |      |                   | 29.9 |               |     |       | 4.9 |               |      |      | 29.9 |       |      |      | 32.5 |       |      |      | 1.3 | 
|                              |                                     |              |                          |      |                   |      |               |      |                   |      |               |     |       |     |               |      |      |      |       |      |      |      |       |     
|Operating income              |                                     |              | 6.6                      |      |                   |      | 6.9           |      |                   |      | 11.3          |     |       |     | 6.9           |      |      |      | 3.8   |      |      |      | (48.9 | )   
|Interest expense              |                                     |              | 0.2                      |      |                   |      | 0.1           |      |                   |      | (66.1         | )   |       |     | 0.1           |      |      |      | 0.0   |      |      |      | (50.0 | )   
|Interest income               |                                     |              | 0.2                      |      |                   |      | 0.0           |      |                   |      | (76.7         | )   |       |     | 0.0           |      |      |      | 0.0   |      |      |      | 1.9   |     
|                              |                                     |              |                          |      |                   |      |               |      |                   |      |               |     |       |     |               |      |      |      |       |      |      |      |       |     
|Income before taxes on income |                                     |              | 6.6                      |      |                   |      | 6.8           |      |                   |      | 11.6          |     |       |     | 6.8           |      |      |      | 3.8   |      |      |      | (48.6 | )   
|Taxes on income               |                                     |              | 2.4                      |      |                   |      | 2.5           |      |                   |      | 11.1          |     |       |     | 2.5           |      |      |      | 1.2   |      |      |      | (55.6 | )   
|                              |                                     |              |                          |      |                   |      |               |      |                   |      |               |     |       |     |               |      |      |      |       |      |      |      |       |     
|Net Income                    |                                     |              | 4.1                      | %    |                   |      | 4.3           | %    |                   |      | 11.9          | %   |       |     | 4.3           | %    |      |      | 2.6   | %    |      |      | (44.6 | )%  
|                              |                                     |              |                          |      |                   |      |               |      |                   |      |               |     |       |     |               |      |      |      |       |      |      |      |       |     

13



---



##### Table of Contents



Fiscal Year 2003 Compared to Fiscal Year 2002

Revenues

Revenues decreased 6.8% to $115.2 million in fiscal year 2003 from
$123.6 million in fiscal year 2002. The decrease was primarily the result
of a decrease of approximately $4.4 million, or 9.5%, in the sale of
automotive carburetors; a decrease of $1.5 million, or 19.9%, in the sale
of automotive air cleaners and valve covers; and a decrease of
approximately $3.2 million, or 11.0%, in the sale of automotive aluminum
intake manifolds. Edelbrock attributed the overall decrease in revenues to
a prolonged period of unseasonable inclement weather during the spring and
summer months, consumer concerns related to the war in Iraq, and the
sluggish national economy.

Cost of Sales

Cost of sales decreased 6.0% to $73.4 million in fiscal year 2003 from
$78.1 million in fiscal year 2002. As a percent of revenues, cost of sales
increased to 63.7% in fiscal year 2003 from 63.2% in fiscal year 2002. The
decrease in cost of sales was primarily due to lower revenues. The
increase in cost of sales as a percentage of revenues was primarily due to
increased labor rates and higher workers compensation expenses.

Selling, General and Administrative Expense

Selling, general and administrative expenses (S,G&A) increased 1.5%
to $33.6 million in fiscal year 2003 from $33.2 million in fiscal year
2002. This increase resulted primarily from an increase in salaries and
higher insurance costs offset by lower commissions and other variable
expenses associated with lower revenues. As a percentage of revenues,
S,G&A expenses increased to 29.2% in fiscal year 2003 from 26.8% in fiscal
year 2002. The increase in S,G&A expenses as a percentage of revenues
resulted primarily from increases in advertising, general insurance, and
salaries spread over lower revenues.

Research and Development Expense

Research and development expense decreased 0.6% to $3.8 million in
fiscal 2003 from $3.9 million in fiscal year 2002. As a percent of revenue,
research and development expense increased slightly to 3.3% in fiscal year
2003 versus 3.1% in fiscal year 2002.

Operating Income

Operating income decreased 48.9% to $4.3 million in fiscal year 2003
from $8.5 million in fiscal year 2002. This decrease was mainly a result
of decreased revenues and higher operating expenses as a percentage of
revenues.

Interest Expense

Interest expense decreased 50.0% to $48,000 in fiscal year 2003 from
$96,000 in fiscal year 2002. 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 increased 1.9% to $54,000 in fiscal year 2003 from
$53,000 in fiscal year 2002. This increase was the result of an increase
in interest earned on invested cash due to higher amounts of invested
excess working capital offset by lower interest rates during the year.

Taxes on Income

The provision for income taxes decreased 55.6% to $1.4 million in
fiscal year 2003 from $3.1 million in fiscal year 2002. The effective tax
rates were 31.7% and 36.6% for fiscal years 2003 and 2002, respectively.
The decrease in the effective tax rate resulted primarily from the
Companys continued investment in research and development and capital
improvements which resulted in increases in research and development tax
credits and California manufacturers tax credit despite the decrease in
taxable income.

Net Income

The Companys net income decreased 44.6% for fiscal year 2003 to $3.0
million in fiscal 2003 from $5.4 million in fiscal year 2002. This
decrease was primarily due to the items mentioned above.

14



---



##### 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
revenues. 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

S,G&A 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, S,G&A 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.

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.

15



---



##### Table of Contents



Quarterly Results

The following table sets forth unaudited operating data for each of
the specified quarters of fiscal years 2002 and 2003. 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 |         | For the Fiscal Year Ended
|                                                        |                                     |         | June 30, 2002             |         | June 30, 2003            
|                                                        |                                     |         |                           |         |                          
|(In thousands except per                                |                                     | First   |                           | Second  |                           | Third   |        | Fourth  |  | First   |        | Second  |  | Third   |        | Fourth 
|share data)                                             |                                     | Quarter |                           | Quarter |                           | Quarter |        | Quarter |  | Quarter |        | Quarter |  | Quarter |        | Quarter
|                                                        |                                     |         |                           |         |                           |         |        |         |  |         |        |         |  |         |        |        
|Revenues                                                |                                     | $       | 25,425                    |         |                           | $       | 30,642 |         |  | $       | 28,194 |         |  | $       | 39,318 |         |  | $ | 25,874 |        |  | $ | 31,015 |        |  | $ | 25,658 |       |  | $ | 32,678 |       
|Cost of sales                                           |                                     |         | 16,282                    |         |                           |         | 19,716 |         |  |         | 17,783 |         |  |         | 24,293 |         |  |   | 15,839 |        |  |   | 19,918 |        |  |   | 16,404 |       |  |   | 21,248 |       
|                                                        |                                     |         |                           |         |                           |         |        |         |  |         |        |         |  |         |        |         |  |   |        |        |  |   |        |        |  |   |        |       |  |   |        |       
|                                                        | Gross profit                        |         |                           | 9,143   |                           |         |        | 10,926  |  |         |        | 10,411  |  |         |        | 15,025  |  |   |        | 10,035 |  |   |        | 11,097 |  |   |        | 9,254 |  |   |        | 11,430 | 
|                                                        |                                     |         |                           |         |                           |         |        |         |  |         |        |         |  |         |        |         |  |   |        |        |  |   |        |        |  |   |        |       |  |   |        |       
|Operating expenses:                                     |                                     |         |                           |         |                           |         |        |         |  |         |        |         |  |         |        |         |  |   |        |        |  |   |        |        |  |   |        |       |  |   |        |       
|                                                        | Selling, general and
administrative |         |                           | 7,254   |                           |         |        | 8,021   |  |         |        | 7,674   |  |         |        | 10,202  |  |   |        | 7,844  |  |   |        | 8,263  |  |   |        | 8,056 |  |   |        | 9,485  | 
|                                                        | Research and
development            |         |                           | 813     |                           |         |        | 852     |  |         |        | 912     |  |         |        | 1,275   |  |   |        | 835    |  |   |        | 942    |  |   |        | 865   |  |   |        | 1,185  | 
|                                                        |                                     |         |                           |         |                           |         |        |         |  |         |        |         |  |         |        |         |  |   |        |        |  |   |        |        |  |   |        |       |  |   |        |       
|Total operating expenses                                |                                     |         | 8,067                     |         |                           |         | 8,873  |         |  |         | 8,586  |         |  |         | 11,477 |         |  |   | 8,679  |        |  |   | 9,205  |        |  |   | 8,921  |       |  |   | 10,670 |       
|                                                        |                                     |         |                           |         |                           |         |        |         |  |         |        |         |  |         |        |         |  |   |        |        |  |   |        |        |  |   |        |       |  |   |        |       
|Operating income                                        |                                     |         | 1,076                     |         |                           |         | 2,053  |         |  |         | 1,825  |         |  |         | 3,548  |         |  |   | 1,356  |        |  |   | 1,892  |        |  |   | 333    |       |  |   | 760    |       
|Interest expense                                        |                                     |         | 9                         |         |                           |         | 11     |         |  |         | 31     |         |  |         | 45     |         |  |   | 20     |        |  |   | 11     |        |  |   | 7      |       |  |   | 10     |       
|Interest income                                         |                                     |         | 33                        |         |                           |         | 3      |         |  |         | 2      |         |  |         | 15     |         |  |   | 20     |        |  |   | 18     |        |  |   | 8      |       |  |   | 8      |       
|                                                        |                                     |         |                           |         |                           |         |        |         |  |         |        |         |  |         |        |         |  |   |        |        |  |   |        |        |  |   |        |       |  |   |        |       
|Income before taxes on
income                           |                                     |         | 1,100                     |         |                           |         | 2,045  |         |  |         | 1,796  |         |  |         | 3,518  |         |  |   | 1,356  |        |  |   | 1,899  |        |  |   | 334    |       |  |   | 758    |       
|Taxes on income                                         |                                     |         | 407                       |         |                           |         | 757    |         |  |         | 664    |         |  |         | 1,271  |         |  |   | 502    |        |  |   | 702    |        |  |   | 124    |       |  |   | 49     |       
|                                                        |                                     |         |                           |         |                           |         |        |         |  |         |        |         |  |         |        |         |  |   |        |        |  |   |        |        |  |   |        |       |  |   |        |       
|Net income                                              |                                     | $       | 693                       |         |                           | $       | 1,288  |         |  | $       | 1,132  |         |  | $       | 2,247  |         |  | $ | 854    |        |  | $ | 1,197  |        |  | $ | 210    |       |  | $ | 709    |       
|                                                        |                                     |         |                           |         |                           |         |        |         |  |         |        |         |  |         |        |         |  |   |        |        |  |   |        |        |  |   |        |       |  |   |        |       
|Basic net income
per share *                            |                                     | $       | 0.12                      |         |                           | $       | 0.23   |         |  | $       | 0.21   |         |  | $       | 0.41   |         |  | $ | 0.16   |        |  | $ | 0.22   |        |  | $ | 0.04   |       |  | $ | 0.13   |       
|                                                        |                                     |         |                           |         |                           |         |        |         |  |         |        |         |  |         |        |         |  |   |        |        |  |   |        |        |  |   |        |       |  |   |        |       
|Diluted net income
per share *                          |                                     | $       | 0.12                      |         |                           | $       | 0.23   |         |  | $       | 0.21   |         |  | $       | 0.41   |         |  | $ | 0.16   |        |  | $ | 0.22   |        |  | $ | 0.04   |       |  | $ | 0.13   |       
|                                                        |                                     |         |                           |         |                           |         |        |         |  |         |        |         |  |         |        |         |  |   |        |        |  |   |        |        |  |   |        |       |  |   |        |       
|Basic weighted
average number of
shares outstanding *   |                                     |         | 5,584                     |         |                           |         | 5,492  |         |  |         | 5,450  |         |  |         | 5,451  |         |  |   | 5,452  |        |  |   | 5,452  |        |  |   | 5,452  |       |  |   | 5,452  |       
|Effect of dilutive stock
options and warrants *         |                                     |         |                          |         |                           |         |       |         |  |         |       |         |  |         | 46     |         |  |   | 12     |        |  |   | 5      |        |  |   | 9      |       |  |   | 1      |       
|                                                        |                                     |         |                           |         |                           |         |        |         |  |         |        |         |  |         |        |         |  |   |        |        |  |   |        |        |  |   |        |       |  |   |        |       
|Diluted weighted average
number of shares
outstanding * |                                     |         | 5,584                     |         |                           |         | 5,492  |         |  |         | 5,450  |         |  |         | 5,497  |         |  |   | 5,464  |        |  |   | 5,457  |        |  |   | 5,461  |       |  |   | 5,453  |       
|                                                        |                                     |         |                           |         |                           |         |        |         |  |         |        |         |  |         |        |         |  |   |        |        |  |   |        |        |  |   |        |       |  |   |        |       



|* | - | Earnings per share and share amounts for the periods ended June
30, 2002 have been retroactively adjusted to account for the
Companys 10% stock dividend distributed in June 2002. See Note 10
of Notes to Consolidated Financial Statements.
|- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

16



---



##### Table of Contents



Critical Accounting Policies

The Companys financial statements and accompanying notes are prepared in
accordance with accounting principles generally accepted in the United
States of America. Preparing financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, and expenses. These estimates and assumptions are
affected by managements application of accounting policies. The following
paragraphs include a discussion of accounting policies critical to the
Company:

Revenue Recognition

Revenue is recognized upon shipment of products by the Company. All
shipments are made only upon written or electronic contractual agreements
with the Companys customers.

Accounts Receivable and Accounts Receivable Reserves

The Company maintains reserves for cash and other discounts, returns and
potential credit losses. Accounts receivable reserves are based on (i) the
Companys estimate of the rate at which customers take credit discounts
allowed and (ii) the Companys specific assessment of the collectibility of
all past due accounts. The actual cash and other discounts, returns and
credit losses have not differed materially from accrued estimated amounts
for the year ended June 30, 2003.

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 value and have been reduced by an allowance for excess and obsolete
inventories. The estimated allowance is based on managements review of
inventories on hand compared to estimated future usage and sales.

Long-Lived Assets

The Company evaluates the recoverability of the carrying amount of
long-lived assets whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be fully recoverable. The Company
evaluates the recoverability of goodwill and other intangible assets with
indefinite useful lives annually or more frequently if events or
circumstances indicate that an asset might be impaired. The Company uses
judgment when applying the impairment rules to determine when an impairment
test is necessary. Factors the Company considers which could trigger an
impairment review include significant underperformance relative to
historical or forecasted operating results, a significant decrease in the
market value of an asset, a significant change in the extent or manner in
which an asset is used, and significant negative industry or economic
trends. Impairment losses are measured as the amount by which the carrying
value of an asset exceeds its estimated fair value. The Company is required
to make estimates of its future cash flows related to the asset subject to
review. These estimates require assumptions about demand for the Companys
products and services, future market conditions and technological
developments. Other assumptions include determining the discount rate and
future growth rates.

Product Warranties

The Company records a liability for an estimate of costs that it expects
to incur under its basic limited warranty when product revenue is
recognized. Factors affecting the Companys product warranty liability
include the number of units sold and historical and anticipated rates of
claims and costs per claim. Companys management periodically assesses
the adequacy of its product warranty liability based on changes in these
factors.

Self-Insurance Liabilities

The Companys obligation for employee-health care benefits is self-insured
for which the Company uses a third party administrator to process all
claims and benefits. Employee health care insurance liabilities are accrued
based on historical claims experience and risk exposure levels. Eligible
losses on a per claim basis and in the aggregate for all eligible claims in
excess of self-insurance levels and up to stated limits of liability are
covered by insurance policies purchased from third-party insurers.

17



---



##### 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 19, 2003. The line of credit borrowings are at the banks prime
rate (4.00% at June 30, 2003 and as of September 19, 2003). The line of
credit agreement expires on February 1, 2005. Under the Revolving Credit
Facility, the Company is subject to certain customary restrictive financial
requirements. For all periods presented and as of September 19, 2003, the
Company is in compliance with all such financial covenants.

Net cash provided by operating activities was $5.7 million, $6.7
million and $6.8 million in fiscal years 2001, 2002, and 2003, respectively.
Due to the seasonality of the Companys business, more funds from operating
activities are generated in its third and fourth fiscal quarters.

Accounts payable decreased $2.5 million for fiscal year 2003 compared
to fiscal year 2002 primarily as a result of timing of receipt of goods from
a principal supplier.

Accounts receivable decreased by $5.3 million for fiscal year 2003
compared to fiscal year 2002, while sales decreased $8.4 million for fiscal
year 2003 compared to fiscal year 2002. The decrease in accounts receivable
in fiscal year 2003 was primarily due to the decreased sales and timing of
payments from customers.

Inventories increased by $3.0 million for fiscal year 2003 compared to
fiscal year 2002 while cost of sales decreased $4.7 million for fiscal year
2003 compared to fiscal year 2002. The increase in inventories from fiscal
year 2003 versus fiscal year 2002 was primarily due to an increase in
finished goods inventories as the Company maintained inventory levels based
on a projected fourth quarter forecast that was initially estimated to be
consistent with previous fourth quarter quantities. To help limit the
increase in inventories, the Company rescheduled raw component inventory
deliveries with various vendors.

The Companys total capital expenditures were $7.6 million, which
included $3.3 million for the acquisition of Russell Performance Products,
in fiscal year 2001; $4.0 million in fiscal year 2002; and $5.7 million in
fiscal year 2003. The Company anticipates making capital expenditures of
$4.5  $6.0 million in fiscal year 2004 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 2004.

The Companys Board of Directors has authorized the repurchase of up
to 100,000 additional shares of its Common Stock for cash in the open
market on the NASDAQ National Market System and in privately negotiated
transactions.

Contractual Obligations

The table below summarizes the Companys contractual obligations as of June 30,
2003:

|                        |       |      |                                     |              |  |              |            |            |  |       |            |            |  |          |            |            |  |   |             |             | 
|----------------------- | ----- | ---- | ----------------------------------- | ------------ |  | ------------ | ---------- | ---------- |  | ----- | ---------- | ---------- |  | -------- | ---------- | ---------- |  | - | ----------- | ----------- | 
|                        |       |      | Payments Due By Period End June 30,
|                        |       |      |                                    
|                        |       |      |                                     |              |  |              |            |            |  |       |            |            |  | 2009 and |            |            |  |  
|Contractual Obligations |       | 2004 |                                     | 2005 to 2006 |  | 2007 to 2008 |            | Thereafter |  | Total
|                        |       |      |                                     |              |  |              |            |            |  |      
|Purchase commitments1   |       | $    | 21,645,000                          |              |  | $            | 37,654,000 |            |  | $     | 37,654,000 |            |  | $        | 28,241,000 |            |  | $ | 125,194,000 |            
|Employee contracts 2    |       |      | 845,000                             |              |  |              | 54,000     |            |  |       |           |            |  |          |           |            |  |   | 899,000     |            
|Long-term debt 3        |       |      | 11,000                              |              |  |              | 11,000     |            |  |       | 10,000     |            |  |          | 445,000    |            |  |   | 477,000     |            
|Capital leases          |       |      | 35,000                              |              |  |              | 38,000     |            |  |       |           |            |  |          |           |            |  |   | 73,000      |            
|                        |       |      |                                     |              |  |              |            |            |  |       |            |            |  |          |            |            |  |   |             |            
|                        | Total |      | $                                   | 22,536,000   |  |              | $          | 37,757,000 |  |       | $          | 37,664,000 |  |          | $          | 28,686,000 |  |   | $           | 126,643,000 | 
|                        |       |      |                                     |              |  |              |            |            |  |       |            |            |  |          |            |            |  |   |             |            

18



---



##### Table of Contents



Contractual Obligations (continued)



|1  - |  | The Company has an agreement with Magneti Marelli, USA, Inc., who
is the key supplier of automotive carburetors for the Company. The
agreement expires in December 2009 and requires, among other things,
that (i) the Company sell only automotive 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. 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 obtain
automotive carburetors from 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. The Companys minimum obligation under this agreement is
based on a calendar year basis. However, as the above table is
presented on a fiscal year basis, each respective period reflects six
months of the previous years commitment (July  December) and six
months of the current respective calendar year (January  June).
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|2 -  |  | The Company has employment agreements with its President and two
other officers expiring on June 30, 2004 and one other officer expiring
on October 31, 2005. The agreements provide for base salaries of
$899,000 in the aggregate, 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 any 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    
|3 -  |  | In August 2003, the Company sold a property related to certain
mortgage notes and paid off those respective notes in full. See Note
4 of Notes to Consolidated Financial Statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

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 4.00%). It expires on
February 1, 2005. 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, 2003 and as of September 19,
2003, 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.

19



---



##### Table of Contents






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

None.




Item 9A. Controls and Procedures.

The Companys President, Chief Executive Officer, and Chairman of the
Board, O. Victor Edelbrock, and the Companys Vice-President of Finance and
Chief Financial Officer, Aristedes T. Feles, have evaluated the Companys
disclosure controls and procedures as of June 30, 2003. These controls and
procedures are designed to ensure that all of the information required to be
disclosed by the Company in its periodic reports filed with the Securities
and Exchange Commission (the Commission) is recorded, processed,
summarized and reported within the time periods specified by the Commission
and that the information is communicated to Messrs. Edelbrock and Feles on a
timely basis.

Based on their evaluation, Messrs. Edelbrock and Feles concluded that
the Companys disclosure controls and procedures are suitable and effective
for the Company, taking into consideration the size and nature of the
Companys business and operations. Subsequent to the date of their
evaluation, there have been no significant changes in the Companys
disclosure controls and procedures, or in other factors that could
significantly affect the controls or procedures.




Part III




Item 10. Directors and Executive Officers of the Company.

The information required by Item 10 will be set forth in the Proxy
Statement and is incorporated herein by reference.




Item 11. Executive Compensation.

The information required by Item 11 will be set forth in the Proxy
Statement and is incorporated herein by reference.




Item 12.  Security Ownership of Certain Beneficial Owners and Management
and Related Shareholder Matters.

The information required by Item 12 will be set forth in the Proxy
Statement and is incorporated herein by reference.




Item 13. Certain Relationships and Related Transactions.

The information required by Item 13 will be set forth in the Proxy
Statement and is incorporated herein by reference.




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 26 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 a report on Form 8-K on May 6,
2003 related to its earnings release for its third quarter ended March
25, 2003.

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

20



---



##### 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 4.1
(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). 

21



---



##### Table of Contents



EDELBROCK CORPORATION
EXHIBIT INDEX

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                          |  |            |  | 
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------- |  | 
|Number and  |  |                                                                                                                                                                                                                                                                                                                                                                                                                          |  | Sequential
|Description |  |                                                                                                                                                                                                                                                                                                                                                                                                                          |  | Page      
|of 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 (filed as Exhibit 10.18 to the Companys
Annual Report on Form 10-K for the fiscal year ended June 30, 2002 and incorporated
herein by reference)                                                                                                                                                     
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                         
|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                                                                                                                                                                                                                                                                                                                                                                                                      
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                         
|31.1        |  | Certifications of principal executive officer required by Rules 13a-14 and 15d-14
of the Securities and Exchange Act of 1934.                                                                                                                                                                                                                                                                                           
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                         
|31.2        |  | Certifications of principal financial officer required by
Rules 13a-14 and 15d-14 of the Securities and Exchange Act of 1934.                                                                                                                                                                                                                                                                                           
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                         
|32.1        |  | Certifications of principal executive officer pursuant to 18 U.S.C. 1350 (furnished)                                                                                                                                                                                                                                                                                                                                    
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                         
|32.2        |  | Certifications of principal financial officer pursuant to 18 U.S.C. 1350 (furnished)                                                                                                                                                                                                                                                                                                                                    



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

22



---



##### 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, 2003 |  | 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           |  | September 26, 2003 |  | 
|                        |  | Officer and Chairman of the          |  |                    |  | 
|                        |  | Board (Principal Executive Officer)  |  |                    |  | 
|                        |  |                                      |  |                    |  | 
|*                       |  |                                      |  |                    |  | 
|                        |  |                                      |  |                    |  | 
|Jeffrey L. Thompson     |  | Executive Vice President, Chief      |  | September 26, 2003 |  | 
|                        |  | Operating Officer and Director       |  |                    |  | 
|                        |  |                                      |  |                    |  | 
|ARISTEDES T. FELES      |  |                                      |  |                    |  | 
|                        |  |                                      |  |                    |  | 
|Aristedes T. Feles      |  | Vice-President, Finance and Director |  | September 26, 2003 |  | 
|                        |  | (Principal Financial Officer and     |  |                    |  | 
|                        |  | Principal Accounting Officer)        |  |                    |  | 
|                        |  |                                      |  |                    |  | 
|*                       |  |                                      |  |                    |  | 
|                        |  |                                      |  |                    |  | 
|Cathleen Edelbrock      |  | Vice President of Advertising,       |  | September 26, 2003 |  | 
|                        |  | and Director                         |  |                    |  | 
|                        |  |                                      |  |                    |  | 
|*                       |  |                                      |  |                    |  | 
|                        |  |                                      |  |                    |  | 
|Timothy D. Pettit       |  | Director                             |  | September 26, 2003 |  | 
|                        |  |                                      |  |                    |  | 
|*                       |  |                                      |  |                    |  | 
|                        |  |                                      |  |                    |  | 
|Dr. Cornelius J. Pings  |  | Director                             |  | September 26, 2003 |  | 
|                        |  |                                      |  |                    |  | 
|*                       |  |                                      |  |                    |  | 
|                        |  |                                      |  |                    |  | 
|Jerry Herbst            |  | Director                             |  | September 26, 2003 |  | 
|                        |  |                                      |  |                    |  | 
|ARISTEDES T. FELES      |  |                                      |  |                    |  | 
|                        |  |                                      |  |                    |  | 
|*By: Aristedes T. Feles |  |                                      |  | September 26, 2003 | 
|Attorney-in-fact        |  |                                      |  |                    | 

23



---



##### Table of Contents



EDELBROCK CORPORATION

INDEX TO FINANCIAL STATEMENTS

|                                                   |                                            |  |      |    | 
|-------------------------------------------------- | ------------------------------------------ |  | ---- | -- | 
|                                                   |                                            |  | Page
|                                                   |                                            |  |     
|Report of independent certified public accountants |                                            |  | 25   |   
|Consolidated financial statements                  |                                            |  |      |   
|                                                   | Balance sheets                             |  |      | 26 | 
|                                                   | Statements of income                       |  |      | 28 | 
|                                                   | Statements of shareholders equity         |  |      | 29 | 
|                                                   | Statements of cash flows                   |  |      | 30 | 
|                                                   | Notes to consolidated financial statements |  |      | 32 | 
|Schedule II  Valuation and qualifying accounts    |                                            |  | 47   |   

24



---



##### 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, 2002 and 2003, and the related consolidated
statements of income, shareholders equity, and cash flows for each of the
three years in the period ended June 30, 2003. 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, 2002 and 2003, and the consolidated results of
its operations and its consolidated cash flows for each of the three years
in the period ended June 30, 2003, 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, 2003. 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 28, 2003

25



---



##### Table of Contents



EDELBROCK CORPORATION

CONSOLIDATED BALANCE SHEETS

|                                                                                                    |                                                                   |   |             |            |      |   |             |            | 
|--------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------- | - | ----------- | ---------- | ---- | - | ----------- | ---------- | 
|                                                                                                    |                                                                   |   | June 30,   
|                                                                                                    |                                                                   |   |            
|                                                                                                    |                                                                   |   | 2002        |            | 2003
|                                                                                                    |                                                                   |   |             |            |     
|Assets                                                                                              |                                                                   |   |             |            |      |   |             |           
|                                                                                                    | Cash and cash equivalents                                         |   | $           | 7,682,000  |      |   | $           | 8,707,000  | 
|                                                                                                    | Accounts receivable, net of reserves of $500,000
at 2002 and 2003 |   |             | 32,192,000 |      |   |             | 26,858,000 | 
|                                                                                                    | Inventories (Note 3)                                              |   |             | 23,359,000 |      |   |             | 26,398,000 | 
|                                                                                                    | Deferred income taxes (Note 6)                                    |   |             | 1,855,000  |      |   |             | 1,567,000  | 
|                                                                                                    | Prepaid expenses and other                                        |   |             | 1,014,000  |      |   |             | 2,268,000  | 
|                                                                                                    |                                                                   |   |             |            |      |   |             |           
|Total current assets                                                                                |                                                                   |   | 66,102,000  |            |      |   | 65,798,000  |           
|                                                                                                    |                                                                   |   |             |            |      |   |             |           
|Property, plant and equipment (Note 4)                                                              |                                                                   |   |             |            |      |   |             |           
|                                                                                                    | Land                                                              |   |             | 6,794,000  |      |   |             | 6,794,000  | 
|                                                                                                    | Buildings and improvements                                        |   |             | 17,498,000 |      |   |             | 17,527,000 | 
|                                                                                                    | Machinery and equipment                                           |   |             | 43,375,000 |      |   |             | 46,925,000 | 
|                                                                                                    | Office equipment                                                  |   |             | 5,103,000  |      |   |             | 5,967,000  | 
|                                                                                                    | Furniture and fixtures                                            |   |             | 1,837,000  |      |   |             | 1,960,000  | 
|                                                                                                    | Transportation equipment                                          |   |             | 6,853,000  |      |   |             | 7,104,000  | 
|                                                                                                    |                                                                   |   |             |            |      |   |             |           
|                                                                                                    |                                                                   |   | 81,460,000  |            |      |   | 86,277,000  |           
|                                                                                                    | Less accumulated depreciation and amortization                    |   |             | 43,431,000 |      |   |             | 48,312,000 | 
|                                                                                                    |                                                                   |   |             |            |      |   |             |           
|Property, plant and equipment, net                                                                  |                                                                   |   | 38,029,000  |            |      |   | 37,965,000  |           
|Real estate properties and partnerships                                                             |                                                                   |   | 303,000     |            |      |   | 266,000     |           
|Goodwill, net of accumulated amortization of
$56,000 at 2002 and 2003 (Note 5)                      |                                                                   |   | 1,172,000   |            |      |   | 1,172,000   |           
|License agreement, net of accumulated amortization of
$84,000 at 2002 and 2003 (Notes 5, 7, and 10) |                                                                   |   | 758,000     |            |      |   | 758,000     |           
|Other                                                                                               |                                                                   |   | 1,498,000   |            |      |   | 1,441,000   |           
|                                                                                                    |                                                                   |   |             |            |      |   |             |           
|Total assets                                                                                        |                                                                   | $ | 107,862,000 |            |      | $ | 107,400,000 |           
|                                                                                                    |                                                                   |   |             |            |      |   |             |           

See accompanying notes to consolidated financial statements.

26



---



##### Table of Contents



EDELBROCK CORPORATION

CONSOLIDATED BALANCE SHEETS

|                                              |                                                                                                                                                                   |                            |             |            |           |      |             |            |           | 
|--------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ----------- | ---------- | --------- | ---- | ----------- | ---------- | --------- | 
|                                              |                                                                                                                                                                   |                            |             | June 30,  
|                                              |                                                                                                                                                                   |                            |             |           
|                                              |                                                                                                                                                                   |                            |             | 2002       |           | 2003
|                                              |                                                                                                                                                                   |                            |             |            |           |     
|Liabilities and shareholders equity          |                                                                                                                                                                   |                            |             |            |           |      |             |           
|Current liabilities                           |                                                                                                                                                                   |                            |             |            |           |      |             |           
|                                              | Accounts payable                                                                                                                                                  |                            | $           | 14,519,000 |           |      | $           | 12,038,000 |          
|                                              | Accrued expenses                                                                                                                                                  |                            |             |            |           |      |             |            |          
|                                              |                                                                                                                                                                   | Payroll and bonuses        |             |            | 2,159,000 |      |             |            | 2,340,000 | 
|                                              |                                                                                                                                                                   | Retirement plans (Note 7)  |             |            | 577,000   |      |             |            | 628,000   | 
|                                              |                                                                                                                                                                   | Commissions                |             |            | 1,171,000 |      |             |            | 979,000   | 
|                                              |                                                                                                                                                                   | Income taxes payable       |             |            | 803,000   |      |             |            |          | 
|                                              |                                                                                                                                                                   | Product warranty liability |             |            | 300,000   |      |             |            | 607,000   | 
|                                              |                                                                                                                                                                   | Other                      |             |            | 244,000   |      |             |            | 138,000   | 
|                                              | Current portion of long-term debt and capital lease
obligation (Note 4)                                                                                           |                            |             | 67,000     |           |      |             | 48,000     |          
|                                              |                                                                                                                                                                   |                            |             |            |           |      |             |           
|Total current liabilities                     |                                                                                                                                                                   |                            | 19,840,000  |            |           |      | 16,778,000  |           
|Long-term debt, less current portion (Note 4) |                                                                                                                                                                   |                            | 463,000     |            |           |      | 466,000     |           
|Capital lease obligation (Note 4)             |                                                                                                                                                                   |                            | 64,000      |            |           |      | 28,000      |           
|Deferred income taxes (Note 6)                |                                                                                                                                                                   |                            | 3,318,000   |            |           |      | 3,090,000   |           
|                                              |                                                                                                                                                                   |                            |             |            |           |      |             |           
|Total liabilities                             |                                                                                                                                                                   |                            | 23,685,000  |            |           |      | 20,362,000  |           
|                                              |                                                                                                                                                                   |                            |             |            |           |      |             |           
|Commitments and contingencies (Notes 7 and 9) |                                                                                                                                                                   |                            |             |            |           |      |             |           
|Shareholders equity (Note 10)                |                                                                                                                                                                   |                            |             |            |           |      |             |           
|                                              | Common stock, par value $.01 per share;
15,000,000 shares authorized; 5,804,800 shares issued
5,451,915 outstanding, and 320,806 treasury shares in
2002 and 2003 |                            |             | 54,470     |           |      |             | 54,470     |          
|                                              | Paid-in capital                                                                                                                                                   |                            |             | 21,239,530 |           |      |             | 21,239,530 |          
|                                              | Retained earnings                                                                                                                                                 |                            |             | 62,883,000 |           |      |             | 65,744,000 |          
|                                              |                                                                                                                                                                   |                            |             |            |           |      |             |           
|Total shareholders equity                    |                                                                                                                                                                   |                            | 84,177,000  |            |           |      | 87,038,000  |           
|                                              |                                                                                                                                                                   |                            |             |            |           |      |             |           
|Total liabilities and shareholders equity    |                                                                                                                                                                   | $                          | 107,862,000 |            |           | $    | 107,400,000 |           
|                                              |                                                                                                                                                                   |                            |             |            |           |      |             |           

See accompanying notes to consolidated financial statements.

27



---



##### Table of Contents



EDELBROCK CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

|                                                        |                                     |                          |             |                     |            |      |             |            |            |   |             |            |            | 
|------------------------------------------------------- | ----------------------------------- | ------------------------ | ----------- | ------------------- | ---------- | ---- | ----------- | ---------- | ---------- | - | ----------- | ---------- | ---------- | 
|                                                        |                                     |                          |             | Year Ended June 30,
|                                                        |                                     |                          |             |                    
|                                                        |                                     |                          |             | 2001                |            | 2002 |             | 2003      
|                                                        |                                     |                          |             |                     |            |      |             |           
|Revenues (Note 8)                                       |                                     | $                        | 115,630,000 |                     |            | $    | 123,579,000 |            |            | $ | 115,225,000 |           
|Cost of sales                                           |                                     |                          | 72,734,000  |                     |            |      | 78,074,000  |            |            |   | 73,409,000  |           
|                                                        |                                     |                          |             |                     |            |      |             |            |            |   |             |           
|                                                        |                                     | Gross profit             |             |                     | 42,896,000 |      |             |            | 45,505,000 |   |             |            | 41,816,000 | 
|                                                        |                                     |                          |             |                     |            |      |             |            |            |   |             |           
|Operating expenses                                      |                                     |                          |             |                     |            |      |             |            |            |   |             |           
|                                                        | Selling, general and administrative |                          |             | 31,607,000          |            |      |             | 33,151,000 |            |   |             | 33,648,000 |           
|                                                        | Research and development            |                          |             | 3,651,000           |            |      |             | 3,852,000  |            |   |             | 3,827,000  |           
|                                                        |                                     |                          |             |                     |            |      |             |            |            |   |             |           
|                                                        |                                     | Total operating expenses |             |                     | 35,258,000 |      |             |            | 37,003,000 |   |             |            | 37,475,000 | 
|                                                        |                                     |                          |             |                     |            |      |             |            |            |   |             |           
|Operating income                                        |                                     |                          | 7,638,000   |                     |            |      | 8,502,000   |            |            |   | 4,341,000   |           
|Interest expense                                        |                                     |                          | 283,000     |                     |            |      | 96,000      |            |            |   | 48,000      |           
|Interest income                                         |                                     |                          | 227,000     |                     |            |      | 53,000      |            |            |   | 54,000      |           
|                                                        |                                     |                          |             |                     |            |      |             |            |            |   |             |           
|Income before taxes on income                           |                                     |                          | 7,582,000   |                     |            |      | 8,459,000   |            |            |   | 4,347,000   |           
|Taxes on income (Note 6)                                |                                     |                          | 2,790,000   |                     |            |      | 3,099,000   |            |            |   | 1,377,000   |           
|                                                        |                                     |                          |             |                     |            |      |             |            |            |   |             |           
|Net income                                              |                                     | $                        | 4,792,000   |                     |            | $    | 5,360,000   |            |            | $ | 2,970,000   |           
|                                                        |                                     |                          |             |                     |            |      |             |            |            |   |             |           
|Net income per share (Note 10):                         |                                     |                          |             |                     |            |      |             |            |            |   |             |           
|Basic net income per share *                            |                                     | $                        | 0.86        |                     |            | $    | 0.98        |            |            | $ | 0.54        |           
|                                                        |                                     |                          |             |                     |            |      |             |            |            |   |             |           
|Diluted net income per share *                          |                                     | $                        | 0.86        |                     |            | $    | 0.98        |            |            | $ | 0.54        |           
|                                                        |                                     |                          |             |                     |            |      |             |            |            |   |             |           
|Basic weighted average number of shares
outstanding *   |                                     |                          | 5,585,000   |                     |            |      | 5,492,000   |            |            |   | 5,452,000   |           
|Effect of dilutive stock options and warrants *         |                                     |                          |            |                     |            |      | 1,000       |            |            |   | 6,000       |           
|                                                        |                                     |                          |             |                     |            |      |             |            |            |   |             |           
|Diluted weighted average number of shares
outstanding * |                                     |                          | 5,585,000   |                     |            |      | 5,493,000   |            |            |   | 5,458,000   |           
|                                                        |                                     |                          |             |                     |            |      |             |            |            |   |             |           



|* |  | Earnings per share and share amounts for 2001 and 2002 have
been retroactively adjusted to account for the Companys 10% stock
dividend distributed in June 2002. See Note 10 of Notes to
Consolidated Financial Statements.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

See accompanying notes to consolidated financial statements.

28



---



##### Table of Contents



EDELBROCK CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY

Years Ended June 30, 2001, 2002, and 2003

|                        |  |              |           |         |  |          |        |               |  |        |            |   |  |   |            |   |  |       |            |  
|----------------------- |  | ------------ | --------- | ------- |  | -------- | ------ | ------------- |  | ------ | ---------- | - |  | - | ---------- | - |  | ----- | ---------- | -
|                        |  |              |           |         |  |          |        |               |  |        |            |   |  |   |            |   |  | Total
|                        |  | Common Stock |           | Paid-in |  | Retained |        | Shareholders
|                        |  | Shares       |           | Amount  |  | Capital  |        | Earnings      |  | Equity
|                        |  |              |           |         |  |          |        |               |  |       
|Balance July 1, 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 |  
|Net income for year     |  |              |          |         |  |          |       |               |  |        |           |   |  |   | 2,970,000  |   |  |       | 2,970,000  |  
|Cash dividends          |  |              |          |         |  |          |       |               |  |        |           |   |  |   | (109,000   | ) |  |       | (109,000   | )
|                        |  |              |           |         |  |          |        |               |  |        |            |   |  |   |            |   |  |       |            |  
|Balance June 30, 2003   |  |              | 5,451,915 |         |  | $        | 54,470 |               |  | $      | 21,239,530 |   |  | $ | 65,744,000 |   |  | $     | 87,038,000 |  
|                        |  |              |           |         |  |          |        |               |  |        |            |   |  |   |            |   |  |       |            |  

See accompanying notes to consolidated financial statements.

29



---



##### Table of Contents



EDELBROCK CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                          |                                                                                  |                                                                |            |                     |            |      |            |            |            |   |            |            |            |  
|----------------------------------------- | -------------------------------------------------------------------------------- | -------------------------------------------------------------- | ---------- | ------------------- | ---------- | ---- | ---------- | ---------- | ---------- | - | ---------- | ---------- | ---------- | -
|                                          |                                                                                  |                                                                |            | Year Ended June 30,
|                                          |                                                                                  |                                                                |            |                    
|                                          |                                                                                  |                                                                |            | 2001                |            | 2002 |            | 2003      
|                                          |                                                                                  |                                                                |            |                     |            |      |            |           
|Cash flows from operating activities      |                                                                                  |                                                                |            |                     |            |      |            |            |            |   |            |           
|                                          | Net income                                                                       |                                                                | $          | 4,792,000           |            |      | $          | 5,360,000  |            |   | $          | 2,970,000  |           
|                                          | Adjustments to reconcile net income to
net cash provided by operating activities |                                                                |            |                     |            |      |            |            |            |   |            |            |           
|                                          |                                                                                  | Inventory reserve                                              |            |                     | 150,000    |      |            |            | (50,000    | ) |            |            |           |  
|                                          |                                                                                  | Depreciation and amortization of
property, plant and equipment |            |                     | 6,368,000  |      |            |            | 6,237,000  |   |            |            | 5,769,000  |  
|                                          |                                                                                  | (Gain) loss from sale of property,
plant and equipment         |            |                     | (7,000     | )    |            |            | 37,000     |   |            |            | (17,000    | )
|                                          |                                                                                  | Depreciation and amortization of
real estate properties        |            |                     | 31,000     |      |            |            | 32,000     |   |            |            | 33,000     |  
|                                          |                                                                                  | Deferred income taxes                                          |            |                     | (74,000    | )    |            |            | (501,000   | ) |            |            | 60,000     |  
|                                          |                                                                                  | Equity in net income of partnerships                           |            |                     | (72,000    | )    |            |            | (91,000    | ) |            |            | (68,000    | )
|                                          | Changes in assets and liabilities, net of effect of
acquisition:                 |                                                                |            |                     |            |      |            |            |            |   |            |            |           
|                                          |                                                                                  | Accounts receivable                                            |            |                     | 854,000    |      |            |            | (5,264,000 | ) |            |            | 5,334,000  |  
|                                          |                                                                                  | Inventories                                                    |            |                     | (4,548,000 | )    |            |            | (410,000   | ) |            |            | (3,039,000 | )
|                                          |                                                                                  | Prepaid expenses and other current assets                      |            |                     | (280,000   | )    |            |            | (204,000   | ) |            |            | (1,254,000 | )
|                                          |                                                                                  | Other assets                                                   |            |                     | 56,000     |      |            |            | (90,000    | ) |            |            | 57,000     |  
|                                          |                                                                                  | Accounts payable                                               |            |                     | (1,123,000 | )    |            |            | 538,000    |   |            |            | (2,481,000 | )
|                                          |                                                                                  | Accrued expenses                                               |            |                     | (409,000   | )    |            |            | 1,089,000  |   |            |            | (562,000   | )
|                                          |                                                                                  |                                                                |            |                     |            |      |            |            |            |   |            |           
|Net cash provided by operating activities |                                                                                  |                                                                | 5,738,000  |                     |            |      | 6,683,000  |            |            |   | 6,802,000  |           
|                                          |                                                                                  |                                                                |            |                     |            |      |            |            |            |   |            |           
|Cash flows from investing activities      |                                                                                  |                                                                |            |                     |            |      |            |            |            |   |            |           
|                                          | Acquisition of property, plant and equipment                                     |                                                                |            | (4,260,000          | )          |      |            | (3,998,000 | )          |   |            | (5,715,000 | )         
|                                          | Purchase of assets of Russell Performance                                        |                                                                |            | (3,335,000          | )          |      |            |           |            |   |            |           |           
|                                          | Proceeds from sale of property, plant
and equipment                              |                                                                |            | 34,000              |            |      |            | 73,000     |            |   |            | 27,000     |           
|                                          | Acquisition of real estate properties                                            |                                                                |            | (3,000              | )          |      |            | (7,000     | )          |   |            | (8,000     | )         
|                                          | Distributions from partnerships                                                  |                                                                |            | 70,000              |            |      |            | 175,000    |            |   |            | 80,000     |           
|                                          |                                                                                  |                                                                |            |                     |            |      |            |            |            |   |            |           
|Net cash used in investing activities     |                                                                                  |                                                                | (7,494,000 | )                   |            |      | (3,757,000 | )          |            |   | (5,616,000 | )         
|                                          |                                                                                  |                                                                |            |                     |            |      |            |            |            |   |            |           

See accompanying notes to consolidated financial statements.

30



---



##### Table of Contents



EDELBROCK CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                     |                                            |   |                     |            |      |   |            |            |   |   |           |           |  
|---------------------------------------------------- | ------------------------------------------ | - | ------------------- | ---------- | ---- | - | ---------- | ---------- | - | - | --------- | --------- | -
|                                                     |                                            |   | Year Ended June 30,
|                                                     |                                            |   |                    
|                                                     |                                            |   | 2001                |            | 2002 |   | 2003      
|                                                     |                                            |   |                     |            |      |   |           
|Cash flows from financing activities                 |                                            |   |                     |            |      |   |            |            |   |   |           |          
|                                                     | Net proceeds from issuance of common stock |   | $                   |           |      |   | $          | 25,000     |   |   | $         |          |  
|                                                     | Dividends paid                             |   |                     | (203,000   | )    |   |            | (101,000   | ) |   |           | (109,000  | )
|                                                     | Payments to acquire treasury stock         |   |                     | (8,000     | )    |   |            | (1,131,000 | ) |   |           |          |  
|                                                     | Principal payments on long-term debt       |   |                     | (1,921,000 | )    |   |            | (32,000    | ) |   |           | (52,000   | )
|                                                     |                                            |   |                     |            |      |   |            |            |   |   |           |          
|Net cash used in financing activities                |                                            |   | (2,132,000          | )          |      |   | (1,239,000 | )          |   |   | (161,000  | )        
|                                                     |                                            |   |                     |            |      |   |            |            |   |   |           |          
|Net increase (decrease) in cash and
cash equivalents |                                            |   | (3,888,000          | )          |      |   | 1,687,000  |            |   |   | 1,025,000 |          
|Cash and cash equivalents, beginning of year         |                                            |   | 9,883,000           |            |      |   | 5,995,000  |            |   |   | 7,682,000 |          
|                                                     |                                            |   |                     |            |      |   |            |            |   |   |           |          
|Cash and cash equivalents, end of year               |                                            | $ | 5,995,000           |            |      | $ | 7,682,000  |            |   | $ | 8,707,000 |          
|                                                     |                                            |   |                     |            |      |   |            |            |   |   |           |          
|Supplemental disclosure of cash flow information:    |                                            |   |                     |            |      |   |            |            |   |   |           |          
|Cash paid during the year for:                       |                                            |   |                     |            |      |   |            |            |   |   |           |          
|                                                     | Interest                                   |   | $                   | 296,000    |      |   | $          | 94,000     |   |   | $         | 48,000    |  
|                                                     |                                            |   |                     |            |      |   |            |            |   |   |           |          
|                                                     | Income taxes                               |   | $                   | 3,076,000  |      |   | $          | 3,300,000  |   |   | $         | 2,959,000 |  
|                                                     |                                            |   |                     |            |      |   |            |            |   |   |           |          

See accompanying notes to consolidated financial statements.

31



---



##### Table of Contents



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.
Significant estimates include the reserves on accounts receivables
for discounts, returns, and potential credit losses. In addition,
significant estimates are made for the allowance for
excess and obsolete inventories, and the accruals for product
warranty and self-insurance liabilities.

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 reserves are based on (i)
the Companys estimate of the rate at which customers take credit
discounts allowed and, (ii) the Companys specific assessment of the
collectibility of all past due accounts. Credit losses are charged
directly to selling, general and administrative expenses when determined
to be uncollectible. The actual cash and other discounts, returns and
credit losses have not differed materially from accrued estimated
amounts for the year ended June 30, 2003.

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 value and have been reduced by an allowance for
excess and obsolete inventories. The estimated allowance is based on
managements review of inventories on hand compared to estimated
future usage and sales.

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.

32



---



##### 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 5).
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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.

Long-Lived Assets

Statement of Financial Accounting Standards No. 144 Accounting for the
Impairment or Disposal of Long-Lived Assets(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. The
Company accounts for its long-lived assets as prescribed by SFAS 144 and no
impairment losses have been recorded in fiscal years 2001, 2002, or 2003.

33



---



##### Table of Contents



EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Stock-Based Compensation

In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation Transition and Disclosure an amendment of SFAS
123. This statement amends SFAS No. 123, Accounting for Stock-Based
Compensation, to provide alternative methods of transition for a
voluntary change to the fair value based method of accounting for
stock-based employee compensation. In addition, this statement amends
the disclosure requirements of SFAS No. 123 to require prominent
disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the
effect of the method used on reported results. The Company has chosen to
continue to account for stock-based compensation using the intrinsic
value method prescribed in Accounting Principles Board (APB) Opinion
No. 25, Accounting for Stock Issued to Employees, and related
interpretations. Accordingly, compensation expense for stock options is
measured as the excess, if any, of the estimate of the market value of
our stock at the date of the grant over the amount an employee must pay
to acquire the stock. The Company has adopted the annual disclosure
provisions of SFAS No. 148 in its financial reports for the fiscal year
ended June 30, 2003 and has adopted the interim disclosure provisions
for financial reports for quarterly reporting. The adoption of this
standard did not have a material impact on the Companys results of
operations, financial position or liquidity for the fiscal year ended
June 30, 2003.

SFAS No. 148 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 148. 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 2001, 2002, and
fiscal 2003: dividend yield of zero percent, risk-free interest rate of
6 percent, expected lives of ten years, and expected volatility of 65%,
65%, and 35%, respectively. Under the accounting provisions of FASB
Statement 148, the Companys net income and income per share for 2001,
2002, and 2003 would have been reduced to the pro forma amounts
indicated below:

|                      |                       |  |                     |           |      |  |      |           |  |  |   |           | 
|--------------------- | --------------------- |  | ------------------- | --------- | ---- |  | ---- | --------- |  |  | - | --------- | 
|                      |                       |  | Year Ended June 30,
|                      |                       |  |                    
|                      |                       |  | 2001                |           | 2002 |  | 2003
|                      |                       |  |                     |           |      |  |     
|Net income:           |                       |  |                     |           |      |  |      |           |  |  |   |          
|                      | As reported           |  | $                   | 4,792,000 |      |  | $    | 5,360,000 |  |  | $ | 2,970,000 | 
|                      | Pro forma             |  | $                   | 4,675,000 |      |  | $    | 5,303,000 |  |  | $ | 2,947,000 | 
|Earnings per share: * |                       |  |                     |           |      |  |      |           |  |  |   |          
|                      | As reported  Basic   |  | $                   | 0.86      |      |  | $    | 0.98      |  |  | $ | 0.54      | 
|                      | As reported  Diluted |  | $                   | 0.86      |      |  | $    | 0.98      |  |  | $ | 0.54      | 
|                      | Pro forma  Basic     |  | $                   | 0.84      |      |  | $    | 0.97      |  |  | $ | 0.54      | 
|                      | Pro forma  Diluted   |  | $                   | 0.84      |      |  | $    | 0.97      |  |  | $ | 0.54      | 



|* - |  | Earnings per share for 2001 and 2002 have been retroactively
adjusted to account for the Companys 10% stock dividend distributed in
June 2002.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------

34



---



##### Table of Contents



EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Business and Summary of Significant Accounting Policies (continued)

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.

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, 2001     |             | June 30, 2002 |  | June 30, 2003
|                                                          |  |                   |             |               |  |              
|Options and warrants
to purchase shares
of common stock * |  |                   | 617,291     |               |  |               | 504,845      |  |  |   | 450,889      | 
|                                                          |  |                   |             |               |  |               |              |  |  |   |              | 
|Exercise prices *                                         |  | $                 | 9.60-$20.00 |               |  | $             | 10.23-$20.00 |  |  | $ | 11.36-$20.00 | 
|                                                          |  |                   |             |               |  |               |              |  |  |   |              | 



|* - |  | References to share amounts, earnings per share, and exercise
prices for June 30, 2001 and 2002 above retroactively reflect a 10%
stock dividend distributed in June 2002.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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
include traditional magazine and television ads, costs under cooperative
advertising programs with customers, contingency money decal programs
for racing events, and other advertising costs. These costs are
expensed as incurred and are included in selling, general and
administrative expense.

Advertising expenses, as described above, amounted to $9,618,000,
$10,442,000 and $10,526,000 for fiscal years ended June 30, 2001, 2002,
and 2003, respectively.

Product Warranties

The Company records a liability for an estimate of costs that it expects
to incur under its basic limited warranty when product revenue is
recognized. Factors affecting the Companys product warranty liability
include the number of units sold and historical and anticipated rates of
claims and costs per claim. Companys management periodically assesses
the adequacy of its product warranty liability based on changes in these
factors.

35



---



##### Table of Contents



EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The changes in the Companys product warrant liability are as follows:

|                                |  |          |            |      |  |   |            |  
|------------------------------- |  | -------- | ---------- | ---- |  | - | ---------- | -
|                                |  | June 30,
|                                |  |         
|                                |  | 2002     |            | 2003
|                                |  |          |            |     
|Beginning balance               |  | $        |           |      |  | $ | 300,000    |  
|Accrual for current year claims |  |          | 1,820,000  |      |  |   | 1,674,000  |  
|Warranty claims settled         |  |          | (1,520,000 | )    |  |   | (1,367,000 | )
|                                |  |          |            |      |  |   |            |  
|Ending balance                  |  | $        | 300,000    |      |  | $ | 607,000    |  
|                                |  |          |            |      |  |   |            |  

Self-Insurance Liabilities

The Companys obligation for employee-health care benefits is self-insured
for which the Company uses a third party administrator to process all
claims and benefits. Employee health care insurance liabilities are
accrued based on historical claims experience and risk exposure levels.
Eligible losses on a per claim basis and in the aggregate for all eligible
claims in excess of self-insurance levels and up to stated limits of
liability are covered by insurance policies purchased from third-party
insurers.

Segment Reporting

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

Controlling Stockholder

As of June 30, 2003, O. Victor Edelbrock, the Companys Chairman, President,
and Chief Executive Officer, has beneficial ownership of 52% of the
Companys common shares. As a result, Mr. Edelbrock has the ability to
control the Companys operations.

Reclassifications

Certain prior period amounts have been reclassified for comparison with the
2003 presentation.

Note 2 - New Accounting Pronouncements

In June 2002, the Financial Accounting Standard Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 146, Accounting
for Costs Associated with Exit or Disposal Activities. This statement
addresses financial accounting and reporting for costs associated with
exit or disposal activities and nullifies Emerging Issues Task Force
Issue No. 94-3, Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs
Incurred in a Restructuring). SFAS No. 146 requires that a liability for
a cost associated with an exit or disposal activity be recognized and
measured initially at fair value only when the liability is incurred, not
when it is planned. The Company adopted the provisions of SFAS No. 146
for exit or disposal activities that were initiated after December 31,
2002. The adoption of this standard did not have a material impact on
the Companys results of operations, financial position or liquidity for
the fiscal year ended June 30, 2003.

36



---



##### Table of Contents



EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 - New Accounting Pronouncements (concluded)

In November 2002, the FASB issued FASB Interpretation No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others (FIN 45). This interpretation
elaborates on the disclosures to be made by a guarantor in its interim and
annual financial statements about its obligations under specified
guarantees that it has issued. It also clarifies that a guarantor is
required to recognize, at the inception of a guarantee, a liability for
the fair value of the obligation undertaken in issuing the guarantee. The
disclosure requirements in this interpretation were effective for
financial statements of interim or annual periods ending after December
15, 2002. Additionally, the recognition of a guarantors obligation should
be applied on a prospective basis to guarantees issued after December 31,
2002. The adoption of FIN 45 did not have a material effect on the
Companys financial position or results of operations for the fiscal year
ended June 30, 2003.

In January 2003, the FASB issued FASB Interpretation No. 46, Consolidation
of Variable Interest Entities (FIN 46). This interpretation explains how
to identify variable interest entities and how an enterprise assesses its
interest in a variable interest entity to decide whether to consolidate that
entity. This interpretation requires existing unconsolidated variable
interest entities to be consolidated by their primary beneficiaries if the
entities do not effectively disperse risks among parties involved. Variable
interest entities that effectively disperse risks will not be consolidated
unless a single party holds an interest or combination of interest that
effectively recombines risks that were previously dispersed. This
interpretation applies immediately to variable interest entities created
after January 31, 2003, and to variable interest entities in which an
enterprise obtains an interest after that date. It applies in the first
fiscal year or interim period beginning after June 15, 2003, to variable
interest entities in which an enterprise holds a variable interest that it
acquired before February 1, 2003. Management believes that the adoption of
FIN 46 will not have a material effect on the Companys financial position
or results of operations.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities, which is generally
effective for contracts entered into or modified after June 30, 2003 and
for hedging relationships designated after June 30, 2003. SFAS 149
clarifies under what circumstances a contract with an initial net
investment meets the characteristic of a derivative as discussed in SFAS
No. 133, clarifies when a derivative contains a financing component, amends
the definition of an underlying to conform it to the language used in
FASB Interpretation No. 45, Guarantor Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness
of Others and amends certain other existing pronouncements. The adoption
of SFAS 149 is not expected to have a material effect on the Companys
financial condition or results of operations.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity.
This statement establishes standards for how an issuer classifies and
measures in its statement of financial position certain financial
instruments with characteristics of both liabilities and equity. In
accordance with the standard, financial instruments that embody obligations
for the issuer are required to be classified as liabilities. SFAS 150 is
effective for all financial instruments created or modified after May 31,
2003, and otherwise shall be effective at the beginning of the first
interim period beginning after June 15, 2003. The adoption of SFAS 150 is
not expected to have a material effect on the Companys financial condition
or results of operations.

Note 3 - Inventories

Inventories consist of the following:

|                |  |          |            |      |  |   |            | 
|--------------- |  | -------- | ---------- | ---- |  | - | ---------- | 
|                |  | June 30,
|                |  |         
|                |  | 2002     |            | 2003
|                |  |          |            |     
|Raw materials   |  | $        | 13,306,000 |      |  | $ | 12,542,000 | 
|Work in process |  |          | 2,056,000  |      |  |   | 1,780,000  | 
|Finished goods  |  |          | 7,997,000  |      |  |   | 12,076,000 | 
|                |  |          |            |      |  |   |            | 
|                |  | $        | 23,359,000 |      |  | $ | 26,398,000 | 
|                |  |          |            |      |  |   |            | 

37



---



##### Table of Contents



EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4 - Long-Term Debt, Capital Lease Obligation, and Revolving Line of Credit

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

|                     |  |          |         |      |  |   |         | 
|-------------------- |  | -------- | ------- | ---- |  | - | ------- | 
|                     |  | June 30,
|                     |  |         
|                     |  | 2002     |         | 2003
|                     |  |          |         |     
|Mortgage note (a)    |  | $        | 254,000 |      |  | $ | 251,000 | 
|Mortgage note (b)    |  |          | 53,000  |      |  |   | 53,000  | 
|Note payable (c)     |  |          | 18,000  |      |  |   | 10,000  | 
|Other                |  |          | 149,000 |      |  |   | 163,000 | 
|                     |  |          |         |      |  |   |         | 
|                     |  |          | 474,000 |      |  |   | 477,000 | 
|Less current portion |  |          | 11,000  |      |  |   | 11,000  | 
|                     |  |          |         |      |  |   |         | 
|                     |  | $        | 463,000 |      |  | $ | 466,000 | 
|                     |  |          |         |      |  |   |         | 



|(a) |  | Mortgage note, collateralized by a trust deed on real estate with a
net book value of $296,000 and $285,000 at June 30, 2002 and 2003,
respectively; payable in monthly principal and interest payments at
an interest rate of 7.0% due March 2031. Subsequent to year end,
the Company sold the property in August 2003 for a net amount that
approximated the carrying value of the asset and paid the note in
full.       
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Mortgage note, collateralized by a second trust deed on real estate
with a net book value of $296,000 and $285,000 at June 30, 2002 and
2003, respectively; payable in monthly principal and interest
payments at an interest rate of 7.5% due March 2016. Subsequent to
year end, the Company sold the property in August 2003 for a net
amount that approximated the carrying value of the asset and paid
the note in full.
|   
|(c) |  | Loan, collateralized by an asset with a net book value of $21,000
and $14,000 at June 30, 2002 and 2003, respectively; payable in
monthly principal payments at a zero percent interest rate due
November 2004.                                                                                                                                                                                                              

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

|                      |  |                |         |                    |  |   |         | 
|--------------------- |  | -------------- | ------- | ------------------ |  | - | ------- | 
|                      |  | As of June 30, |         | Subsequent to     
|Years ending June 30, |  | 2003           |         | Sale of Property *
|                      |  |                |         |                   
|2004                  |  | $              | 11,000  |                    |  | $ | 7,000   | 
|2005                  |  |                | 7,000   |                    |  |   | 3,000   | 
|2006                  |  |                | 4,000   |                    |  |   |        | 
|2007                  |  |                | 5,000   |                    |  |   |        | 
|2008                  |  |                | 5,000   |                    |  |   |        | 
|Thereafter            |  |                | 445,000 |                    |  |   | 163,000 | 
|                      |  |                |         |                    |  |   |         | 
|                      |  | $              | 477,000 |                    |  | $ | 173,000 | 
|                      |  |                |         |                    |  |   |         | 



|*- |  | In August 2003, the Company sold the property related to mortgage note
(a) and (b) and paid off those respective notes in full.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------

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 (4.00% at June 30, 2003).
This agreement expires in February 2005. There were no borrowings on the
line as of June 30, 2002 and 2003. This obligation contains covenants,
among other items, relating to various financial ratios. The Company was
in compliance with all such covenants at June 30, 2003.

38



---



##### Table of Contents



EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4 - Long-Term Debt, Capital Lease Obligation, and Revolving Line of Credit (concluded)

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

|                                                                                                        |                           |   |          |        |      |   |        |        | 
|------------------------------------------------------------------------------------------------------- | ------------------------- | - | -------- | ------ | ---- | - | ------ | ------ | 
|                                                                                                        |                           |   | June 30,
|                                                                                                        |                           |   |         
|                                                                                                        |                           |   | 2002     |        | 2003
|                                                                                                        |                           |   |          |        |     
|Leases of capital equipment with lease periods expiring
at various dates through 2006; interest at 9.0% |                           | $ | 120,000  |        |      | $ | 65,000 |       
|                                                                                                        | Less current installments |   |          | 56,000 |      |   |        | 37,000 | 
|                                                                                                        |                           |   |          |        |      |   |        |       
|                                                                                                        |                           | $ | 64,000   |        |      | $ | 28,000 |       
|                                                                                                        |                           |   |          |        |      |   |        |       

During the fiscal year ended June 30, 2003, the Company paid off two capital
lease obligations early without penalty.

Minimum lease payments under capital lease obligations are as follows:

|                                            |  |        |        | 
|------------------------------------------- |  | ------ | ------ | 
|Years ending June 30,                       |  | Amount
|                                            |  |       
|2004                                        |  | $      | 35,000 | 
|2005                                        |  |        | 35,000 | 
|2006                                        |  |        | 3,000  | 
|2007                                        |  |        |       | 
|2008                                        |  |        |       | 
|                                            |  |        |        | 
|Total minimum lease payments                |  |        | 73,000 | 
|Less amount representing interest           |  |        | 8,000  | 
|                                            |  |        |        | 
|Present value of net minimum lease payments |  | $      | 65,000 | 
|                                            |  |        |        | 

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

|                              |  |          |         |      |  |   |         | 
|----------------------------- |  | -------- | ------- | ---- |  | - | ------- | 
|                              |  | June 30,
|                              |  |         
|                              |  | 2002     |         | 2003
|                              |  |          |         |     
|Assets under capital lease    |  | $        | 211,000 |      |  | $ | 150,000 | 
|Less accumulated amortization |  |          | 45,000  |      |  |   | 54,000  | 
|                              |  |          |         |      |  |   |         | 
|                              |  | $        | 166,000 |      |  | $ | 96,000  | 
|                              |  |          |         |      |  |   |         | 

Note 5 - 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 was allowed in fiscal year 2002. The
Company 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. The Company has performed the annual impairment tests required
under SFAS 142 for fiscal years 2002 and 2003 and there were no impairment
of these assets.

39



---



##### Table of Contents



EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 5 - Goodwill and Intangible Assets (concluded)

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 |  | 2003
|                                                    |  |                     |           |      |  |     
|Reported net income                                 |  | $                   | 4,792,000 |      |  | $    | 5,360,000 |  |  | $ | 2,970,000 | 
|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 |  |  | $ | 2,970,000 | 
|                                                    |  |                     |           |      |  |      |           |  |  |   |           | 
|Basic earnings per share: *                         |  |                     |           |      |  |      |           |  |  |   |           | 
|Reported basic earnings per share                   |  | $                   | 0.86      |      |  | $    | 0.98      |  |  | $ | 0.54      | 
|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      |  |  | $ | 0.54      | 
|                                                    |  |                     |           |      |  |      |           |  |  |   |           | 
|Diluted earnings per share: *                       |  |                     |           |      |  |      |           |  |  |   |           | 
|Reported diluted earnings per share                 |  | $                   | 0.86      |      |  | $    | 0.98      |  |  | $ | 0.54      | 
|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      |  |  | $ | 0.54      | 
|                                                    |  |                     |           |      |  |      |           |  |  |   |           | 



|* |  | Earnings per share amounts have been retroactively adjusted to
account for the Companys 10% stock dividend distributed in June 2002 .
See Note 10.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------

Note 6 - Taxes on Income

The provision for taxes on income consists of the following:

|         |         |   |                     |           |      |   |           |           |   |   |           |           | 
|-------- | ------- | - | ------------------- | --------- | ---- | - | --------- | --------- | - | - | --------- | --------- | 
|         |         |   | Year Ended June 30,
|         |         |   |                    
|         |         |   | 2001                |           | 2002 |   | 2003     
|         |         |   |                     |           |      |   |          
|Current  |         |   |                     |           |      |   |           |           |   |   |           |          
|         | Federal |   | $                   | 2,308,000 |      |   | $         | 2,965,000 |   |   | $         | 1,287,000 | 
|         | State   |   |                     | 556,000   |      |   |           | 635,000   |   |   |           | 30,000    | 
|         |         |   |                     |           |      |   |           |           |   |   |           |          
|         |         |   | 2,864,000           |           |      |   | 3,600,000 |           |   |   | 1,317,000 |          
|         |         |   |                     |           |      |   |           |           |   |   |           |          
|Deferred |         |   |                     |           |      |   |           |           |   |   |           |          
|         | Federal |   |                     | (2,000    | )    |   |           | (429,000  | ) |   |           | 30,000    | 
|         | State   |   |                     | (72,000   | )    |   |           | (72,000   | ) |   |           | 30,000    | 
|         |         |   |                     |           |      |   |           |           |   |   |           |          
|         |         |   | (74,000             | )         |      |   | (501,000  | )         |   |   | 60,000    |          
|         |         |   |                     |           |      |   |           |           |   |   |           |          
|         |         | $ | 2,790,000           |           |      | $ | 3,099,000 |           |   | $ | 1,377,000 |          
|         |         |   |                     |           |      |   |           |           |   |   |           |          

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

|                                            |  |                     |      |      |  |      |      |   |  |  |      |  
|------------------------------------------- |  | ------------------- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                                            |  | Year Ended June 30,
|                                            |  |                    
|                                            |  | 2001                |      | 2002 |  | 2003
|                                            |  |                     |      |      |  |     
|U.S. federal statutory tax rate             |  |                     | 34.0 | %    |  |      | 34.0 | % |  |  | 34.0 | %
|State income taxes, net of federal benefits |  |                     | 6.0  |      |  |      | 6.0  |   |  |  | 6.0  |  
|State income tax credits                    |  |                     | (1.7 | )    |  |      | (1.7 | ) |  |  | (5.2 | )
|Federal income tax credits                  |  |                     | (1.6 | )    |  |      | (1.8 | ) |  |  | (3.3 | )
|Other                                       |  |                     | 0.1  |      |  |      | 0.1  |   |  |  | 0.2  |  
|                                            |  |                     |      |      |  |      |      |   |  |  |      |  
|Effective tax rate                          |  |                     | 36.8 | %    |  |      | 36.6 | % |  |  | 31.7 | %
|                                            |  |                     |      |      |  |      |      |   |  |  |      |  

40



---



##### Table of Contents



EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 6 - Taxes on Income (continued)

The components of deferred taxes at June 30, 2002 and 2003 are as follows:

|                           |                               |   |           |           |      |   |           |           | 
|-------------------------- | ----------------------------- | - | --------- | --------- | ---- | - | --------- | --------- | 
|                           |                               |   | 2002      |           | 2003
|                           |                               |   |           |           |     
|Deferred tax assets        |                               |   |           |           |      |   |           |          
|                           | State income taxes            |   | $         | 570,000   |      |   | $         | 401,000   | 
|                           | Advertising accrual           |   |           | 433,000   |      |   |           | 180,000   | 
|                           | Uniform capitalization rule   |   |           | 355,000   |      |   |           | 371,000   | 
|                           | Accrued vacation              |   |           | 284,000   |      |   |           | 318,000   | 
|                           | Deferred gains                |   |           | 15,000    |      |   |           | 15,000    | 
|                           | Accounts receivable reserve   |   |           | 170,000   |      |   |           | 170,000   | 
|                           | Product warranty accrual      |   |           | 102,000   |      |   |           | 206,000   | 
|                           | Inventory reserve             |   |           | 102,000   |      |   |           | 102,000   | 
|                           | Other                         |   |           | 105,000   |      |   |           |          | 
|                           |                               |   |           |           |      |   |           |          
|                           |                               |   | 2,136,000 |           |      |   | 1,763,000 |          
|                           |                               |   |           |           |      |   |           |          
|Deferred tax liabilities:  |                               |   |           |           |      |   |           |          
|                           | State income taxes            |   |           | 404,000   |      |   |           | 399,000   | 
|                           | Depreciation and amortization |   |           | 1,652,000 |      |   |           | 1,344,000 | 
|                           | Like kind exchange            |   |           | 1,543,000 |      |   |           | 1,543,000 | 
|                           |                               |   |           |           |      |   |           |          
|                           |                               |   | 3,599,000 |           |      |   | 3,286,000 |          
|                           |                               |   |           |           |      |   |           |          
|Net deferred tax liability |                               | $ | 1,463,000 |           |      | $ | 1,523,000 |          
|                           |                               |   |           |           |      |   |           |          

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

|                        |                            |   |           |           |      |   |           |           | 
|----------------------- | -------------------------- | - | --------- | --------- | ---- | - | --------- | --------- | 
|                        |                            |   | June 30, 
|                        |                            |   |          
|                        |                            |   | 2002      |           | 2003
|                        |                            |   |           |           |     
|Net current asset       |                            | $ | 1,855,000 |           |      | $ | 1,567,000 |          
|Net long-term liability |                            |   | 3,318,000 |           |      |   | 3,090,000 |          
|                        |                            |   |           |           |      |   |           |          
|                        | Net deferred tax liability |   | $         | 1,463,000 |      |   | $         | 1,523,000 | 
|                        |                            |   |           |           |      |   |           |          

Note 7  Commitments and Contingencies

Royalty and Development Fee Agreements

The Company has a Royalty Agreement with RICOR Racing and Development L.P.
(RICOR) whereby the Company pays RICOR a percentage of revenue derived
from the net sale of shock absorbers. The Company pays RICOR a royalty of
6% of net sales in accordance with the non-exclusive license agreement.
Royalty expense under this agreement amounted to $750,000, $319,000, and
$154,000 for fiscal year ended June 30, 2001, 2002, and 2003, respectively.

Pursuant to a license agreement with JG Engine Dynamics, Inc. (JG) and
Automotive Systems Group, Inc. (ASG) (collectively the Licensor), the
Company jointly developed certain internal engine, exhaust, and suspension
components for import aftermarket products with the Licensor. The Company
pays the Licensor 5% of net revenues derived from the sale of such
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 in 2000 (see Note 10). The
Company capitalized the total $842,000 cost of this License Agreement.

41



---



##### Table of Contents



EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7  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
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 401(k) Plan amounted to
$577,000 for the year ended June 30, 2001. 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. For the year ended June 30, 2003,
Edelbrock Corporation expensed $614,000 which included plan expenses
of $36,000 and a contribution of $578,000 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 of its 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. In fiscal
year 2002, Edelbrock Foundry Corp. 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. 401(k) Plan amounted to
$55,000 for the years ended June 30, 2001. For the years ended June
30, 2002 and 2003, respectively, 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 $577,000 and $628,000 at
June 30, 2002 and 2003, respectively.

42



---



##### Table of Contents



EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7  Commitments and Contingencies (concluded)

Internal Revenue Service and California Franchise Tax Board Audits

The Federal income taxes of the Company for the fiscal year ended June 30,
2002 are currently under examination by the Internal Revenue Service
(IRS). The examination mainly pertains to research and development
credits and extraterritorial income exclusion that the Company has utilized
to reduce taxable income. Management does not believe that the outcome of
the IRS examination will have a material impact on the Companys
consolidated results of operations or financial position.

The California income taxes of the Company for the fiscal years ended June
30, 1999, 2000, and 2001 are currently under examination by the Franchise
Tax Board (FTB). The examination mainly pertains to the apportionment of
income between states. The Company does not believe that the ultimate
outcome of this examination will result in a material impact on the
Companys consolidated results of operations or financial position.

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.

Self-Insurance Liabilities

The Companys obligation for employee-health care benefits is self-insured
for which the Company uses a third party administrator to process all
claims and benefits. Employee health care insurance liabilities are accrued
based on historical claims experience and risk exposure levels. Eligible
losses on a per claim basis and in the aggregate for all eligible claims in
excess of self-insurance levels and up to stated limits of liability are
covered by insurance policies purchased from third-party insurers.

Note 8 - Major Customers

During the fiscal years ended June 30, 2001, 2002, and 2003, one customer
accounted for 14.5%, 15.5%, and 15.8% of revenues, respectively; another
customer accounted for 10.5%, 10.6%, and 8.7% of revenues, respectively.

Note 9 - Dependence on Key Supplier

The Company has 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 calendar year based agreement aggregates
$125,194,000 from a fiscal year equivalent stand-point, or $24,372,000 in
calendar year 2003 and $18,827,000 in each following calendar year through
2009. Sales of these automotive carburetors accounted for 39.7%, 37.8%,
and 36.7% of the Companys revenues for the years ended June 30, 2001,
2002, and 2003. 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.

43



---



##### Table of Contents



EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10  Shareholders Equity

Treasury Stock

At June 30, 2002 and 2003, the Company held 320,806 shares of its
common stock in treasury. The excess of the purchase price over the
par value of the common stock has been reflected as a reduction of
paid-in capital.

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 2001,
2002, and 2003 are as follows:

|                                              |  |           |         |                |  |                  |       |  |  |   |           | 
|--------------------------------------------- |  | --------- | ------- | -------------- |  | ---------------- | ----- |  |  | - | --------- | 
|                                              |  |           |         |                |  | Weighted Average |       |  |  |  
|                                              |  | Number of |         | Exercise Price |  | Aggregate       
|                                              |  | Shares *  |         | Per Share *    |  | Exercise Price *
|                                              |  |           |         |                |  |                 
|Outstanding at July 1, 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 |                |  |                  | 11.57 |  |  |   | 4,194,549 | 
|Granted                                       |  |           | 0       |                |  |                  |      |  |  |   | 0         | 
|Exercised                                     |  |           | 0       |                |  |                  |      |  |  |   | 0         | 
|Cancelled                                     |  |           | 14,451  |                |  |                  | 10.84 |  |  |   | 156,719   | 
|                                              |  |           |         |                |  |                  |       |  |  |   |           | 
|Outstanding at June 30, 2003                  |  |           | 348,038 |                |  |                  | 11.60 |  |  | $ | 4,037,830 | 
|                                              |  |           |         |                |  |                  |       |  |  |   |           | 
|Options exercisable
(vested) at June 30, 2003 |  |           | 323,700 |                |  | $                | 11.89 |  |  | $ | 3,847,623 | 
|                                              |  |           |         |                |  |                  |       |  |  |   |           | 



|* | - | 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 (27,500 post
June 2002 stock dividend) shares of Common Stock.

44



---



##### Table of Contents



EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10  Shareholders Equity (continued)

On February 2, 1996, the Company issued warrants to purchase 100,000
(110,000 post June 2002 stock dividend) 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.

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. These warrants expire on
February 18, 2006. In addition, the Company issued two sets of Warrants
to purchase 11,501 and 22,414 shares of common stock at $22.00 and
$18.00 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 11,501 warrants vest at 20% on December 31 of each year for a
period of 5 years and expire on February 18, 2004. The 22,414 warrants
expired on February 18, 2002.

On June 26, 2000, the Company issued 8,000 (8,800 post June 2002 stock
dividend) shares of common stock at $10.125 per share to Automotive
Systems Group Inc. and issued warrants to purchase 80,000 (88,000 post
June 2002 stock dividend) 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 7).

A summary of changes in options for non-employee directors and common
stock warrants during 2001, 2002, and 2003 are as follows:

|                                               |  |           |         |                |  |                  |       |  |  |   |           | 
|---------------------------------------------- |  | --------- | ------- | -------------- |  | ---------------- | ----- |  |  | - | --------- | 
|                                               |  |           |         |                |  | Weighted Average |       |  |  |  
|                                               |  | Number of |         | Exercise Price |  | Aggregate       
|                                               |  | Shares *  |         | Per Share *    |  | Exercise Price *
|                                               |  |           |         |                |  |                 
|Outstanding at July 1, 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 |                |  |                  | 12.36 |  |  |   | 2,746,027 | 
|Granted                                        |  |           | 0       |                |  |                  |      |  |  |   | 0         | 
|Exercised                                      |  |           | 0       |                |  |                  |      |  |  |   | 0         | 
|Cancelled                                      |  |           | 3,850   |                |  |                  | 11.36 |  |  |   | 43,751    | 
|                                               |  |           |         |                |  |                  |       |  |  |   |           | 
|Outstanding at June 30, 2003                   |  |           | 218,351 |                |  | $                | 12.38 |  |  | $ | 2,702,276 | 
|                                               |  |           |         |                |  |                  |       |  |  |   |           | 
|Warrants exercisable
(vested) at June 30, 2003 |  |           | 177,541 |                |  | $                | 12.76 |  |  | $ | 2,266,027 | 
|                                               |  |           |         |                |  |                  |       |  |  |   |           | 



|* | - | 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 for 2000, 2001, and 2002
have been retroactively adjusted.
|- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

45



---



##### Table of Contents



EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10  Shareholders Equity (concluded)

The following table summarizes information about stock options and warrants
outstanding at June 30, 2003:

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, 2003 * |         | Contractual Life |  | Outstanding *  |      | June 30, 2003 * |                  | Exercise Price *
|                |  |                 |         |                  |  |                |      |                 |                  |                 
|$10.00 - $11.36 |  |                 | 321,638 |                  |  |                | 1.85 |                 |                  | $                | 11.28  |  |  |  | 297,300 |  |  | $ | 11.56 | 
|$12.27          |  |                 | 1,100   |                  |  |                | 2.86 |                 |                  | $                | 12.27  |  |  |  | 1,100   |  |  | $ | 12.27 | 
|$14.55 - $17.73 |  |                 | 25,300  |                  |  |                | 4.80 |                 |                  | $                | 15.73  |  |  |  | 25,300  |  |  | $ | 15.73 | 
|                |  |                 |         |                  |  |                |      |                 |                  |                  |        |  |  |  |         |  |  |   |       | 
|$10.00 - $17.73 |  |                 | 348,038 |                  |  |                | 2.06 |                 |                  | $                | 11.60  |  |  |  | 323,700 |  |  | $ | 11.89 | 
|                |  |                 |         |                  |  |                |      |                 |                  |                  |        |  |  |  |         |  |  |   |       | 

No options were granted during the fiscal year ended June 30, 2002 and 2003.

Non-Employee Options and Warrants:

|               |  |                 |         |                  |  |                |      |                 |                  |                  |        |  |  |  |         |  |  |   |       |  | 
|-------------- |  | --------------- | ------- | ---------------- |  | -------------- | ---- | --------------- | ---------------- | ---------------- | ------ |  |  |  | ------- |  |  | - | ----- |  | 
|               |  |                 | 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, 2003 * |         | Contractual Life |  | Outstanding *  |      | June 30, 2003 * |                  | Exercise Price *
|               |  |                 |         |                  |  |                |      |                 |                  |                 
|$9.60 - $14.88 |  |                 | 205,700 |                  |  |                | 5.95 |                 |                  | $                | 11.91  |  |  |  | 167,420 |  |  | $ | 12.33 |  | 
|$20.00         |  |                 | 12,651  |                  |  |                | 5.00 |                 |                  | $                | 20.00  |  |  |  | 10,121  |  |  | $ | 20.00 |  | 
|               |  |                 |         |                  |  |                |      |                 |                  |                  |        |  |  |  |         |  |  |   |       |  | 
|$9.60 - $20.00 |  |                 | 218,351 |                  |  |                | 5.90 |                 |                  | $                | 12.38  |  |  |  | 177,541 |  |  | $ | 12.76 |  | 
|               |  |                 |         |                  |  |                |      |                 |                  |                  |        |  |  |  |         |  |  |   |       |  | 

No warrants were granted during the fiscal year ended June 30, 2002 and
2003.



|* | - | 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 for 2002
have been retroactively adjusted to reflect the Companys 10% stock
dividend issued on June 7, 2002.
|- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

46



---



##### 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, 2003:   |  |                   |         |           |  |            |         |             |  |            |        |  |  |   |         | 
|Accounts receivable reserve |  | $                 | 500,000 |           |  | $          |        |             |  | $          |       |  |  | $ | 500,000 | 
|Inventory reserves          |  | $                 | 300,000 |           |  | $          |        |             |  | $          |       |  |  | $ | 300,000 | 
|Year ended June 30, 2002:   |  |                   |         |           |  |            |         |             |  |            |        |  |  |   |         | 
|Accounts receivable reserve |  | $                 | 500,000 |           |  | $          |        |             |  | $          |       |  |  | $ | 500,000 | 
|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 | 

47



---



##### Table of Contents



(EDELBROCK(R) LOGO)