UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 28, 2003

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period to

Commission File Number: 333-89061

Holley Performance Products Inc.

(Exact name of Registrant as specified in its charter)

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

1801 Russellville Road, Post Office Box 10360

Bowling Green, Kentucky 42101-7360

(Address of principal executive offices)

Registrant’s telephone number, including area code: 270-782-2900

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

NONE

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

NONE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes x No ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

There were 1,000 shares of Common Stock outstanding as of September 28, 2003.

Index

PART I Financial Information		1
ITEM 1.	Financial Statements	1
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	21
ITEM 4.	Controls and Procedures	21
PART II Other Information		22
ITEM 6.	Exhibits and Reports on Form 8-K	22

PART I

ITEM 1. Financial Statements

HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

	December 31, 2002*			September 28, 2003
ASSETS
Cash and cash equivalents	$	602		$	—
Accounts receivable, less allowance for doubtful accounts of $1,089 and $1,054, respectively		16,915			16,825
Inventories		22,843			19,442
Deferred income taxes		3,249			3,073
Income taxes receivable		3,714			24
Other current assets		1,233			2,075

Total current assets		48,556			41,439

Property, plant and equipment, net		18,210			15,646
Goodwill		16,110			16,110
Intangible assets, net		44,898			42,318

Total assets	$	127,774		$	115,513

LIABILITIES AND STOCKHOLDER’S DEFICIT
Current portion of long-term debt	$	28,724		$	26,586
Accounts payable		7,558			9,172
Accrued liabilities		13,195			12,476
Accrued management fees		850			1,496
Accrued interest		5,913			1,705

Total current liabilities		56,240			51,435

Long-term debt, net of current portion		155,111			154,973
Deferred income taxes		15,841			15,841

Total liabilities		227,192			222,249

Commitments and contingencies

Stockholder’s deficit:
Preferred stock, $1.00 par value, 150,000 shares authorized, 75,000 issued and outstanding		75			75
Common stock, $1.00 par value, 1,000 shares authorized, issued and outstanding		1			1
Paid-in capital		59,924			59,924
Accumulated deficit		(159,418	)		(166,736	)

Stockholder’s deficit		(99,418	)		(106,736	)

Total liabilities and stockholder’s deficit	$	127,774		$	115,513

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

See	notes to condensed consolidated financial statements

HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

(unaudited)

	Three Months Ended September 29, 2002			Three Months Ended September 28, 2003			Nine Months Ended September 29, 2002			Nine Months Ended September 28, 2003
Net sales	$	33,105		$	29,316		$	109,376		$	99,917
Cost of goods sold		30,712			20,425			93,679			68,728

Gross profit		2,393			8,891			15,697			31,189

Selling, general and administrative costs		6,544			5,180			20,998			18,271
Management fees		262			223			686			657
Amortization expense		472			840			1,417			1,784
Other expense		696			51			1,067			249

Total operating expenses		7,974			6,294			24,168			20,961

Operating income (loss)		(5,581	)		2,597			(8,471	)		10,228

Interest expense		5,663			5,318			16,551			17,316

Loss before income taxes and cumulative effect of accounting change		(11,244	)		(2,721	)		(25,022	)		(7,088	)

Income tax expense (benefit)		(622	)		177			(1,866	)		230

Loss before cumulative effect of accounting change		(10,622	)		(2,898	)		(23,156	)		(7,318	)

Cumulative effect of accounting change for intangible asset impairment, net of taxes of $1,292		—			—			(2,114	)		—

Net loss	$	(10,622	)	$	(2,898	)	$	(25,270	)	$	(7,318	)

See notes to condensed consolidated financial statements

HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Nine Months Ended September 29, 2002			Nine Months Ended September 28, 2003
OPERATING ACTIVITIES
Net loss	$	(25,270	)	$	(7,318	)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation		5,091			3,415
Amortization of intangibles		1,417			1,784
Amortization of deferred financing costs included in interest expense		654			796
Amortization of debt discount		514			(146	)
Loss on disposal of business		—			275
Gain on disposal of fixed assets		—			(29	)
Deferred income taxes		(1,929	)		—
Write-off of financing costs		775			—
Cumulative effect of accounting change		2,114			—
Change in operating assets and liabilities:
Accounts receivable		2,619			(385	)
Inventories		8,445			2,627
Other assets		420			3,017
Accounts payable		331			2,334
Accrued liabilities		5,628			(4,927	)

Net cash from operating activities		809			1,443

INVESTING ACTIVITIES
Capital expenditures		(1,302	)		(1,322	)
Proceeds from the disposal of business		—			1,135
Proceeds from the disposal of fixed assets		46			164

Net cash from investing activities		(1,256	)		(23	)

FINANCING ACTIVITIES
Net proceeds (repayments) from revolving credit line		1,461			(484	)
Financing costs		(2,058	)		—
Proceeds from long-term debt		2,000			—
Principal payments on long-term debt		—			(1,538	)

Net cash from financing activities		1,403			(2,022	)

Net change in cash and cash equivalents		956			(602	)
Cash and cash equivalents:
Beginning of period		234			602

End of period	$	1,190		$	—

Supplemental disclosures of cash flow information:
Cash paid for interest	$	10,695		$	20,873

Cash received for income taxes	$	—		$	3,265

See notes to condensed consolidated financial statements

HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except as otherwise noted)

(unaudited)

1. Significant Accounting Policies

Basis of Presentation

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

The Company is highly leveraged. As of September 28, 2003, indebtedness was $181.6 million and stockholder’s deficit was $106.7 million. Further, the Company has experienced recurring net losses. Management is implementing actions designed to reduce working capital and improve operating results. If the improvements associated with these actions do not materialize in a timely manner, the Company may be required to take additional measures to ensure the availability of sufficient cash to sustain operations. Such measures may include, among other things, reducing or delaying capital expenditures, selling assets, restructuring or refinancing indebtedness, or seeking additional equity capital. There is no assurance that any of these measures can be effected on satisfactory terms, if at all.

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

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

Accounting Period

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

Recent Accounting Pronouncements

use of the assets and was effective for fiscal years beginning after June 15, 2002. The adoption of SFAS No. 143 did not have a material impact on the consolidated financial position, results of operations or cash flows of the Company.

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

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

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

In January 2003, the FASB issued Interpretation No. 46 Consolidation of Variable Interest Entities, an interpretation of ARB No. 51. This Interpretation addresses the consolidation by business enterprises of variable interest entities as defined in the Interpretation. The Interpretation is effective for financial statements issued for the first reporting period ending after December 15, 2003. The Company has determined that it does not have any interest in a variable interest entity that would require the variable interest entity to be consolidated or disclosed by the Company.

In April 2003, the FASB issued SFAS No. 149, Amendments of Statement 133 on Derivative instruments and Hedging Activities. This Statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. This Statement is effective for contracts entered into or modified after September 29, 2003, except as stated below and for hedging relationships designated after September 29, 2003. In addition, except as stated below, all provisions of this Statement should be applied prospectively. The provisions of this Statement that relate to SFAS 133 Implementation Issues that have been effective for fiscal quarters that began prior to June 15, 2003, should continue to be applied in accordance with their respective effective dates. In addition, paragraphs 7(a) and 23(a), which relate to forward purchases or sales of when-issued securities or other securities that do not yet exist, should be applied to both existing contracts and new contracts entered into after September 29, 2003. The Company does not expect the adoption of SFAS No. 149, which will be effective for contracts entered into or modified after September 29, 2003, to have a material effect on the Company’s consolidated financial position, results of operations or cash flows of the Company.

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

Reclassifications

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

2. Inventories

Inventories are comprised of the following:

	December 31, 2002		September 28, 2003
Raw materials	$	11,224	$	7,024
Work-in-process		3,979		3,139
Finished goods		7,640		9,279

	$	22,843	$	19,442

3. Segment Information

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

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

	Three Months Ended September 29, 2002			Three Months Ended September 28, 2003		Nine Months Ended September 29, 2002		Nine Months Ended September 28, 2003
Performance Parts:
Net sales	$	29,504		$	26,722	$	97,656	$	89,983
Gross profits		2,568			8,682		15,123		30,028

Remanufactured Parts:
Net sales	$	3,601		$	2,594	$	11,720	$	9,934
Gross profits (loss)		(175	)		209		574		1,161

Total:
Net sales	$	33,105		$	29,316	$	109,376	$	99,917
Gross profits		2,393			8,891		15,697		31,189

Summary balance sheet data for inventories and property, plant and equipment, net for each of the Company’s reportable segments as of December 31, 2002 and September 28, 2003 are shown in the following table:

	December 31, 2002		September 28, 2003
Performance Parts:
Inventories	$	19,875	$	16,832
Property, plant and equipment		16,849		14,553

Remanufactured Parts:
Inventories	$	2,968	$	2,610
Property, plant and equipment		1,361		1,093

Total:
Inventories	$	22,843	$	19,442
Property, plant and equipment		18,210		15,646

4. Intangible Assets

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

	December 31, 2002							September 28, 2003
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value		Gross Carrying Amount		Accumulated Amortization			Net Carrying Value
Amortized intangible assets:
Deferred financing costs	$	7,443	$	(2,163	)	$	5,280	$	7,443	$	(2,959	)	$	4,484
Non-compete covenants		8,164		(5,810	)		2,354		8,164		(7,594	)		570

Ending balance	$	15,607	$	(7,973	)	$	7,634	$	15,607	$	(10,553	)	$	5,054

Amortization of deferred financing costs and non-compete agreements totaled $654 and $1,417 for the nine months ended September 29, 2002 and $796 and $1,784 for the nine months ended September 28, 2003, respectively. Amortization of these costs over the next five years are estimated to be: 2003, $2,780; 2004, $1,851; 2005, $1,139; 2006, $1,139; and 2007, $725.

In addition, included in the line item intangible assets, net are intangible assets not subject to amortization. Goodwill and tradenames have a net carrying value of $16,110 and $37,264, respectively as of December 31, 2002 and September 28, 2003.

5. Related-Party Transactions

Pursuant to a management agreement, Kohlberg and Company, LLC (“Kohlberg”) provides the Company with general corporate administrative services. Kohlberg receives a management fee to recover its operating expenses based upon an allocation of time devoted to the Company. Management fee expense was $262 and $686 for the three and nine months ended September 29, 2002, respectively and $223 and $657 for the three and nine months ended September 28, 2003, respectively. Kohlberg has deferred cash payments with respect to the management fees charged the Company since January 1, 2002; however such fees are accruing in connection with the aforementioned management agreement and as of December 31, 2002 and September 28, 2003, accrued management fees were $850 and $1,496, respectively.

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

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

The information that follows presents condensed consolidating financial information as of September 28, 2003 and December 31, 2002 and for the three and nine month periods ending September 28, 2003 and September 29, 2002 for: a) Holley Performance Products Inc. (as the Issuer), b) the Guarantors, c) elimination entries and d) the Company on a consolidated basis.

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

	Condensed Consolidating Balance Sheet December 31, 2002
	Holley Performance Products Inc. (Parent Company Only)			Subsidiary Guarantors			Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	421		$	181		$	—		$	602
Accounts receivable, net		15,837			1,078			—			16,915
Inventories		11,813			11,030			—			22,843
Income taxes receivable		3,677			37			—			3,714
Deferred income taxes		1,835			1,414						3,249
Intercompany receivable		12,936			—			(12,936	)		—
Other current assets		705			528			—			1,233

Total current assets		47,224			14,268			(12,936	)		48,556

Property, plant and equipment, net		13,673			4,537			—			18,210
Investment in subsidiaries		19,450			—			(19,450	)		—
Intangible assets, net		36,999			24,009			—			61,008

Total assets	$	117,346		$	42,814		$	(32,386	)	$	127,774

LIABILITIES AND STOCKHOLDER’S DEFICIT
Current portion of long-term debt	$	28,679		$	45		$	—		$	28,724
Accounts payable		6,963			595			—			7,558
Accrued liabilities		11,306			1,889			—			13,195
Accrued management fees		850			—			—			850
Accrued interest		5,913			—			—			5,913
Intercompany payable		—			12,936			(12,936	)		—

Total current liabilities		53,711			15,465			(12,936	)		56,240

Long-term debt, net of current portion		154,993			118			—			155,111
Deferred income taxes		8,060			7,781			—			15,841

Total liabilities		216,764			23,364			(12,936	)		227,192

Commitments and contingencies

Stockholder’s deficit:
Preferred stock, $1.00 par value, 150,000 shares authorized, 75,000 issued and outstanding		75			—			—			75
Common stock, $1.00 par value, 1,000 shares authorized, issued and outstanding		1			88,074			(88,074	)		1
Paid-in capital		59,924			—						59,924
Accumulated deficit		(159,418	)		(68,624	)		68,624			(159,418	)

Stockholder’s deficit		(99,418	)		19,450			(19,450	)		(99,418	)

Total liabilities and stockholder’s deficit	$	117,346		$	42,814		$	(32,386	)	$	127,774

	Condensed Consolidating Balance Sheet September 28, 2003
	Holley Performance Products Inc. (Parent Company Only)			Subsidiary Guarantors			Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	—		$	—		$	—		$	—
Accounts receivable, net		16,408			417			—			16,825
Inventories		10,079			9,363			—			19,442
Deferred income taxes		3,073			—			—			3,073
Income taxes receivable		2			22			—			24
Intercompany receivable		4,544			—			(4,544	)		—
Other current assets		1,969			106			—			2,075

Total current assets		36,075			9,908			(4,544	)		41,439

Property, plant and equipment, net		12,195			3,451			—			15,646
Investment in subsidiaries		23,843			—			(23,843	)		—
Intangible assets, net		36,482			21,946			—			58,428

Total assets	$	108,595		$	35,305		$	(28,387	)	$	115,513

LIABILITIES AND STOCKHOLDER’S DEFICIT
Current portion of long-term debt	$	26,586		$	—		$	—		$	26,586
Accounts payable		8,970			202			—			9,172
Accrued liabilities		11,181			1,295			—			12,476
Accrued management fees		1,496			—			—			1,496
Accrued interest		1,705			—			—			1,705
Intercompany payable		—			4,544			(4,544	)		—

Total current liabilities		49,938			6,041			(4,544	)		51,435

Long-term debt, net of current portion		154,973			—			—			154,973
Deferred income taxes		10,420			5,421			—			15,841

Total liabilities		215,331			11,462			(4,544	)		222,249

Commitments and contingencies

Stockholder’s deficit:
Preferred stock, $1.00 par value, 150,000 shares authorized, 75,000 issued and outstanding		75			—			—			75
Common stock, $1.00 par value, 1,000 shares authorized, issued and outstanding		1			88,074			(88,074	)		1
Paid-in capital		59,924			—			—			59,924
Accumulated deficit		(166,736	)		(64,231	)		64,231			(166,736	)

Stockholder’s deficit		(106,736	)		23,843			(23,843	)		(106,736	)

Total liabilities and stockholder’s deficit	$	108,595		$	35,305		$	(28,387	)	$	115,513

	Condensed Consolidating Statement of Operations Three Months Ended September 29, 2002
	Holley Performance Products Inc. (Parent Company Only)			Subsidiary Guarantors			Eliminations			Consolidated
Net sales	$	16,102		$	33,105		$	(16,102	)	$	33,105
Cost of goods sold		14,973			31,841			(16,102	)		30,712

Gross profit		1,129			1,264			—			2,393

Selling, general and administrative costs		3,183			3,361			—			6,544
Management fees		262			—			—			262
Amortization of intangibles		283			189			—			472
Other expense		696			—			—			696
Equity in loss of subsidiaries		2,286			—			(2,286	)		—

Total operating expenses		6,710			3,550			(2,286	)		7,974

Operating loss		(5,581	)		(2,286	)		2,286			(5,581	)

Interest expense		5,663			—			—			5,663

Loss before income taxes		(11,244	)		(2,286	)		2,286			(11,244	)

Income tax benefit		(622	)		—			—			(622	)

Net loss	$	(10,622	)	$	(2,286	)	$	2,286		$	(10,622	)

	Condensed Consolidating Statement of Operations Nine Months Ended September 29, 2002
	Holley Performance Products Inc. (Parent Company Only)			Subsidiary Guarantors			Eliminations			Consolidated
Net sales	$	51,171		$	109,376		$	(51,171	)	$	109,376
Cost of goods sold		41,154			103,696			(51,171	)		93,679

Gross profit		10,017			5,680			—			15,697

Selling, general and administrative costs		9,823			11,175			—			20,998
Management fees		686			—			—			686
Amortization of intangibles		284			1,133			—			1,417
Other expense		1,042			25			—			1,067
Equity in loss of subsidiaries		7,792			—			7,792			—

Total operating expenses		19,627			12,333			(7,792	)		24,168

Operating loss		(9,610	)		(6,653	)		7,792			(8,471	)

Interest expense		16,509			42			—			16,551

Loss before income taxes and cumulative effect of accounting change		(26,119	)		(6,695	)		7,792			(25,022	)

Income tax benefit		(1,357	)		(509	)		—			(1,866	)

Loss before cumulative effect of accounting change		(24,762	)		(6,186	)		7,792			(23,156	)

Cumulative effect of accounting change		(508	)		(1,606	)		—			(2,114	)

Net loss	$	(25,270	)	$	(7,792	)	$	7,792		$	(25,270	)

	Consolidating Statement of Cash Flows Nine Months Ended September 29, 2002
	Holley Performance Products Inc. (Parent Company Only)			Subsidiary Guarantors			Eliminations		Consolidated
OPERATING ACTIVITIES:
Net cash from operating activities	$	(295	)	$	1,104		$	—	$	809

INVESTING ACTIVITIES:
Capital expenditures		(856	)		(446	)		—		(1,302	)
Proceeds on disposal of fixed assets		46			—			—		46

Net cash from investing activities		(810	)		(446	)		—		(1,256	)

FINANCING ACTIVITIES:
Net proceeds (repayments) from revolving credit line		1,681			(220	)		—		1,461
Proceeds from long-term debt		2,000			—			—		2,000
Financing costs		(2,058	)		—			—		(2,058	)

Net cash from financing activities		1,623			(220	)		—		1,403

Net changes in cash and cash equivalents		518			438			—		956
Cash and cash equivalents:
Beginning of period		72			162			—		234

End of period	$	590		$	600		$	—	$	1,190

	Condensed Consolidating Statement of Operations Three Months Ended September 28, 2003
	Holley Performance Products Inc. (Parent Company Only)			Subsidiary Guarantors		Eliminations			Consolidated
Net sales	$	15,459		$	13,857	$	—		$	29,316
Cost of goods sold		10,059			10,366		—			20,425

Gross profit		5,400			3,491		—			8,891

Selling, general and administrative costs		2,774			2,406		—			5,180
Management fees		223			—		—			223
Amortization of intangibles		504			336		—			840
Other expense		51			—		—			51
Equity in income of subsidiaries		(749	)		—		749			—

Total operating expenses		2,803			2,742		749			6,294

Operating income (loss)		2,597			749		(749	)		2,597

Interest expense		5,318			—		—			5,318

Loss before income taxes		(2,721	)		749		(749	)		(2,721	)

Income tax expense		177			—		—			177

Net loss	$	(2,898	)	$	749	$	(749	)	$	(2,898	)

	Condensed Consolidating Statement of Operations Nine Months Ended September 28, 2003
	Holley Performance Products Inc. (Parent Company Only)			Subsidiary Guarantors		Eliminations			Consolidated
Net sales	$	49,365		$	50,552	$	—		$	99,917
Cost of goods sold		32,408			36,320		—			68,728

Gross profit		16,957			14,232		—			31,189

Selling, general and administrative costs		9,156			9,115		—			18,271
Management fees		657			—		—			657
Amortization of intangibles		1,070			714		—			1,784
Other expense		249			—		—			249
Equity in income of subsidiaries		(4,393	)		—		4,393			—

Total operating expenses		6,739			9,829		4,393			20,961

Operating income		10,218			4,403		(4,393	)		10,228

Interest expense		17,316			—		—			17,316

Income (loss) before income taxes		(7,098	)		4,403		(4,393	)		(7,088	)

Income tax expense		220			10		—			230

Net income (loss)	$	(7,318	)	$	4,393	$	(4,393	)	$	(7,318	)

	Consolidating Statement of Cash Flows Nine Months Ended September 28, 2003
	Holley Performance Products Inc. (Parent Company Only)			Subsidiary Guarantors			Eliminations		Consolidated
OPERATING ACTIVITIES:
Net cash from operating activities	$	1,624		$	(181	)	$	—	$	1,443

INVESTING ACTIVITIES:
Capital expenditures		(1,322	)		—			—		(1,322	)
Proceeds from the disposal of business		1,135			—			—		1,135
Proceeds from the disposal of fixed assets		164			—			—		164

Net cash from investing activities		(23	)		—			—		(23	)

FINANCING ACTIVITIES:
Net proceeds from revolving credit line		(484	)		—			—		(484	)
Principal payments on long-term debt		(1,538	)		—			—		(1,538	)

Net cash from financing activities		(2,022	)		—			—		(2,022	)

Net change in cash and cash equivalents		(421	)		(181	)		—		(602	)
Cash and cash equivalents:
Beginning of period		421			181			—		602

End of period	$	—		$	—		$	—	$	—

7. Contingent Liabilities

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

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

The Company generally warrants its products against certain manufacturing and other defects. These product warranties are provided for specific periods of time depending on the nature of the product. The accrued product warranty costs are based primarily on historical experience of actual warranty claims. The following table provides the changes in the Company’s product warranties:

	Three Months Ended September 29, 2002			Three Months Ended September 28, 2003			Nine Months Ended September 29, 2002			Nine Months Ended September 28, 2003
Beginning balance	$	2,191		$	3,417		$	3,797		$	3,074
Accrued for current year claims		3,303			1,174			6,831			4,384
Settlement of warranty claims		(1,352	)		(2,227	)		(6,486	)		(5,094	)

Ending balance	$	4,142		$	2,364		$	4,142		$	2,364

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

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

OVERVIEW

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

SEASONALITY

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

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

	Three months ended										Nine months ended
	September 29, 2002					September 28, 2003					September 29, 2002					September 28, 2003
Net sales	$	33.1		100.0	%	$	29.3		100.0	%	$	109.4		100.0	%	$	99.9		100.0	%
Gross profit		2.4		7.3			8.9		30.4			15.7		14.4			31.2		31.2
SG&A		6.5		19.6			5.2		17.7			21.0		19.2			18.3		18.3
Operating income (loss)		(5.6	)	(16.9	)		2.6		8.9			(8.5	)	(7.8	)		10.2		10.2
Net loss		(10.6	)	(32.0	)		(2.9	)	(9.9	)		(25.3	)	(23.1	)		(7.3	)	(7.3	)

Net Sales

Net sales equal gross revenues less provisions for volume rebates, credits, product returns, and other sales allowances. Net sales for the quarter ended September 28, 2003 totaled $29.3 million compared to $33.1 million for the same period in 2002, a decrease of $3.8 million or 11.5%. Net sales for the nine months ended September 28, 2003 were $99.9 million compared to $109.4 million for the nine months ended September 29, 2002, a decrease of $9.5 million or 8.7%.

Net sales in the performance segment for the third quarter of 2003 were $26.7 million compared to $29.5 million in the third quarter of 2002, a decrease of $2.8 million or 9.5%. Net sales in the performance segment for the nine months ended September 28, 2003 were $90.0 million compared to $97.7 million for the nine months ended September 29, 2002, a decrease of $7.7 million or 7.9%. The decline in sales for the quarter and nine month periods is generally attributable to weak consumer confidence resulting in soft end-user demand, unfavorable weather conditions, uncertainty over the war in Iraq and prevailing economic conditions. In addition, the Company has employed a strategy of eliminating poorly performing product lines which, while reducing net sales, has resulted in improvement at the gross profit level.

Net sales in the remanufacturing segment were $2.6 million in the third quarter of 2003 compared to $3.6 million in the third quarter of 2002, a decrease of $1.0 million or 27.8%. Net sales in the

remanufacturing segment for the nine months ended September 28, 2003 were $9.9 million compared to $11.7 million for the nine months ended September 29, 2002, a decrease of $1.8 million or 15.4%. The remanufacturing segment is mature and in decline because new cars have not been produced with carburetors since approximately 1992 and the Company believes that the retirement of carbureted vehicles has been accelerated by strong sales of new cars. In addition, the Company believes that its distributors made downward adjustments to inventories to realign their stocking levels with the Company’s improved shipping performance thereby contributing to the decreased sales experienced in the remanufacturing segment.

Gross Profit

Gross profit for the third quarter of 2003 totaled $8.9 million or 30.4% of net sales compared to gross profits of $2.4 million or 7.3% of net sales for the same quarter in 2002. This represents an increase of $6.5 million or 270.8%. Gross profit for the nine months ended September 28, 2003 was $31.2 million compared to $15.7 million for the nine months ended September 29, 2002, an increase of $15.5 million or 98.7%. The Company realized improved results from the implementation of strategies to improve manufacturing performance and control manufacturing costs. These strategies resulted in improvements in quality, material costs, and overhead spending which resulted in cost savings of $0.6 million, $4.2 million and $0.5 million, respectively for the quarter ended September 28, 2003. Additional improvements in gross profit were realized through reductions in marketing program costs of $2.1 million. The aforementioned improvements in gross profit were partially offset by a reduction in gross profit of $0.9 million as a result of the decrease in volume. For the nine months ended September 28, 2003, the improvements in quality, material costs, and overhead spending resulted in cost savings of $3.6 million, $6.5 million and $3.9 million, respectively. The reductions in marketing program costs for the nine month period ended September 28, 2003 resulted in $4.5 million in additional improvements in gross profit. These improvements were partially offset by a reduction in gross profit of $3.1 million as a result of the decrease in volume.

In the performance segment, gross profit was $8.7 million for the third quarter of 2003 compared to $2.6 million for the third quarter of 2002, an increase of $6.1 million or 234.6%. Gross profit in the performance segment for the nine months ended September 28, 2003 was $30.0 million compared to $15.1 million for the nine months ended September 29, 2002, an increase of $14.9 million or 98.7%. The improvement in gross profit for the three and nine months ended September 28, 2003 was driven primarily by the aforementioned manufacturing improvements.

In the remanufacturing segment, gross profit was $0.2 million in the third quarter of 2003 compared to a gross loss of $0.2 million for the same period in 2002. Gross profit in the remanufacturing segment for the nine months ended September 28, 2003 was $1.2 million compared to $0.6 million for the nine months ended September 29, 2002, an increase of $0.6 million or 100.0%. The increase in gross profit for the quarter and nine months ended September 28, 2003 resulted primarily from a decrease in warranty costs.

Selling, General and Administrative Costs

Selling, general and administrative costs for the three months ended September 28, 2003 totaled $5.2 million or 17.7% of net sales compared to $6.5 million or 19.6% of net sales in the same period in 2002, a decrease of $1.3 million or 20.0%. Selling, general and administrative costs decreased to $18.3 million for the nine months ended September 28, 2003 from $21.0 million for the nine months ended September 29, 2002, a decrease of $2.7 million or 12.9%. The Company has focused its spending strategy on receiving maximum value for each dollar spent, which resulted in lower spending for promotions, advertising and commissions during the third quarter and first nine months of 2003.

Other Expense

Other expense was $0.2 million for the nine months ended September 28, 2003 compared to $1.1 million in the same period in 2002. The 2003 amount includes $0.3 million related to a loss on the sale of So-Cal Speed Shops, Inc. (“So-Cal”) effective February 24, 2003. Cash proceeds of $1.1 million were received in connection with this sale.

Operating Income

Operating income for the three months ended September 28, 2003 was $2.6 million or 8.9% of net sales compared to an operating loss of $5.6 million or 16.9% of net sales for the same period in 2002, an increase of $8.2 million or 146.4%. Operating income for the nine months ended September 28, 2003 was $10.2 million or 10.2% of net sales compared to an operating loss of $8.5 million or 7.8% of net sales for the nine months ended September 29, 2002, an increase of $18.7 million or 220.0%. The increase in operating income for the quarter and nine months ended September 28, 2003 resulted from the aforementioned improvements in manufacturing performance and spending.

Interest Expense

Interest expense was $5.3 million for the three months ended September 28, 2003 compared to $5.7 million for the same period in 2002, a decrease of $0.4 million or 7.0%. Interest expense was $17.3 million for the nine months ended September 28, 2003 compared to $16.6 million for the nine months ended September 29, 2002, an increase of $0.7 million or 4.2%. The increase for the nine months ended September 28, 2003 was a result of interest associated with the promissory notes issued in the fourth quarter of 2002, as well as higher interest rates under the revolving credit agreement.

Tax Expense

The tax expense of $0.2 million for the three and nine month periods ended September 28, 2003 were related to tax expense associated with the Company’s foreign subsidiary. The tax benefit of $0.6 million and $1.9 for the three and nine month periods ended September 29, 2002 resulted from a tax sharing agreement that the Company entered into in 2002 with its prior owner, Coltec Industries, Inc. (“Coltec”). Pursuant to this agreement, the Company was able to carry back net operating losses to years it was a member of Coltec’s consolidated tax group. No further opportunities for carry back are available.

LIQUIDITY AND CAPITAL RESOURCES

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

The credit agreement provides for a total credit limit of $45.0 million, which includes a $25.0 million revolving credit facility, subject to a borrowing base formula, of which $1.1 million is reserved for irrevocable standby letters of credit. As of September 28, 2003 borrowings under the credit agreement were $26.5 million and unused borrowing capacity under the revolving credit facility was $5.7 million.

The credit agreement contains financial covenants which require the maintenance of a fixed charge coverage ratio. The Company’s ability to operate within these financial covenants is dependent on its ability to improve earnings. The Company was in compliance with the terms of its indebtedness as of September 28, 2003.

The Company is highly leveraged. As of September 28, 2003, the Company’s indebtedness was $181.6 million and its stockholder’s deficit was $106.7 million. Further, the Company has incurred recurring net losses. Management is implementing actions designed to reduce working capital and improve operating results. If the improvements associated with these actions do not materialize in a timely manner, the

Company may be required to take additional measures to ensure the availability of sufficient cash to sustain operations. Such measures may include, among other things, reducing or delaying capital expenditures, selling assets, restructuring or refinancing indebtedness, or seeking additional equity capital. There is no assurance that any of these measures can be affected on satisfactory terms, if at all.

Operating Activities

Net cash provided by operating activities increased to $1.4 million for the nine months ended September 28, 2003 from $0.8 million for the nine months ended September 29, 2002. Operating activities for 2003 were primarily affected by the net loss of $7.3 million and the increase in accrued liabilities of $4.9 million, offset by depreciation and amortization of $5.9 million, a decrease in inventories of $2.6 million, the receipt of a tax refund of $3.0 million and the increase in accounts payable of $2.3 million. Operating activities for 2002 were primarily affected by the net loss of $25.3 million, offset by depreciation and amortization of $7.7 million, the cumulative effect of accounting change of $2.1, a decrease in trade accounts receivable of $2.6 million, a decrease in inventories of $8.4 million, and an increase in accrued liabilities of $5.6 million.

Investing Activities

Net cash used by investing activities was $23,000 for the nine months ended September 28, 2003 compared to net cash used in investing activities of $1.3 million for the nine months ended September 29, 2002. For 2003, proceeds from the sale of So-Cal of $1.1 million and proceeds from the disposal of fixed assets of $0.2 million were partially offset by capital expenditures of $1.3 million. For the nine months ended September 29, 2002, capital expenditures were $1.3 million.

Financing Activities

Net cash used in financing activities for the nine months ended September 28, 2003 was $2.0 million compared to net cash provided by financing activities of 2002 of $1.4 million. In 2003, cash was used to pay down the revolving credit facility and make principal payments on long-term debt. In 2002, cash provided was principally a result of net borrowings under the Company’s revolving credit facility of $1.5 million, $2.0 million in proceeds from the issuance of a promissory note from Kohlberg, partially offset by financing costs of $2.1 million associated with the Foothill Capital Corporation credit agreement entered into in July 2002.

EBITDA

EBITDA was $15.7 million for the nine months ended September 28, 2003 compared to $(0.9) million for the nine months ended September 29, 2002, an increase of $16.6 million. This increase in EBITDA is the result of the increase in gross profit and reduced selling, general and administrative costs in 2003.

	Nine Months Ended
	September 29, 2002			September 28, 2003
Net loss	$	(25,270	)	$	(7,318	)
Cumulative effect of accounting change for intangible asset impairment		2,114			—
Income tax expense (benefit)		(1,866	)		230
Interest expense		16,551			17,316
Other expense		1,067			249
Amortization of intangibles		1,417			1,784
Depreciation		5,091			3,415

EBITDA	$	(896	)	$	15,676

EBITDA is a required component of the financial covenant contained in the Company’s credit agreement. EBITDA, as defined by the Company’s credit agreement, is presented and discussed because the Company believes that investors regard EBITDA as a key measure of a leveraged company’s performance. EBITDA

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

Contractual Obligations and Commitments

The table below sets forth a summary of the Company’s contractual obligations and commitments as of September 28, 2003 that will have an impact on the Company’s future liquidity:

	Years Ending December 31,
Contractual Obligations	2003		2004		2005		2006		2007		Thereafter		Total
Loan and security agreement	$	501	$	2,000	$	2,000	$	2,000	$	20,037	$	—	$	26,538
Senior notes		—		—		—		—		146,600		—		146,600
Convertible promissory note		—		7,500		—		—		—		—		7,500
Other long term debt		12		49		52		55		58		695		921
Operating leases		211		600		89		46		10		135		1,091

Total contractual obligations	$	724	$	10,149	$	2,141	$	2,101	$	166,705	$	830	$	182,650

In 2007 the Company’s credit agreement and unsecured senior notes become due. Should the Company be unable to refinance the unsecured Senior Notes upon their maturity in 2007 or obtain additional equity funding sufficient to repay such indebtedness, the Company may have to affect a restructuring of such indebtedness. There can be no assurance that a restructuring could be affected in a timely manner and without causing substantial disruption to the Company’s operations. The potential disruptions associated with the inability to restructure such indebtedness would likely have a material adverse effect on the Company’s liquidity, financial position and results of operations.

Impact of Inflation

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

Recent Accounting Pronouncements

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

requires that a liability be recognized for those costs only when the liability is incurred, that is, when it meets the definition of a liability in the FASB’s conceptual framework. In contrast, under Issue No. 94-3, a company recognized a liability for an exit cost when it committed to an exit plan. SFAS No. 146 is effective for exit or disposal activities that are initiated after December 31, 2002. The adoption of SFAS No. 146 did not have any impact on the consolidated financial position, results of operations or cash flows of the Company.

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

In January 2003, the FASB issued Interpretation No. 46 Consolidation of Variable Interest Entities, an interpretation of ARB No. 51. This Interpretation addresses the consolidation by business enterprises of variable interest entities as defined in the Interpretation. The Interpretation is effective for financial statements issued for the first reporting period ending after December 31, 2003. The application of this Interpretation did not have any impact on the Company’s consolidated financial position, results of operations or cash flows of the Company.

principle for financial instruments created before the issuance date of the Statement and still existing at the beginning of the interim period of adoption. Restatement is not permitted. The adoption of SFAS No. 150 did not have a material impact on the consolidated financial position, results of operations or cash flows of the Company.

Forward-Looking Statements

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

Item 4. Controls and Procedures

As required by Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company carried out an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. This evaluation was carried out under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer along with the Company’s Chief Financial Officer. Based upon that evaluation, the Company’s Chief Executive Officer along with the Company’s Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to Holley (including its consolidated subsidiaries) required to be included in Holley’s periodic SEC filings.

There has been no adverse change in Holley’s internal control over financial reporting during the quarter ended September 28, 2003 that has materially affected, or is reasonably likely to materially affect, Holley’s internal control over financial reporting. However, in connection with the Company’s ongoing evaluation of internal control over financial reporting, certain internal control matters were noted that require corrective actions. These internal control matters relate to deficiencies in staffing, systems, and processes. The Company began implementation of a plan to strengthen internal control over financial reporting during 2002 and has made considerable progress on improving internal controls through September 28, 2003. The Company expects its plan to address the identified internal control matters to be substantially complete by December 31, 2003.

PART II

ITEM 6. Exhibits and Reports on Form 8-K

(a) Exhibits

Exhibit No.		Item
31(a)		Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31(b)		Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32(a)		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32(b)		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K

None

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Holley Performance Products Inc.

(Registrant)

Signature	Title	Date

/S/ JAMES D. WIGGINS James D. Wiggins	President and Chief Executive Officer	November 12, 2003

/S/ THOMAS W. TOMLINSON Thomas W. Tomlinson	Chief Financial Officer	November 12, 2003

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HOLLEY PERFORMANCE PRODUCTS INC 10-Q