EDELBROCK CORP, 10-K405, 1996-09-26

EDELBROCK CORP
10-K405, 1996-09-26
MOTOR VEHICLE PARTS & ACCESSORIES

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<PAGE> 1

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, 1996
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. [X]

The aggregate market value of voting stock held by non-affiliates of the
Registrant, as of September 25, 1996, was approximately $31,018,000 (based upon
the closing price for shares of the Registrant's Common Stock as reported by
the NASDAQ Stock Market for the last trading date prior to that date).

On September 26, 1996, approximately 5,241,604 shares of the Registrant's
Common Stock, $.01 par value, were outstanding.

1
<PAGE> 2
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PART I Page
----
<S> <C> <C>
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Item 4. Submission of Matters To a Vote of Security Holders . . . . . . . . . . . . . . 6

Additional Item: Executive Officers of the Company . . . . . . . . . . . . . . . . . . . . . . . 7

PART II

Item 5. Market for the Company's Common Stock and Related Shareholder Matters . . . . . 9

Item 6. Selected Consolidated Financial Data . . . . . . . . . . . . . . . . . . . . . 10

Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . 19

Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . . . 19

PART III

Item 10. Directors of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Item 12. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . 25

PART IV

Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>

2
<PAGE> 3
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, manufacturers, distributes and markets
a wide range of high quality performance products, including intake manifolds,
carburetors, camshafts, cylinder heads, exhaust systems and other components
designed for most domestic V8 and selected V6 engines. These products are
designed to enhance street, off-road, recreational and competition vehicle
performance through increased horsepower, torque and 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 October 1994, the Company introduced performance aluminum cylinder heads and
intake manifolds for the Harley-Davidson Evolution engine and these products
are now available to over 5,000 Harley-Davidson performance shops nationwide.
In March 1995, the Company acquired substantially all of the assets of
QwikSilver II, Inc. of Apple Valley, California a manufacturer of aftermarket
Harley-Davidson and other motorcycle carburetors and air cleaners.

In early 1997, the Company plans to enter the performance shock
absorber market for the automotive, truck (under one ton), ATV, motorhome,
racing and Harley-Davidson motorcycle aftermarkets utilizing RICOR Racing and
Development, L.P.'s ("RICOR") patented "inertia sensitive system." In
connection therewith, the Company has entered into a royalty agreement with
RICOR and issued warrants to purchase common stock of the Company. See Notes 6
and 10 of Notes to Consolidated Financial Statements.

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

- Broaden Application of Core Products.

- Expand Market Share in Compatible Product Lines.

- Expand Presence in Chain Stores.

- Introduce New Products.

- Expand Production Capacity.

- Reduce Manufacturing Costs through Vertical Integration and Automation.

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 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 it product line to include camshaft kits, valve train parts,
exhaust systems and other performance components. 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
has 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 April 1995, the Company
completed the construction of a 37,000 square foot building in Torrance,
California to house its exhaust products division. In early 1997, the Company
intends to introduce a new line of performance aftermarket shock absorbers. In
May 1996, the Company began construction of a 45,000 square foot facility
adjacent to its existing exhaust facility. The new facility will be utilized
for the manufacture of shock absorbers, expand exhaust system manufacturing
operations and accommodate additional corporate expansion including warehouse
overflow.

3
<PAGE> 4
PRODUCTS

The Company offers approximately 1,600 performance automotive and
motorcycle aftermarket parts for street, offroad, 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.

The Company's present lines include, among other items, intake
manifolds, which accounted for 37%, 33% and 32% of the Company's revenues for
fiscal years 1994, 1995 and 1996, respectively and carburetors, which accounted
for 37%, 39% and 39% of the Company's revenue for fiscal years 1994, 1995 and
1996, respectively. See "Item 6. Selected Consolidated Financial Data" for the
Company's revenue, operating income and total assets for each of the last three
years.

DISTRIBUTION, SALES AND MARKETING

The Company has established a balanced nationwide distribution
network, which encompasses all the major channels of distribution. It is the
Company's policy 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 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. The
Company's aluminum foundry casts components for a variety of third-party
manufacturers.

Two customers, Auto Sales, Inc. and Super Shops, Inc. accounted for
16.0% and 12.7%, respectively of the Company's revenues for fiscal year 1996.
See Note 8 of Notes to Consolidated Financial Statements of the Company.

MANUFACTURING

The Company conducts manufacturing operations in its Torrance,
California facilities and its aluminum foundry in San Jacinto, California. The
Company manufactures products such as manifolds, cylinder heads, water pumps
and exhaust systems. Approximately 54% of the Company's revenues for fiscal
year 1996 were attributable to products which were manufactured by third-part
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 1996, representing approximately 39% of the Company's revenue for
that fiscal year. The agreement extends through 1999 and is renewable at the
option of the parties.

4
<PAGE> 5
COMPETITION

There is significant competition in the performance automotive and
motorcycle parts industries. The Company competes with other companies and
individuals in the manufacture and sale of performance automotive and
motorcycle parts. The Company competes, with, among others, Weiand Automotive
and Holley Replacement Parts ("Holley") in the manifold market, Holley and
Federal-Mogal Corporation in the automotive carburetor market, Crane Cams and
Competition Cams in the camshaft market, World Products and TFS in the cylinder
head market and Mr. Gasket, TransDapt and Moroso in the specialty automotive
accessories market. The Company competes primarily with S & S Cycle,
Incorporated and Mikuni of America in the motorcycle aftermarket. The Company
competes primarily on the basis of product quality and 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 42 trademarks and patents used in connection
with the marketing of the Company's products, including Edelbrock(R),
Torker(R), Torker II(R), Tunnel Ram(R), Signature Series(R), Performer
Series(R), QwikSilver II(R) and Edelbrock Total Power Package(R). 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 possesses a number of United States and
international patents, including three United States patents relating to the
Company's manifolds, all of which also contribute to the success of the
Company's operations. The Company's patents expire between 1997 and 2013.

EMPLOYEES

As of June 30, 1996, the Company employed approximately 485 persons in
the operation of its business. The Company believes that its ability to
attract and retain qualified management personnel and skilled production
technicians and marketing 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 and a new manufacturing facility
located in buildings of approximately 142,000 and 37,000 square feet
respectively in Torrance, California, and two buildings for its Foundry
operations located in approximately 73,000 and 15,000 square feet in San
Jacinto, California. The 73,000 square foot facility and related land are
subject to a deed of trust which secures certain indebtedness incurred in
connection with the construction of the facility. See Note 3 of Notes to
Consolidated Financial Statements. The Company also leases a building of
approximately 7,000 square feet in which its "QwikSilver" motorcycle products
are manufactured, in Apple Valley, California.

In May 1996, the Company began construction of a new 45,000 square
foot facility on Company owned property contiguous to its current exhaust
facility in Torrance, California. The Company currently anticipates that
construction will be completed in late 1996. This facility will be utilized
for the manufacture of performance aftermarket shock absorbers and to expand
exhaust system manufacturing and house additional corporate expansion including
warehouse overflow.

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

5
<PAGE> 6
Item 3. Legal Proceedings

There is no material legal proceeding to which the Company is a party
or to which any of its properties are subject.

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.

6
<PAGE> 7

Executive Officers of the Company.

EXECUTIVE OFFICERS
The following sets forth the name, age and business experience of the
executive officers of the Company as of June 30, 1996:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
O. Victor Edelbrock . . . . . . . . . . . 60 Chairman, President and Chief Executive Officer
Jeffrey L. Thompson . . . . . . . . . . . 43 Executive Vice-President, Chief Operating Officer and Director
Anthony S. Hollis . . . . . . . . . . . . 55 Vice-President of Finance and Director (Retired)
Aristedes T. Feles . . . . . . . . . . . 29 Vice-President of Finance and Director
Adrian Murray . . . . . . . . . . . . . . 41 Vice-President of Sales
Wayne P. Murray . . . . . . . . . . . . . 44 Vice-President of Manufacturing
Jack B. Mayberry . . . . . . . . . . . . 49 Vice-President of Research & Development
Camee Edelbrock . . . . . . . . . . . . . 36 Vice-President of Advertising, Secretary and Director
Nancy Edelbrock . . . . . . . . . . . . . 60 Treasurer
Ronald L. Webb . . . . . . . . . . . . . 62 Executive Vice-President of Edelbrock Foundry Corp.
</TABLE>

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

Jeffrey L. Thompson has been the Executive Vice-President/General Manager
and Chief Operating Officer of the Company since December 1988. He is also a
member of the board of directors of the Specialty Equipment Market Association.
Mr. Thompson has been a director of the Company since 1994.

Anthony S. Hollis retired from his positions with the Company on June 30,
1996. Mr. Hollis joined the Company in 1969 as Controller. Mr. Hollis had
been the Vice President of Finance since 1975 and director of the Company since
1994.

Aristedes T. Feles has been the Vice President of Finance since July 1996
and was previously Controller for the Company since 1992 and has recently
accepted the position of Vice President. Prior to 1992, Mr. Feles was
employed as a senior accountant at BDO Seidman (since 1989). Mr. Feles has
been a director of the Company since July 1996.

Adrian Murray has been Vice-President of Sales for the Company since 1992.
Mr. Murray was previously the National Sales Manager for the Company (since
1988).

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

Jack B. Mayberry has 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.

7
<PAGE> 8
Camee Edelbrock has 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.

Nancy Edelbrock has 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 Camee Edelbrock.

Ronald L. Webb has 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).

8
<PAGE> 9
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 National
Association of Securities Dealers Automated Quotation System ("NASDAQ") Stock
Market under the symbol EDEL. Prior to October 19, 1994, there was no
established public trading market for the Common Stock. The following table
sets forth the range of high and low closing sales prices, as reported on the
NASDAQ Stock Market since October 19, 1994. On September 25, 1996, the Company
had 80 holders of record of its Common Stock and 5,241,604 shares outstanding
and a closing price of $16.75.

<TABLE>
<CAPTION>
Price Range of Common Stock
---------------------------
<S> <C> <C>
Year Ended June 30, 1995 High Low
---- ---
First Quarter N/A N/A
Second Quarter $16.75 $12.25
Third Quarter $15.50 $11.25
Fourth Quarter $14.50 $11.50

Year Ended June 30, 1996 High Low
---- ---
First Quarter $17.00 $12.88
Second Quarter $15.75 $13.75
Third Quarter $16.25 $12.25
Fourth Quarter $19.50 $14.00
</TABLE>

Since its initial public offering, the Company has not declared or
paid a dividend on its common stock. The Company currently plans to retain all
of its earnings to support the development and expansion of its business and
has no present intention of paying any dividends on the Common Stock in the
foreseeable future. However, the Board of Directors of the Company will review
the dividend policy periodically to determine whether the declaration of
dividends is appropriate.

9
<PAGE> 10
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, 1995
and 1996 and the Income Statement Data and the Other Data for each of the three
fiscal years in the period ended June 30, 1996 have been derived from the
audited Consolidated Financial Statements of the Company, which were audited by
BDO Seidman, LLP as indicated in their report included elsewhere in this Form
10-K. The Balance Sheet Data at June 30, 1994 and the Income Statement Data
and the Other Data for each of the two fiscal years in the period ended June
30, 1993 have been derived from audited financial statements not included
herein.

<TABLE>
<CAPTION>
Year Ended June 30,
-------------------------------------------------------------------------------------
INCOME STATEMENT DATA: 1992 1993 1994 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues $37,427,000 $46,136,000 $53,509,000 $68,792,000 $79,032,000
Cost of sales 20,961,000 26,536,000 31,012,000 40,883,000 47,043,000
----------- ----------- ----------- ----------- -----------
Gross profit 16,466,000 19,600,000 22,497,000 27,909,000 31,989,000
----------- ----------- ----------- ----------- -----------
Operating expenses
Selling, general and 11,582,000 13,378,000 15,203,000 17,172,000 20,392,000
administrative 1,361,000 1,494,000 1,862,000 1,963,000 2,227,000
----------- ----------- ----------- ----------- -----------
Research and development

Total operating expenses 12,943,000 14,872,000 17,065,000 19,135,000 22,619,000
----------- ----------- ----------- ----------- -----------
Operating income 3,523,000 4,728,000 5,432,000 8,774,000 9,370,000

Interest expense 964,000 726,000 672,000 552,000 292,000
Interest income - - - 344,000 471,000
Other income - - - - 274,000
----------- ----------- ----------- ----------- -----------
Income from continuing operations
before taxes on income and
cumulative effect of change in
accounting principle 2,559,000 4,002,000 4,760,000 8,566,000 9,823,000

Taxes on income from continuing
operations 775,000 1,493,000 1,740,000 3,336,000 3,346,000
----------- ----------- ----------- ----------- -----------
Income from continuing operations
before cumulative effect of
change in accounting principle 1,784,000 2,509,000 3,020,000 5,230,000 6,477,000

Income (loss) from discontinued
operations, net of tax (1) (318,000) (478,000) (62,000) 1,086,000 -
----------- ----------- ----------- ----------- -----------
Income before cumulative effect of
change in accounting principle 1,466,000 2,031,000 2,958,000 6,316,000 6,477,000

Cumulative effect on prior years
of change in accounting for
taxes on income (2) - - 201,000 - -
----------- ----------- ----------- ----------- -----------
Net income $ 1,466,000 $ 2,031,000 $ 3,159,000 $ 6,316,000 $ 6,477,000
=========== =========== =========== =========== ===========
</TABLE>

10
<PAGE> 11
<TABLE>
<CAPTION>
Year Ended June 30,
--------------------------------------------------------------------------------
PER SHARE DATA: 1992 1993 1994 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Income per share before change
in accounting principle and
discontinued operations $0.48 $0.67 $0.81 $1.10 $1.24
Income (loss) per share from
discontinued operations,
net of tax (0.09) (0.13) (0.02) 0.22 -
Net income per share 0.39 0.54 0.84 1.32 1.24
Weighted average shares outstanding 3,750,000 3,750,000 3,750,000 4,772,000 5,241,000

OTHER DATA:
Capital expenditures $1,379,000 $2,026,000 $2,396,000 $12,221,000 $4,342,000
Dividends - - - - -

June 30,
--------------------------------------------------------------------------------
BALANCE SHEET DATA: 1992 1993 1994 1995 1996
(In thousands) ---- ---- ---- ---- ----
Working capital $ 5,668 $ 7,514 $ 7,772 $ 20,033 $ 23,953
Total assets 42,627 47,377 50,272 62,771 66,430
Total long-term debt 20,010 19,355 17,278 4,657 3,148
Shareholders' equity 13,571 15,602 18,761 41,923 48,420
</TABLE>

(1) On May 1, 1995, the Company disposed of substantially all of its real
estate operations. See Management's Discussion and Analysis of Financial
Condition and Results of Operations and Note 7 of Notes to Consolidated
Financial Statements for further information regarding the Company's real
estate activities.

(2) On July 1, 1993, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 109, "Accounting for Income Taxes." See Notes 1 and
4 of Notes to Consolidated Financial Statements.

11
<PAGE> 12
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, 1994, 1995, and 1996. 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, camshafts, cylinder heads, exhaust systems and other
performance components for most domestic V8 and selected V6 engines. In
addition, the Company offers performance aftermarket manifolds, cylinder heads,
camshafts, air cleaners, and carburetors for Harley-Davidson motorcycles. The
Company currently offers approximately 1,600 performance automotive and
motorcycle aftermarket parts for street, off-road, recreational and competition
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. For example, in recent years, the Company has experienced significant
growth in the sale of carburetors which it has purchased pursuant to a
long-term contract with a third-party manufacturer.

Product Concentration

Historically, the Company has derived a substantial portion of its
revenues from the sale of intake manifolds and carburetors. For the fiscal
year ended June 30, 1996, approximately 32.4% and 39.3% of revenues were
derived from the sales of intake manifolds and carburetors, respectively.
Although the revenues attributable to the sales of intake manifolds as a
percentage of total revenues declined in fiscal year 1996 as compared to fiscal
year 1995, the aggregate dollar volume of sales intake manifolds increased
12.7% to $25.6 million from $22.7 million.

Manufacturing Capacity

During the most recent peak manufacturing period, the Company used
substantially all of its manufacturing capability for producing its specialty
performance automotive and motorcycle aftermarket parts. In fiscal year 1995,
the Company expanded its manufacturing capacity by constructing an additional
37,000 square-foot manufacturing facility in Torrance, California to house its
exhaust division, and a 15,000 square-foot expansion of its foundry operation
on Company-owned property adjacent to its current San Jacinto, California
foundry site.

In May 1996, the Company began construction of a new 45,000 square
foot facility on Company owned property contiguous to its current Exhaust
facility in Torrance, California. The Company currently anticipates that
construction will be completed in late 1996. This facility will be utilized
for the manufacture of performance aftermarket shock absorbers, expand exhaust
system manufacturing and house additional corporate expansion including
warehouse overflow.

12
<PAGE> 13
Seasonality

The Company's sales are subject to seasonal variations. Customer
orders and sales are greatest in the 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 the
third and fourth fiscal quarters. This seasonality typically results in
reduced earnings for the Company's first and second fiscal quarters because a
significant portion of operating expenses are fixed throughout the fiscal year.

Real Estate

On May 1, 1995, the Company completed the sale of substantially all of
its Arizona real estate portfolio to Arizona Presidio Industrial Partners for
$17.1 million. The $17.1 million sales price included $1.9 million for real
estate held by two partnerships, of which the Company is a general partner, and
$0.5 million was for real estate held by the Company Employee Stock Ownership
Plan ("ESOP"). The Company netted, after payment of debt and sales expenses,
cash of $3.2 million and 2.31 acres of prime industrial property contiguous to
its new exhaust facility in Torrance, California. The partnerships and ESOP
netted cash of approximately $536,000 and $435,000, respectively. Through the
sale, the Company was able to eliminate approximately $10.0 million in debt and
the varying degrees of risk associated with real property investments. In
addition, through this sale, the Company has focused its efforts on automotive
and motorcycle operations. The results of the real estate division have been
reported separately as discontinued operations.

13
<PAGE> 14
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.

<TABLE>
<CAPTION>
Percentage of Year Ended Percentage of Year Ended
Revenues for Year June 30, 1995 Revenues for Year June 30, 1996
Ended June 30, as Compared Ended June 30, as Compared
------------------ to Year Ended ----------------- to Year Ended
1994 1995 June 30, 1994 1995 1996 June 30, 1995
---- ---- ------------- ---- ---- -------------
<S> <C> <C> <C> <C> <C> <C>
Revenues 100.0% 100.0% 28.6% 100.0% 100.0% 14.9%
Cost of sales 57.9 59.4 31.8 59.4 59.5 15.1
----- ----- ----- -----
Gross profit 42.1 40.6 24.1 40.6 40.5 14.6
----- ----- ----- -----
Operating expenses
Selling, general and administrative 28.4 25.0 13.0 25.0 25.8 18.8
Research and development 3.5 2.8 5.4 2.8 2.8 13.4
----- ----- ----- -----
Total operating expenses 31.9 27.8 12.2 27.8 28.6 18.2
----- ----- ----- -----
Operating income 10.2 12.8 61.5 12.8 11.9 6.8

Interest expense 1.3 0.8 (17.9) 0.8 0.4 (47.1)
Interest income - 0.5 NM 0.5 0.6 36.9
Other income - - NM - 0.3 NM
----- ----- ----- -----

Income from continuing operations before
taxes on income and cumulative effect of
change in accounting principle 8.9 12.5 80.0 12.5 12.4 14.7

Taxes on income from continuing operations 3.3 4.9 91.7 4.9 4.2 .3
----- ----- ----- -----
Income from continuing operations before
cumulative effect of change in accounting
principle 5.6 7.6 73.2 7.6 8.2 23.8

Income (loss) from discontinued operations,
net of tax (0.1) 1.6 NM 1.6 N/A N/A
----- ----- ----- -----
Income before cumulative effect of change in
accounting principle 5.5 9.2 113.5 9.2 8.2 2.5

Cumulative effect on prior years of change in
accounting for taxes on income 0.4 - NM - - -
----- ----- ----- -----
Net income 5.9% 9.2% 99.9% 9.2% 8.2% 2.5%
===== ===== ===== =====
</TABLE>

14
<PAGE> 15
FISCAL YEAR 1996 COMPARED TO FISCAL YEAR 1995

Revenues

Revenues increased 14.9% to $79.0 million in fiscal year 1996 from
$68.8 million in fiscal year 1995. The increase was primarily the result of an
increase of approximately $4.1 million, or 15.3%, in the sale of carburetors,
an increase of $0.9 million, or 24.8%, in the sale of aluminum cylinder heads,
and an increase of $0.9 million, or 46.4%, in the sale of exhaust systems.

Cost of Sales

Cost of sales increased 15.1% to $47.0 million in fiscal year 1996
from $40.9 million in fiscal year 1995. As a percent of revenues, cost of
sales increased to 59.5% in fiscal year 1996 from 59.4% in fiscal year 1995.
The increase in cost of sales was primarily due to an increase in sales which
included a change in product mix toward third-party manufactured products,
partially offset by improved production efficiencies associated with the
introduction of high-tech machining centers used in the production of
manifolds, cylinder heads and water pumps.

Selling, General and Administrative Expense

Selling, general and administrative expenses increased 18.6% to $20.4
million in fiscal year 1996 from $17.2 million in fiscal year 1995. This
increase was primarily due to increased advertising expense, sales commissions
and salaries associated with increased sales. As a percent of sales, selling,
general and administrative expenses increased to 25.8% in fiscal year 1996 from
25.0% in fiscal year 1995. This increase was the result of expenditures
relating to being a public company and increased advertising expenses including
catalogs and television advertising.

Research and Development Expense

Research and development expense increased 13.4% to $2.2 million in
fiscal year 1996 from $2.0 million in fiscal year 1995. As a percent of
revenue, research and development expense decreased to 2.8% in fiscal year 1996
from 2.9% in fiscal year 1995. The Company plans on continuing to expand its
research and development program, but through improved efficiency, expenditures
may decrease as a percent of revenue in the future.

Operating Income

Operating income increased 6.8% to $9.4 million in fiscal year 1996
from $8.8 million in fiscal year 1995. This increase was a result of the items
mentioned above.

Interest Expense

Interest expense decreased 47.1% to $292,000 in fiscal year 1996 from
$552,000 in fiscal year 1995. This decrease was primarily due to retirement of
debt and a decrease in the principal amount of average debt outstanding.

Interest Income

Interest income increased 36.9% to $471,000 in fiscal year 1996 from
$344,000 in fiscal year 1995. This increase was the result of interest earned
on invested proceeds from the Company's initial public offering, which occurred
during the second quarter of fiscal 1995.

Other Income

During the fiscal year, the Company sold a piece of equipment that
resulted in a $162,000 pre-tax gain.

Additionally, the Company settled its lawsuit against a supplier of
defective foundry furnace equipment relating to the original construction of
the refractory furnaces at the Company's aluminum foundry in 1990. Under the
terms of the settlement, the Company received net proceeds of $112,000.

15
<PAGE> 16
Taxes on Income

The provision of income taxes increased $10,000 to $3,346,000 in
fiscal year 1996 from $3,336,000 in fiscal year 1995. The effective tax rate
decreased to 34.1% in fiscal year 1996 from 38.9% in fiscal year 1995 as a
result of state income tax credits relating to research and development and
manufacturing.

Net Income

The Company's net income increased 23.8% to $6.5 million in fiscal
1996 from $5.2 million (excluding net income of $1.1 million from discontinued
real estate operations) in fiscal year 1995. This increase was primarily due
to the items mentioned above.

FISCAL YEAR 1995 COMPARED TO FISCAL YEAR 1994

Revenues

Revenues increased 28.6% to $68.8 million in fiscal year 1995 from
$53.5 million in fiscal year 1994. The increase was primarily the result of an
increase of approximately $6.1 million, or 22.5%, in the sale of carburetors,
$2.1 million from the introduction of performance aftermarket parts for
Harley-Davidson motorcycles, and an increase of $1.5 million, or 42.1%, in the
sale of aluminum cylinder heads.

Cost of Sales

Cost of sales increased 31.8% to $40.9 million in fiscal year 1995
from $31.0 million in fiscal year 1994. As a percent of revenues, cost of
sales increased to 59.4% in fiscal year 1995 from 58.0% in fiscal year 1994.
The increase in cost of sales was primarily due to a change in product mix
toward third-party manufactured products, inefficiencies associated with the
relocation of the Exhaust division into its new facility and acquisition of
QwikSilver, partially offset by improved production efficiencies associated
with the introduction of high-tech machining centers used in the production of
manifolds, cylinder heads and water pumps.

Selling, General and Administrative Expense

Selling, general and administrative expenses increased 13.0% to $17.2
million in fiscal year 1995 from $15.2 million in fiscal year 1994. This
increase was primarily due to increased advertising expense, sales commissions
and salaries associated with increased sales. As a percent of sales, selling,
general and administrative expenses decreased to 25.0% in fiscal year 1995 from
28.4% in fiscal year 1994.

Research and Development Expense

Research and development expense increased 5.4% to $2.0 million in
fiscal year 1995 from $1.9 million in fiscal year 1994. As a percent of
revenue, research and development expense decreased to 2.9% in fiscal year 1995
from 3.5% in fiscal year 1994. The Company plans on continuing to expand its
research and development program, but through improved efficiency, expenditures
may decrease as a percent of revenue in the future.

Operating Income

Operating income increased 61.5% to $8.8 million in fiscal year 1995
from $5.4 million in fiscal year 1994. This increase was a result of the items
mentioned above.

Interest Expense

Interest expense decreased 17.9% to $552,000 in fiscal year 1995 from
$672,000 in fiscal year 1994. The decrease was primarily due to retirement of
debt and a decrease in the principal amount of average debt outstanding.

Interest Income

Interest income totalled $344,000 in fiscal year 1995 as a result of
interest earned on invested proceeds from the Company's initial public offering
which occurred during the second quarter of fiscal 1995.

16
<PAGE> 17
Taxes on Income

The provision of income taxes increased to $3.3 million in fiscal year
1995 from $1.7 million in fiscal year 1994. The effective tax rate increased
to 38.9% in fiscal year 1995 from 36.5% in fiscal year 1994 as a result of
decreases in tax credits and partial offset to income from the Arizona net
operating loss credit that expired during the year.

Net Income

The Company's net income increased 62.4% to $5.2 million in fiscal
1995 from $3.2 million in fiscal year 1994. This increase was primarily due to
the items mentioned above.

Quarterly Results

The following table sets forth unaudited operating data for each of
the specified quarters of fiscal years 1995 and 1996. 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
unaudited quarterly financial data presented below has not been subject to a
review by BDO Seidman, LLP, Edelbrock's independent certified public
accountants.

<TABLE>
<CAPTION>
For the Fiscal Year Ended For the Fiscal Year Ended
June 30, 1995 June 30, 1996
------------------------------------------- --------------------------------------------
First Second Third Fourth First Second Third Fourth
(In thousands) Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
-------- ------- -------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $14,685 $16,138 $15,477 $22,492 $16,843 $18,536 $18,854 $24,799
Cost of sales 8,734 9,931 8,935 13,283 9,916 11,060 11,316 14,751
------- ------- ------- ------- ------- ------- ------- -------
Gross profit 5,951 6,207 6,542 9,209 6,927 7,476 7,538 10,048
------- ------- ------- ------- ------- ------- ------- -------
Operating expenses
Selling, general and
administrative 4,069 4,042 4,041 5020 4,731 4,919 4,923 5,819
Research and development 364 375 402 822 426 408 405 988
------- ------- ------- ------- ------- ------- ------- -------
Total operating
expenses 4,433 4,417 4,443 5,842 5,157 5,327 5,328 6,807
------- ------- ------- ------- ------- ------- ------- -------
Operating income 1,518 1,790 2,099 3,367 1,770 2,149 2,210 3,241

Interest expense 167 168 120 97 114 112 108 (42)
Interest income 19 73 138 114 157 153 51 110
Other income - - - - 192 (20) 102 -
------- ------- ------- ------- ------- ------- ------- -------
Income from continuing
operations before taxes
on income 1,370 1,695 2,117 3,384 2,005 2,170 2,255 3,393

Taxes on income from continuing
operations 527 652 817 1,340 778 787 846 935
------- ------- ------- ------- ------- ------- ------- -------
Income from continuing
operations 843 1,043 1,300 2,044 1,227 1,383 1,409 2,458

Income (loss) from discontinued
operations, net of tax 2 (91) 69 1,106 - - - -
------- ------- ------- ------- ------- ------- ------- -------
Net income $ 845 $ 952 $ 1,369 $ 3,150 $ 1,227 $ 1,383 $ 1,409 $ 2,458
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>

17
<PAGE> 18
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 $1.5
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 and second fiscal quarters in advance of the typically
stronger selling periods during the Company's 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
$1.5 million, all of which was available to the Company as of September 26,
1996. The line of credit borrowings are at the applicable bank's base rate
(8.25% at June 30, 1996). The line of credit agreement expires in February
1997.

Net cash provided by operating activities was $4.9 million, $5.0
million and $4.2 million in fiscal years 1994, 1995, and 1996, respectively.
Because of the seasonality of the Company's business, more funds from operating
activities are generated in its third and fourth fiscal quarters. During
fiscal year 1996, the Company paid down $1.8 million on its long-term debt in
part due to prepayments relating to manufacturing equipment. Under the
Revolving Credit Facility, the Company is subject to certain customary
restrictive financial requirements. The Company has been and is in compliance
with all such financial covenants as of September 26, 1996.

Accounts payable decreased $300,000 for fiscal year 1996 compared to
fiscal year 1995. Income taxes payable decreased by $891,000 primarily as a
result of the prior year reflecting the sale of the Company's real estate
properties. See Note 7 of Notes to Consolidated Financial Statements.

Accounts receivable increased $4.0 million for fiscal year 1996
compared to fiscal year 1995, while sales increased $10.2 million for fiscal
year 1996 compared to fiscal year 1995. The increase in fiscal year 1996 was
primarily due to an increase in sales and to the timing of payments from
customers in connection with the Company's dating programs.

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 1997.

The Company's total capital expenditures were $3.7 million in fiscal
year 1994, $12.2 million in fiscal year 1995 and $4.3 million in fiscal year
1996. The $4.3 million of capital expenditures for fiscal year 1996 included
the purchase of computerized machining centers and the purchase of additional
furnaces for the Company's aluminum foundry. The Company anticipates making
capital expenditures of approximately $6.3 million in fiscal year 1997,
primarily for construction of the 45,000 square foot facility to house the
Company's shock absorber division, expand exhaust system manufacturing and
house additional Corporate expansion including warehouse overflow; installation
of new computer mainframe system and related software; machinery for the shock
absorber facility; and additional capital equipment to increase the Company's
production capacity. The Company anticipates using working capital to fund
these expenditures.

RECENT ACCOUNTING PRONOUNCEMENTS

Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of"
("SFAS No. 121") issued by the Financial Accounting Standards Board ("FASB") is
effective for financial statements for fiscal years beginning after December 15,
1995. The new standard establishes guidelines regarding when impairment losses
on long-lived assets, which include plant and equipment, and certain
identifiable intangible assets, should be recognized and how impairment losses
should be measured. The Company does not expect adoption to have a material
effect on its financial position or results of operations.

18
<PAGE> 19
Statement of Financial Accounting Standards No. 123, " Accounting for
the Stock-Based Compensation" ("SFAS No. 123") issued by the FASB is effective
for specific transactions entered into after December 15, 1995, while the
disclosure requirements of SFAS No. 123 are effective for financial statements
for fiscal years beginning no later than December 15, 1995. The new standard
establishes a fair value method of account for stock-based compensation plans
and for transactions in which an entity acquires goods or services from
non-employees in exchange for equity instruments. The Company does not expect
adoption to have a material effect on its financial position or results of
operations. At the present time, the Company has not determined if it will
change its accounting policy for stock based compensation or only provide the
required financial statement disclosures. As such, the impact on the Company's
financial position and results of operations is currently unknown.

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 in documents filed by the Company with the Securities and Exchange
Commission.

Item 8. Financial Statements and Supplementary Data.

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

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

None.

19
<PAGE> 20
PART III

Item 10. Directors of the Company

The following sets forth the name, age and business experience of the
directors of the Company as of June 30, 1996:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
O. Victor Edelbrock . . . . . . . . . . 60 Chairman, President and Chief Executive Officer
Jeffrey L. Thompson . . . . . . . . . . 43 Executive Vice-President, Chief Operating Officer and Director
Anthony S. Hollis . . . . . . . . . . . 55 Vice-President of Finance and Director, Retired
Aristedes T. Feles . . . . . . . . . . 29 Vice President of Finance and Director
Camee Edelbrock . . . . . . . . . . . . 36 Vice-President of Advertising, Secretary and Director
E. A. Breitenbach . . . . . . . . . . . 59 Director
Jerry Herbst . . . . . . . . . . . . . 58 Director
Alexander Michalowski . . . . . . . . . 60 Director
Richard M. Wilbur . . . . . . . . . . . 60 Director
</TABLE>

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

Camee Edelbrock has 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.

E. A. Breitenbach has served as a director of the Company since 1994. Dr.
Breitenbach is a consultant in the Petroleum Industry and recently retired as
the Chairman, President and Chief Executive Officer (since 1968) of Scientific
Software - Intercomp. Inc. in Denver, Colorado. Dr. Breitenbach is the
President of the Society of Petroleum Engineers and is the recipient of the
1996 John Franklin Carl award.

20
<PAGE> 21
Jerry Herbst has served as a director of the Company since 1994. Mr. Herbst
has owned and served as the Chief Executive Officer of Terrible Herbst, Inc.
and Herbst Supply Co., Inc. (gas and autowash service stations) since 1959.
Mr. Herbst is also a general partner of Gold Coast Hotel & Casino in Las Vegas,
Nevada. He has served as a director of Bank of America Nevada (formerly Valley
Bank) (since 1977) and a director of Nevada Power Company (since 1990).

Alexander Michalowski has served as a director of the Company since 1995.
In 1995 he retired as President of Magneti Marelli, U.S.A. Inc., a wholly owned
subsidiary of Fiat S.P.A. where he served in various capacities since 1981.

Richard M. Wilbur has served as a director of the Company since 1994. Mr.
Wilbur is sole shareholder of R.M. Wilbur, Certified Public Accountants. Mr.
Wilbur has served as Chairman of the Board of Liberty National Bank (since
1982) and is the owner of GOLFAMERICA (since 1993).

21
<PAGE> 22
Item 11. Executive Compensation.

EXECUTIVE COMPENSATION
The following table sets forth the names of the persons who were, at the
completion of the Company's most recent fiscal year on June 30, 1996 (i) the
Chief Executive Officer of the Company and (ii) the four most highly
compensated executive officers of the Company other than the Chief Executive
Officer (collectively, the "Named Officers"). All of the Named Officers
received their compensation shown in the following table from the Company for
services to the Company and, in certain cases, subsidiary companies other than
the Company.

SUMMARY OF COMPENSATION TABLE

<TABLE>
<CAPTION>
Annual Compensation
----------------------- Long Term
Compensation
------------
Stock Option
Awards All Other
Name and Principal Position Year Salary Bonus (in shares) Compensation
--------------------------- ---- ------ ----- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
O. Victor Edelbrock
President and Chief Executive Officer 1996 $310,402 $300,000 0 $10,860 (1)
1995 317,628 300,000 28,125 10,860 (1)
1994 378,333 500,000 0 10,860 (1)
Jeffrey L. Thompson
Executive Vice-President, Chief 1996 223,018 115,000 0 741 (2)
Operating Officer 1995 205,429 115,000 42,500 670 (2)
1994 177,767 100,000 0 608 (2)

Ronald L. Webb
Executive Vice-President, 1996 200,550 40,000 0 0
Foundry Corp. 1995 201,323 35,000 27,053 0
1994 174,165 18,500 0 184,500 (3)

Anthony S. Hollis
Vice-President Finance and Secretary (4) 1996 188,260 28,620 0 0
1995 180,708 28,620 15,568 0
1994 169,447 26,500 0 0
Wayne P. Murray
Vice-President of Manufacturing 1996 160,811 32,000 0 0
1995 123,119 32,000 17,405 0
1994 115,574 29,000 0 0
</TABLE>

_____________________

(1) This amount represents premiums paid on a life insurance on the life of Mr.
Edelbrock.

(2) This amount represents premiums paid on two life insurance policies on the
life of Mr. Thompson.

(3) Amount consists of compensation in respect of services provided in prior
fiscal years that was paid $61,500 in fiscal 1994 and $123,000 in fiscal
1995.

(4) Mr. Hollis retired from the Company on June, 30, 1996.

OPTION GRANTS

There were no option grants made during the fiscal year ended June 30, 1996.

22
<PAGE> 23
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUE TABLE

Shown below is information with respect to unexercised options to purchase
Common Stock of the Company granted in fiscal 1996 and prior years to the Named
Officers.

<TABLE>
<CAPTION>
Number of Value of Unexercised,
Unexercised In-the-Money
Options at Options at
Shares Value Fiscal Year-End (#) Fiscal Year-End ($)
Acquired on Realized Exercisable/ Exercisable/
Name Exercise (#) ($) Unexercisable (1) Unexercisable
---- ------------ -------- ------------------- --------------------
<S> <C> <C> <C> <C>
O. Victor Edelbrock 0 0 5,625/22,500 $28,125/$112,500
Jeffrey L. Thompson 0 0 8,500/34,000 $42,500/$170,000
Ronald L. Webb 0 0 5,411/21,642 $27,055/$108,210
Anthony S. Hollis 0 0 3,114/12,454 $15,570/$62,270
Wayne P. Murray 0 0 3,481/13,924 $17,405/$69,620
</TABLE>

DIRECTOR EXPENSES

All non-employee Directors are reimbursed for their out-of-pocket expenses
incurred plus $500 per diem in connection with attendance at meetings of, and
other activities relating to, serving on the Board of Directors (the "Board")
or any Board Committee. Employee Directors are not compensated.

EMPLOYMENT AGREEMENTS

The Company has entered into an employment agreement with O. Victor
Edelbrock for a term expiring on June 30, 1999, pursuant to which he will serve
as President and Chief Executive officer of the Company and President of
Edelbrock Foundry Corp. The employment agreement provides for a base salary of
$300,000 per year, with annual raises to be determined by the Compensation
Committee or Board, and an annual bonus to be determined each year in good
faith by the Compensation Committee or Board utilizing such factors as Mr.
Edelbrock's performance and the Company's and Edelbrock Foundry Corp.'s
financial performance. Upon termination of Mr. Edelbrock's employment during
this term of the employment 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 for the year prior to such
termination.

The Company has also entered into similar employment agreements with
Messrs. Thompson and Webb, each having at term expiring in June 30, 1999.
Pursuant to their employment agreements, Messrs. Thompson and Webb are
entitled to base salaries of $215,000 and $200,000, respectively. Messrs.
Thompson and Webb will also be entitled to annual bonus to be determined each
year at the good faith discretion of the Compensation Committee or Board,
utilizing such factors as such employee's performance and the financial
performance of the Company.

COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISION

The Compensation Committee consists of four directors. Currently, the
members of the Compensation Committee are Messrs. Breitenbach, Herbst, Wilbur,
non-employee directors and Mr. Edelbrock, President and Chief Executive Officer
of the Company. The Company's 1994 Incentive Equity Plan and 1994 Stock Option
Plan for Non-Employee Directors are administered by a committee consisting of
Mssrs. Breitenbach, Herbst and Wilbur. None of the executive officers of the
Company serves as a director of another corporation in a case where an
executive officer of such other corporation serves as a director of the
Company.

23
<PAGE> 24
Item 12. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information known to the Company,
with respect to beneficial ownership of the Company's Common Stock as of
September 23, 1996, by (i) each person known by the Company to be the
beneficial owner of more than 5% of the Common Stock, (ii) each director of the
Company, (iii) each of the Named Officers and (iv) all directors and officers
of the Company. Except as listed below, based on information furnished by such
owners, each person has sole investment and voting power with respect to such
shares, subject to community property laws where applicable. The address of
each of the 5% stockholders named below is the Company's principal executive
office.

<TABLE>
<CAPTION>
Shares Beneficially
Owned (1)
-----------------------------
5% STOCKHOLDERS Number Percent
--------------- ------ -------
<S> <C> <C>
O. Victor Edelbrock Jr. (2) . . . . . . . . . . . . . . . 2,604,131 49.7%
Nancy Edelbrock (3) . . . . . . . . . . . . . . . . . . . 2,604,131 49.7
Vic and Nancy Edelbrock Inter Vivos Trust,
dated December 19, 1995 (4) . . . . . . . . . . . . . 771,625 14.7
Edelbrock Corp. Employee Stock
Ownership Plan (5) . . . . . . . . . . . . . . . . . 928,150 17.7
Wayne P. Murray (6) . . . . . . . . . . . . . . . . . . . 928,350 17.7
Christina Lee Edelbrock (7) . . . . . . . . . . . . . . . 984,477 18.8
Tim Pettit (8) . . . . . . . . . . . . . . . . . . . . . 928,150 17.7
Vic Edelbrock, Sr. Will Marital
Deduction Fund (9) . . . . . . . . . . . . . . . . . 801,500 15.3
Vic Edelbrock, Sr. Will Residuary Fund (10) . . . . . . . 562,500 10.7

DIRECTORS OTHER THAN MR. EDELBROCK
----------------------------------
E. A. Breitenbach . . . . . . . . . . . . . . . . . . . . 0 0
Camee Edelbrock (11) . . . . . . . . . . . . . . . . . . 65,226 1.2
Aristedes T. Feles . . . . . . . . . . . . . . . . . . . 0 0
Jerry Herbst . . . . . . . . . . . . . . . . . . . . . . 1,000 *
Jeffrey L. Thompson (12) . . . . . . . . . . . . . . . . 20,719 *
Alexander (Mike) Michalowski . . . . . . . . . . . . . . 4,500 *
Richard M. Wilbur . . . . . . . . . . . . . . . . . . . . 1,000 *

NAMED OFFICERS OTHER THAN DIRECTORS
-----------------------------------
Ronald L. Webb . . . . . . . . . . . . . . . . . . . . . 1,000 *
Anthony S. Hollis (13) . . . . . . . . . . . . . . . . . 86,644 1.7
All Directors and Officers as a group
(14 persons) (2)(3)(6)(7)(11)(12)(13)(14) . . . . . . 3,389,775 64.7
</TABLE>

24
<PAGE> 25
* Less than one percent.

(1) Beneficial ownership is determined in accordance with Rule 13d-3 under
the Exchange Act.

(2) Includes 771,625 shares owned by the Vic and Nancy Edelbrock Inter
Vivos Trust, 160,006 shares attributable to Mr. Edelbrock's beneficial
interest in the Edelbrock Corp. Employee Stock Ownership Plan
("ESOP"), 801,500 shares owned by the Vic Edelbrock, Sr. Will Marital
Deduction Fund, 562,500 shares owned by the Vic Edelbrock, Sr. Will
Residuary Fund, 51,420 shares owned by the Sean Michael Robb Trust,
51,410 shares owned by the Alexander Edelbrock Wilson Trust, 51,420
shares owned by the Courtney Isom Trust, 51,410 shares owned by the
Carey Edelbrock Robb Trust, 51,420 shares owned by the Cathleen
Edelbrock Trust and 51,410 shares owned by the Christina Edelbrock
Wilson Trust. Mr. Edelbrock is the trustee of the above trusts. Mr.
Edelbrock disclaims beneficial ownership of such shares owned by the
Vic Edelbrock, Sr. Will Marital Deduction Fund, the Sean Michael Robb
Trust, the Alexander Edelbrock Wilson Trust, the Courtney Isom Trust,
the Carey Edelbrock Robb Trust, the Cathleen Edelbrock Trust and the
Christina Edelbrock Wilson Trust.

(3) Includes 771,625 shares owned by the Vic and Nancy Edelbrock Inter
Vivos Trust. Also includes 2,600,650 shares owned by other trusts of
which Ms. Edelbrock's spouse, O. Victor Edelbrock, Jr., is trustee
(see note 2). Ms. Edelbrock disclaims beneficial ownership of such
shares.

(4) O. Victor Edelbrock, Jr. and Nancy Edelbrock are trustees of, and
beneficiaries under, such trust.

(5) Wayne P. Murray, Christina Lee Edelbrock and Tim Pettit are trustees
of the ESOP. The trustees disclaim beneficial ownership of such
shares held by the ESOP except to the extent of 41,510 and 4,917
shares attributable to Mr. Murray's and Ms. Edelbrock's respective
beneficial interests, in the ESOP.

(6) Includes 928,150 shares held by the ESOP of which Mr. Murray is a
trustee. Mr. Murray disclaims beneficial ownership of such shares
except to the extent of 41,710 shares of which 41,510 shares are
attributable to Mr. Murrays' beneficial interest in the ESOP.

(7) Includes 928,150 shares held by the ESOP of which Ms. Edelbrock is a
trustee. Ms. Edelbrock disclaims beneficial ownership of such shares
except to the extent of 56,327 shares, of which 4,917 shares are
attributable to Ms. Edelbrock's beneficial interest in the ESOP and
51,410 shares are attributable to Ms. Edelbrocks' interest in the
Christina Edelbrock Wilson Trust.

(8) Includes 928,150 shares held by the ESOP of which Mr. Pettit is a
trustee. Mr. Pettit who is a Certified Public Accountant and not an
employee of the Company disclaims beneficial ownership of such shares.

(9) O. Victor Edelbrock, Jr. is trustee of the trust. He disclaims
beneficial ownership to such shares.

(10) O. Victor Edelbrock, Jr. is trustee of such trust.

(11) Includes 13,806 shares of which 10,006 shares are attributable to Ms.
Edelbrock's interest in the ESOP and 51,420 shares attributable to Ms.
Edelbrock's interest in the Cathleen Edelbrock Trust.

(12) Consists of 20,719 shares of which 20,219 shares are attributable to
Mr. Thompson's beneficial interest in the ESOP.

(13) Includes 86,644 shares of which 81,644 are attributable to Mr. Hollis'
interest in the ESOP. Mr. Hollis retired from the Company on June 30,
1996.

(14) Includes 316,582 shares attributable to the directors' and officers'
beneficial interests in the ESOP.

Item 13. Certain Relationships and Related Transactions.

The Company was indebted to the Edelbrock Children's Trust in the principal
amount of $78,000 as of June 30, 1995 pursuant to the terms of a promissory
note between the Company and the trust. Jerry Herbst is trustee of, and
Christina Edelbrock and Carey Edelbrock Robb are beneficiaries under the trust.
This note was paid in full in May 1996.

25
<PAGE> 26
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 31 hereof.

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

Reports on Form 8-K.

A report on Form 8-K was filed with the Securities and Exchange
Commission on June 13, 1996 under Item 5 - Other Events.

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

26
<PAGE> 27
EDELBROCK CORPORATION

EXHIBIT INDEX

<TABLE>
<CAPTION>
Number and Sequential
Description of Page
Exhibit Number
-------------- ----------
<S> <C>
2.1 Form of Merger Agreement (filed as Exhibit 2.1 to the Company's
Registration Statement on Form S-1 (File No. 33-83258) and
incorporated herein by reference)
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 Corp. Employee Stock Ownership Plan
(filed as Exhibit 4.2 to the Company's Registration Statement on
Form S-1 (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 Mutual Agreement between Weber U.S.A.and Edelbrock (filed as
Exhibit 10.2 to the Company's Registration Statement on Form S-1
(File No. 33-83258) and incorporated herein by reference)
10.3 Form of Employment Agreement with O. Victor Edelbrock, Jr. (filed as
Exhibit 10.2 to the Company's Registration Statement on Form S-1
(File No. 33-83258) and incorporated herein by reference)*
10.4 Form of Employment Agreement with Jeffrey L. Thompson (filed as
Exhibit 10.4 to the Company's Registration Statement on Form S-1
(File No. 33-83258) and incorporated herein by reference)*
10.5 Form of Employment Agreement with A.S. Hollis (files as Exhibit 10.5
of the Company's Registration Statement on Form S-1 (File No. 33-
83258) and incorporating herein by reference)*
</TABLE>

27
<PAGE> 28

EDELBROCK CORPORATION

EXHIBIT INDEX
<TABLE>
<CAPTION>
Number and Sequential
Description of Page
Exhibit Number
- ---------------- ----------
<S> <C>
10.6 Form of Employment Agreement with Ronald L. Webb (filed as Exhibit 10.6
to the Company's Registration Statement on Form S-1 (File No. 33-83258)
and incorporated herein by reference)*

10.7 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)

10.8 Loan Agreement between Edelbrock Corporation and City National Bank
(filed as Exhibit 10.8 to the Company's Registration Statement on Form
S-1 (File No. 33-83258) and incorporated herein by reference)

10.9 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)

10.10 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)

10.11 Industrial Development Bond Agreements (filed as Exhibit 10.11 to the
Company's Registration Statement on Form S-1 (File No. 33-83258) and
incorporated herein by reference)

10.12 Industrial Redevelopment Bond Agreements (filed as Exhibit 10.12 to the
Company's Registration Statement on Form S-1 (File No. 33-83258) and
incorporated herein by reference)

10.13 Offers to Purchase Real Property (filed as Exhibit 10.13 to the
Company's Registration Statement on Form S-1 (File No. 33-83258) and
incorporated herein by reference)

10.14 Offer to Purchase Real Estate Property; Brutten/Reynolds/Shidler
Investment Corporation, Buyer, Edelbrock Corporation, Seller, together
with First Amendment thereto (filed as Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the Quarter Ended March 25,1995 and
incorporated herein by reference)
</TABLE>

28
<PAGE> 29
EDELBROCK CORPORATION

EXHIBIT INDEX
<TABLE>
<CAPTION>
Number and Sequential
Description of Page
Exhibit Number
-------------- ----------
<S> <C>
10.15 Offer to Purchase Real Estate Property; Brutten/Reynolds/Shidler Investment
Corporation, Buyer, Fairmont Associates, Seller (filed as Exhibit 10.2 to the
Company's Quarterly Report on Form 10-Q for the Quarter Ended March 25, 1995 and
incorporated herein by reference)
10.16 Offer to Purchase Real Estate Property; Brutten/Reynolds/Shidler
Investment Corporation, Buyer, Edelbrock Corporation E.S.O.P., Seller (filed as
Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the Quarter
Ended March 25, 1995 and incorporated herein by reference.)
10.17 Offer to Purchase Real Estate Property; Brutten/Reynolds/Shidler Investment
Corporation, Buyer, Edelbrock-Tucson #5, Seller (filed as Exhibit 10.4 to the
Company's Quarterly Report on Form 10-Q for the Quarter Ended March 25, 1995 and
incorporated herein by reference.)
10.18 Amendments to Purchase Agreements dated December 2, 1994 (filed as Exhibit 10.5
to the Company's Quarterly Report on Form 10-Q for the Quarter Ended March 25,
1995 and incorporated herein by reference.)
10.19 Amendment to Purchase Agreements dated April 13, 1995. (filed as Exhibit 10.6 to
the Company's Quarterly Report on Form 10-Q for the Quarter Ended March 25, 1995
and incorporated herein by reference.)
10.20 License 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 December 25, 1995 and incorporated
herein by reference).
10.21 Warrant Agreement dated February 2, 1996 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).
10.22 Amendment to Business Loan Agreement between Edelbrock Corporation and Bank of
America, NT&SA.
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)
23.2 Consent of BDO Seidman, LLP
24.1 Powers of Attorney
27.1 Financial Data Schedule
</TABLE>
*Management Contract or compensatory plan or arrangement which is separately
identified in accordance with Item 14(a)(3) of Form 10-K.

29
<PAGE> 30
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 24, 1996 EDELBROCK CORPORATION

By: JEFFREY L. THOMPSON
---------------------------------

Jeffrey L. Thompson
Executive Vice President,
Chief Operating Officer
Director

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.

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* President, Chief Executive
- ------------------------------------ Officer and Chairman of the
O. Victor Edelbrock Board (Principal Executive Officer) September 24, 1996

JEFFREY L. THOMPSON Executive Vice President and
- ------------------------------------ Director September 24, 1996
Jeffrey L. Thompson

* Vice-President, Finance and Director September 24, 1996
- ------------------------------------ (Principal Financial Officer and
Aristedes T. Feles Principal Accounting Officer)

* Vice President of Advertising, September 24, 1996
- ------------------------------------ and Director
Camee Edelbrock

* Director September 24, 1996
- ------------------------------------
E. A. Breitenbach

*
- ------------------------------------
Alexander Michalowski Director September 24, 1996

*
- ------------------------------------ Director September 24, 1996
Jerry Herbst

*
- ------------------------------------ Director September 24, 1996
Richard Wilbur

JEFFREY L. THOMPSON
- ------------------------------------
*By: Jeffrey L. Thompson
Attorney-in-fact
</TABLE>

30
<PAGE> 31
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of independent certified public accountants . . . . . . . . . . . . . . . . . . . . . . . . 32

Consolidated financial statements

Balance sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Statements of income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Statements of shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Statements of cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Notes to consolidated financial statements . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>

31
<PAGE> 32

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, 1995 and 1996, and the related consolidated
statements of income, shareholders' equity, and cash flows for each of the
years in the three year period ended June 30, 1996. 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 generally accepted auditing
standards. 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 presentation of
the financial statements. We believe that our audits provide a reasonable
basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Edelbrock
Corporation at June 30, 1995 and 1996 and the results of its operations and its
cash flows for each of the years in the three year period ended June 30, 1996,
in conformity with generally accepted accounting principles.

BDO SEIDMAN, LLP

Los Angeles, California
August 27, 1996

32
<PAGE> 33
EDELBROCK CORPORATION

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
June 30,
---------------------------------
1995 1996
----------- -----------
<S> <C> <C>
Assets

Cash and cash equivalents $10,298,000 $ 8,771,000
Accounts receivable, net of allowance for doubtful
accounts of $145,000 for each year 13,988,000 17,973,000
Inventories (Note 2) 9,246,000 9,735,000
Prepaid expenses and other 604,000 436,000
----------- -----------
Total current assets 34,136,000 36,915,000
----------- -----------

Property, plant and equipment (Note 3)
Land 4,658,000 4,658,000
Buildings and improvements 9,826,000 10,070,000
Machinery and equipment 18,919,000 22,201,000
Office equipment 1,028,000 1,579,000
Furniture and fixtures 694,000 722,000
Transportation equipment 4,788,000 4,051,000
----------- -----------
39,913,000 43,281,000
Less accumulated depreciation and amortization 13,031,000 15,899,000
----------- -----------
26,882,000 27,382,000

Real estate properties (Notes 3 and 7) 958,000 971,000

Other 795,000 1,162,000
----------- -----------
Total Assets $62,771,000 $66,430,000
=========== ===========
</TABLE>

See accompanying notes to consolidated financial statements.

33
<PAGE> 34
EDELBROCK CORPORATION

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
June 30,
---------------------------------
1995 1996
----------- -----------
<S> <C> <C>
Liabilities and shareholders' equity

Current liabilities
Accounts payable $ 9,768,000 $ 9,454,000
Accrued expenses
Payroll and bonuses 1,189,000 1,377,000
ESOP contribution (Note 6) 563,000 568,000
Interest 36,000 28,000
Commissions 321,000 493,000
Income taxes payable 913,000 22,000
Other 55,000 49,000
Current portion of long-term debt (Note 3) 1,258,000 971,000
----------- -----------
Total current liabilities 14,103,000 12,962,000

Long-term debt (Note 3) 4,657,000 3,148,000

Deferred income taxes (Note 4) 2,088,000 1,900,000
----------- -----------
Total liabilities 20,848,000 18,010,000
----------- -----------
Commitments (Notes 6 and 10)

Shareholders' equity
Common stock (Notes 6 and 10)
Common stock, par value $.01 per share;
authorized 15,000,000 shares; 5,240,000 and
5,241,604 shares issued and outstanding 52,400 52,400
Paid-in capital 16,922,100 16,942,100
Retained earnings 24,948,500 31,425,500
----------- -----------

Total shareholders' equity 41,923,000 48,420,000
----------- -----------
Total liabilities and shareholders' equity $62,771,000 $66,430,000
=========== ===========
</TABLE>

See accompanying notes to consolidated financial statements.

34
<PAGE> 35
EDELBROCK CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
Year Ended June 30,
----------------------------------------------------
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Revenues (Note 8) $53,509,000 $68,792,000 $79,032,000
Cost of sales 31,012,000 40,883,000 47,043,000
----------- ----------- -----------
Gross profit 22,497,000 27,909,000 31,989,000
----------- ----------- -----------
Operating expenses
Selling, general and administrative 15,203,000 17,172,000 20,392,000
Research and development 1,862,000 1,963,000 2,227,000
----------- ----------- -----------
Total operating expenses 17,065,000 19,135,000 22,619,000
----------- ----------- -----------
Operating income 5,432,000 8,774,000 9,370,000

Interest expense 672,000 552,000 292,000
Interest income - 344,000 471,000
Other income - - 274,000
----------- ----------- -----------
Income from continuing operations
before taxes on income and cumulative
effect of change in accounting principle 4,760,000 8,566,000 9,823,000

Taxes on income from continuing
operations (Note 4) 1,740,000 3,336,000 3,346,000
----------- ----------- -----------
Income from continuing operations
before cumulative effect of change
in accounting principle 3,020,000 5,230,000 6,477,000

Income (loss) from discontinued
operations, net of tax (Note 7) (62,000) 1,086,000 -
----------- ----------- -----------
Income before cumulative effect of
change in accounting principle 2,958,000 6,316,000 6,477,000

Cumulative effect on prior years of change
in accounting for taxes on income (Note 4) 201,000 - -
----------- ----------- -----------

Net income $ 3,159,000 $ 6,316,000 $ 6,477,000
=========== =========== ===========
</TABLE>

See accompanying notes to consolidated financial statements.

35
<PAGE> 36
EDELBROCK CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
Year Ended June 30,
----------------------------------------------------
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
Net income per share

Income per share from continuing
operations before cumulative effect
of change in accounting principle $.81 $1.10 $1.24

Income (loss) per share from discontinued
operations, net of tax (.02) .22 -
--------- --------- ---------
Income per share before cumulative
effect of change in accounting principle .79 1.32 1.24

Cumulative effect per share on prior years
of change in accounting for taxes
on income .05 - -
--------- --------- ---------
Net income per share $.84 $1.32 $1.24
========= ========= =========
Weighted average number of shares
outstanding 3,750,000 4,772,000 5,241,000
========= ========= =========
</TABLE>

See accompanying notes to consolidated financial statements.

36
<PAGE> 37
EDELBROCK CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
Common Stock
------------------------------------------------------------------------------------------
Class A Class B
-------------------------- --------------------------
Shares Amount Shares Amount Shares Amount
--------- ------ ---------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1993 - $ - 2,400,000 $24,000 1,350,000 $13,500

Net income for year - - - - - -
--------- ------ ---------- ------- ---------- -------
Balance, June 30, 1994 0 0 2,400,000 24,000 1,350,000 13,500

Initial public
offering, net of
offering cost 5,240,000 52,400 (2,400,000) (24,000) (1,350,000) (13,500)
(Note 10)

Net income for year - - - - - -
--------- ------ ---------- ------- ---------- -------
Balance, June 30, 1995 5,240,000 52,400 0 0 0 0

Net income for year - - - - - -

Stock options exercised 1,604 - - - - -
--------- ------ ---------- ------- ---------- -------
Balance June 30, 1996 5,241,604 $52,400 0 $0 0 $0
========= ====== ========== ======= ========== =======

Total
Paid-in Retained Shareholders'
Capital Earnings Equity
----------- ----------- -------------
<S> <C> <C> <C>
Balance, June 30, 1993 $91,000 $15,473,500 $15,602,000

Net income for year - 3,159,000 3,159,000
----------- ----------- -----------
Balance, June 30, 1994 91,000 18,632,500 18,761,000

Initial public
offering, net of
offering costs 16,831,100 - 16,846,000
(Note 10)

Net income for year - 6,316,000 6,316,000
----------- ----------- -----------
Balance, June 30, 1995 16,922,100 24,948,500 41,923,000

Net income for year - 6,477,000 6,477,000

Stock options exercised 20,000 - 20,000
----------- ----------- -----------
Balance June 30, 1996 $16,942,100 $31,425,500 $48,420,000
=========== =========== ===========
</TABLE>

See accompanying notes to consolidated financial statements.

37
<PAGE> 38

EDELBROCK CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

<TABLE>
<CAPTION>
Year Ended June 30,
----------------------------------------------------
1994 1995 1996
----------- ----------- ----------
<S> <C> <C> <C>
Cash flows from operating activities
Net income $ 3,159,000 $ 6,316,000 $ 6,477,000
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and amortization of
property, plant and equipment 2,141,000 2,700,000 3,646,000
(Gain) loss from sale of property,
plant and equipment (16,000) (13,000) (149,000)
Depreciation and amortization of
real estate properties 446,000 437,000 30,000
(Gain) loss from sale of real estate
properties (381,000) (2,075,000) 34,000
Decrease in deferred income taxes (115,000) (205,000) (108,000)
Cumulative effect of change in accounting
for taxes on income (201,000) - -
Equity in net income of partnerships (Note 8) (12,000) 32,000 (151,000)
Decrease from changes in
Accounts receivable (2,259,000) (2,034,000) (3,985,000)
Inventories (248,000) (2,571,000) (489,000)
Prepaid expenses and other assets (64,000) (132,000) 88,000
Other assets (291,000) 199,000 (367,000)
Accounts payable 2,881,000 934,000 (314,000)
Accrued expenses (168,000) 1,436,000 (540,000)
----------- ----------- ----------
Net cash provided by operating activities 4,872,000 5,024,000 4,172,000
----------- ----------- ----------
Cash flows from investing activities
Acquisition of property, plant and equipment (2,396,000) (12,221,000) (4,342,000)
Proceeds from sale of property, plant
and equipment 21,000 21,000 345,000
Purchase of QwikSilver II, Inc. - (314,000) -
Acquisition of real estate properties (1,262,000) - (5,000)
Proceeds from sale of real estate properties, net 1,190,000 13,071,000 -
Investments in partnerships (195,000) (310,000) (64,000)
Distributions from partnerships 25,000 221,000 143,000
----------- ----------- ----------
Net cash provided by (used in) investing activities (2,617,000) 468,000 (3,923,000)
=========== =========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

38
<PAGE> 39

EDELBROCK CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

<TABLE>
<CAPTION>
Year Ended June 30,
----------------------------------------------------
1994 1995 1996
---------- ----------- ------------
<S> <C> <C> <C>
Cash flows from financing activities
Net proceeds from issuance of
common stock - 16,846,000 20,000
Proceeds from issuance of long-term debt 355,000 - 8,000
Principal payments on long-term debt (3,233,000) (12,928,000) (1,804,000)
---------- ----------- -----------
Net cash provided by (used in) financing activities (2,878,000) 3,918,000 (1,776,000)
---------- ----------- -----------
cash equivalents (623,000) 9,410,000 (1,527,000)

Cash and cash equivalents, beginning of year 1,511,000 888,000 10,298,000
---------- ----------- -----------
Cash and cash equivalents, end of year $ 888,000 $10,298,000 $ 8,771,000
========== =========== ===========
Supplemental disclosure of cash flow information:

Cash paid during the year for:
Interest $2,015,000 $ 1,517,000 $ 422,000
========== =========== ===========

Income taxes $1,790,000 $ 2,810,000 $ 4,375,000
========== =========== ===========
</TABLE>

See accompanying notes to consolidated financial statements.

39
<PAGE> 40

EDELBROCK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BUSINESS AND SUMMARY OF 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.

Consolidation Policy

The consolidated financial statements include the accounts of Edelbrock
Corporation and its wholly-owned subsidiaries. All material intercompany
accounts and transactions have been eliminated.

Accounting Estimates

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

Cash Equivalents

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

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.

Property, Equipment and Depreciation

Property and equipment are stated at cost. Depreciation is computed, primarily
utilizing the straight-line method, over the estimated useful lives of the
assets as follows:
<TABLE>
<CAPTION>
Estimated
Useful
Life*
(in years)
----------
<S> <C>
Buildings and improvements 2-40
Machinery and equipment 3-8
Office equipment 5
Furniture and fixtures 7
Transportation equipment 3-10
</TABLE>

*The average life more closely reflects the high end of the range.

40
<PAGE> 41

EDELBROCK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BUSINESS AND SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition

Revenue is recognized upon shipment of the products.

Taxes on Income

The Company has adopted SFAS No. 109, "Accounting for Income Taxes," which
changes the Company's method of accounting for income taxes from the deferred
method to an asset and liability method. The asset and liability method
requires the recognition of deferred tax assets and liabilities for the future
tax consequences of temporary differences between the financial statement basis
and the tax basis of assets and liabilities. The cumulative effect of this
accounting change resulted in a $201,000 addition to net income for the year
ended June 30, 1994.

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 totalling $145,000 at June
30, 1995 and 1996, respectively. The Company believes that no significant
credit risk exists as credit losses, when realized, have been within the range
of management's expectations.

Fair Value

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

The carrying value of notes payable and long-term debt approximates fair value
at June 30, 1996 and 1995 since these notes substantially bear interest at
floating rates based upon the lenders' "prime" rate.

41
<PAGE> 42

EDELBROCK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BUSINESS AND SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

Long Lived Assets

Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of"
issued by the Financial Accounting Standards Board is effective for financial
statements for fiscal year beginning after December 15, 1995. The new standard
establishes guidelines regarding when impairment losses on long-lived assets,
which include plant and equipment, and certain identifiable intangible assets,
should be recognized and how impairment losses should be measured. The Company
does not expect adoption to have a material effect on its financial position or
results of operations.

Stock-based Compensation

Statement of Financial Account Standards No. 123, "Accounting for the
Stock-Based Compensation" ("SFAS No. 123") issued by the FASB is effective for
specific transactions entered into after December 15, 1995, while the
disclosure requirements of SFAS No. 123 are effective for financial statements
for fiscal years beginning no later than December 15, 1995. The new standard
establishes a fair value method of accounting for stock-based compensation
plans and for transactions in which an entity acquires goods or services from
non-employees in exchange for equity instruments. The Company does not expect
adoption to have a material effect on its financial position or results of
operations. At the present time, the Company has not determined if it will
change its accounting policy for stock based compensation or only provide the
required financial statement disclosures. As such, the impact to the Company's
financial position and results of operations is currently unknown.

Per Share Information

Earnings per share amounts are computed based on the weighted average number of
shares of common stock outstanding. Common stock equivalents, which consisted
of options and warrants to purchase the Company's common stock, were not
material in 1996 and 1995. There were no common stock equivalents outstanding
during 1994.

Reclassification

Certain prior period amounts have been reclassified for comparison with the
1996 presentation.

NOTE 2 - INVENTORIES

Inventories consist of the following:
<TABLE>
<CAPTION>
June 30,
------------------------------
1995 1996
---- ----
<S> <C> <C>
Raw materials $5,287,000 $5,421,000
Work in process 361,000 626,000
Finished goods 3,598,000 3,688,000
---------- ----------
$9,246,000 $9,735,000
========== ==========
</TABLE>

42
<PAGE> 43

EDELBROCK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - LONG-TERM DEBT AND REVOLVING LINE OF CREDIT

The Company's long-term debt consists of the following:
<TABLE>
<CAPTION>
June 30,
--------------------------------
1995 1996
---- ----
<S> <C> <C>
Mortgage note (a) $2,205,000 $2,159,000
Notes payable to a bank (b) 759,000 -0-
Related party - Edelbrock Children's Trust
note payable (c) 78,000 -0-
Industrial Redevelopment bonds (d) 2,760,000 1,840,000
Other 113,000 120,000
---------- ----------
5,915,000 4,119,000
Less current portion 1,258,000 971,000
---------- ----------
$4,657,000 $3,148,000
========== ==========
</TABLE>

(a) Mortgage note, collateralized by a trust deed on real estate with a
net book value of $3,328,000 at June 30, 1996, payable in various monthly
principal and interest payments, totalling approximately $22,000, at an
interest rate of 10%, due June 2011.

(b) Notes payable to a bank, collateralized by equipment, payable in
various monthly principal and interest payments of approximately $23,000, at
interest rates ranging from 6.7% to 7.1%.

(c) Related party - Edelbrock Children's Trust note payable, unsecured,
due in interest only quarterly installments at the prime rate plus 1%. This
note was paid in full on May 20, 1996.

(d) Industrial Redevelopment Bonds, City of San Jacinto, California,
issued to finance the purchase and installation of foundry equipment,
collateralized by a standby letter of credit for $1,912,000 at June 30, 1996.
The standby letter of credit is collateralized by a financing statement and
security agreement on the foundry equipment. Payments are made to the trustee
in annual principal installments of $920,000 on June 1 through 1998. Interest
is due semiannually on June 1 and December 1 and is fixed at 7.2%.

43
<PAGE> 44

EDELBROCK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - LONG-TERM DEBT AND REVOLVING LINE OF CREDIT (CONTINUED)

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

<TABLE>
<CAPTION>
Years Ending June 30, Amount
--------------------- ------
<S> <C>
1997 $ 971,000
1998 976,000
1999 62,000
2000 69,000
2001 2,041,000
Thereafter -0-
-----------
$ 4,119,000
===========
</TABLE>

The Company has one unsecured line of credit agreement with a bank which
provides total loan commitment not to exceed $1,500,000. All line of credit
financing is at the bank's prime rate (8.25% at June 30, 1996). This agreement
expires in February 1997. There were no borrowings on the line at June 30,
1995 and 1996. This obligation contains covenants, among other items, relating
to various financial ratios. The Company was in compliance with all such
covenants at June 30, 1996.

NOTE 4 - TAXES ON INCOME

As discussed in the Summary of Accounting Policies, the Company adopted SFAS
No. 109 as of July 1, 1993. Prior years' financial statements have not been
restated to apply the provisions of SFAS No. 109. The current and cumulative
effect of this accounting change resulted in a $201,000 addition to net income
for the year ended June 30, 1994.

The provision for taxes on income consists of the following:

<TABLE>
<CAPTION>
Year Ended June 30,
-------------------------------------------------
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Current
Federal $1,431,000 $3,141,000 $2,768,000
State 388,000 864,000 686,000
---------- ---------- ----------
1,819,000 4,005,000 3,454,000
---------- ---------- ----------
Deferred
Federal (50,000) 48,000 (188,000)
State (65,000) (24,000) 80,000
---------- ---------- ----------
(115,000) 24,000 (108,000)
---------- ---------- ----------
$1,704,000 $4,029,000 $3,346,000
========== ========== ==========
</TABLE>

44
<PAGE> 45

EDELBROCK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - TAXES ON INCOME (CONTINUED)

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

<TABLE>
<CAPTION>
Year Ended June 30,
---------------------------------------
1994 1995 1996
---- ------ ----
<S> <C> <C> <C>
U.S. federal statutory tax rate 34.0% 34.0% 34.0%
State income taxes (net of federal benefits) 5.1 5.8 6.3
State income tax credits (0.2) (0.4) (5.9)
Federal income tax credits (1.9) (1.1) (0.0)
Other (0.5) 0.6 (0.3)
---- ---- ----
Effective tax rate 36.5% 38.9% 34.1%
==== ==== ====
</TABLE>

The components of deferred taxes at June 30, 1995 and 1996 are as follows:

<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Deferred tax assets
State income taxes $ 162,000 $ 351,000
Uniform capitalization rule 114,000 110,000
Accrued vacation 118,000 156,000
Deferred gains 15,000 15,000
Allowance for doubtful accounts 49,000 49,000
Other 5,000 0
---------- ----------
$ 463,000 $ 681,000
========== ==========

Deferred tax liabilities:
Advertising accrual $ 0 $ 128,000
Depreciation and amortization 752,000 1,032,000
Like kind exchange 1,207,000 1,207,000
State tax deferred items 297,000 0
---------- ----------
$2,256,000 $2,367,000
========== ==========
</TABLE>

45
<PAGE> 46

EDELBROCK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - ACQUISITION

On March 1, 1995, the Company completed the acquisition of substantially all
the assets of QwikSilver II, Inc. of Apple Valley, California for approximately
$314,000 cash plus $357,000 of assumed payables and debt obligations. The
purchase price is subject to adjustment and includes cash paid to QwikSilver
II, Inc. and other direct costs of the acquisition. The acquisition has been
accounted for under the purchase method. Accordingly, results of operations
have been included in the consolidated statement of income from the date of
acquisition. QwikSilver is a manufacturer of aftermarket Harley-Davidson and
other motorcycle carburetors and air cleaners.

The funds used to acquire QwikSilver II, Inc. were provided by proceeds from
the Company's initial public offering. The financial position and results of
operations of QwikSilver II, Inc., are not material in relation to the
Company's financial position and results of operations.

NOTE 6 - COMMITMENTS

Royalty Agreement

The Company entered into a Royalty Agreement with RICOR Racing and Development
L.P. ("RICOR") whereby the Company will pay RICOR a percentage of revenue
derived from the sale of shock absorbers based on the following:

<TABLE>
<CAPTION>
Aggregate Net Sales Price Royalty
-------------------------- -------
<S> <C>
Up to $4,000,000 8%
From $4,000,001 to $8,000,000 7%
$8,000,001 and above 6%
</TABLE>

Employee Stock Ownership Plan

An employee stock ownership plan ("ESOP") was established July 1, 1979 covering
substantially all employees of Edelbrock Corporation. 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. The maximum annual contribution cannot exceed 25% of the total
salaries or wages of the plan participants. Edelbrock Corporation provided
contributions of $475,000, $513,000 and $513,000 for the years ended June 30,
1994, 1995 and 1996, respectively.

46
<PAGE> 47

EDELBROCK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 - COMMITMENTS (CONTINUED)

Profit Sharing Plan

Edelbrock Foundry Corp. maintains a defined contribution profit sharing plan
(the "Plan") covering substantially all employees who have attained one year of
service. Contributions to the Plan are at the discretion of the Company's
Board of Directors; however, contributions cannot exceed 15% of the total
salaries or wages of the plan participants. Contributions to the Plan amounted
to $25,000 for the year ended June 30, 1994, $50,000 for the year ended June
30, 1995 and $55,000 for the year ended June 30, 1996.

Employment Agreements

In conjunction with the Company's initial public offering, the Company entered
into an employment agreement with its President and Chief Executive Officer for
a term expiring on June 30, 1999. 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 entered into similar employment agreements with two other
officers, each having a term expiring on June 30, 1999. Pursuant to these
employment agreements, the two officers are entitled to an aggregate base
salary of $415,000. Each officer is entitled to an annual bonus to be
determined by the Compensation Committee of the Board of Directors based on
such factors as the performance of the officer and the financial results of the
Company.

NOTE 7 - DISCONTINUED OPERATIONS

47
<PAGE> 48

EDELBROCK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - DISCONTINUED OPERATIONS (CONTINUED)

The sale resulted in a pre-tax gain of $2,075,000 ($1,268,000 after-tax or $.27
per share), which included selling costs incurred in connection with the sale.
Through the sale, the Company was able to extinguish approximately $10.0
million of real estate debt. The results of the real estate division have been
reported separately as discontinued operations. Prior year consolidated
financial statements have been restated to present the real estate division as
a discontinued operation. Summarized results are as follows:

<TABLE>
<CAPTION>
Year Ended June 30,
---------------------------
1994 1995
--------- --------
<S> <C> <C>
Real estate revenue $2,188,000 $2,002,000
Real estate expense 1,103,000 904,000
General and administrative expenses 458,000 533,000
---------- ----------
Operating income 627,000 565,000
Interest expense 1,106,000 861,000
Gain on sale of real estate 381,000 2,075,000
---------- ----------
Income (loss) before income taxes (98,000) 1,779,000
Income tax (benefit) (36,000) 693,000
---------- ----------
Net income (loss) $(62,000) $1,086,000
========== ==========
</TABLE>

NOTE 8 - MAJOR CUSTOMERS

A significant portion of the Company's revenues has been derived from two major
customers. For the years ended June 30, 1994, 1995 and 1996, one customer
accounted for 12.7%, 11.6% and 12.7%, respectively, of revenues, and the other
customer accounted for 13.8%, 16.6% and 16.0%, respectively, of revenues. The
loss of all, or substantial portion, of sales to these customers could have a
material adverse effect on the Company's results of operations.

NOTE 9 - DEPENDENCE ON KEY SUPPLIER

The Company has entered into an agreement expiring in 1999 with a key supplier
that requires, among other things, that (i) the Company sell only carburetors
manufactured by the supplier, (ii) the Company purchase a minimum number of
carburetors from the supplier and (iii) the Company prices the carburetors so
as to remain market competitive. The Company's minimum obligation under this
agreement aggregates $55,616,000, or $13,904,000 each calendar year. These
carburetors accounted for 39% of the Company's revenues for the year ended June
30, 1996. 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 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 carburetors in
excess of the minimum purchase requirement or the contractual limitations on
the Company's pricing of carburetors could have a material adverse effect on
the Company.

48
<PAGE> 49

EDELBROCK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - SHAREHOLDERS' EQUITY

Initial Public Offering

On October 19, 1994, the Company consummated an initial public offering of its
Common Stock (the "Offering"). Prior to the consummation of the Offering,
Edelbrock Corp., a California corporation, was merged with and into the
Company, a Delaware corporation, which was formed on August 10, 1994.

Pursuant to the Offering, 1,600,000 shares of Common Stock were sold at $12.50
per share of which 1,250,000 shares were issued and sold by the Company and
350,000 shares were sold by the Company's principal stockholder. Proceeds to
the Company, after deducting underwriters' commissions and discounts and
expenses payable by the Company in connection with the Offering of
approximately $468,000, were $14,058,000. On November 17, 1994, the
underwriters exercised their over-allotment option to purchase 240,000 shares
of Common Stock from the Company at $12.50 per share. Proceeds from the sale
of these shares that were issued and sold by the Company totaled $2,788,000 and
reflects $212,000 of underwriters' commissions and discounts.

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
375,000. The stock options have been granted at the current quoted market
price at the date of grant.

The options vest 20% on October 19 of each year for a period of five years.
The first 20% vested on October 19, 1995. A summary of changes in common stock
options during 1995 and 1996 are as follows:

<TABLE>
<CAPTION>
Number of
Shares Price Per Share
--------- ---------------
<S> <C> <C>
Outstanding at June 30, 1994 - -
Granted 357,179 $12.50 - $13.50
Exercised - -
Cancelled - -
-------
Outstanding at June 30, 1995 357,179 $12.50 - $13.50
Granted - -
Exercised 1,604 $15.75 - 16.00
Cancelled 8,070 $12.50
-------
Outstanding at June 30, 1996 347,505 $12.50 - $13.50
=======
Options exercisable at June 30, 1996 69,501 $12.50 - $13.50
=======
</TABLE>

49
<PAGE> 50

EDELBROCK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - SHAREHOLDERS' EQUITY (CONTINUED)

1994 Stock Option Plan For Non-Employee Directors

Additionally, the Company adopted the Edelbrock Corporation 1994 Stock Option
Plan for Non-Employee Directors ("Director Plan"), which authorizes the
granting of non qualified stock options to certain non-employee directors of
the Company. The maximum number of shares granted under the Director Plan
shall not exceed 25,000 shares of Common Stock. Initial grants of options
under the Director Plan totaled 14,000, three grants of 3,500 shares each were
granted at the initial offering price of $12.50 per share and one grant of
3,500 shares was granted at a price of $12.75 per share.

Stock Warrants

On February 2, 1996 the Company issued Warrants to purchase 100,000 shares of
common stock at $14.75 per share to RICOR Racing and Development L.P. The
Warrants vest 20% on December 31 of each year for a period of five years with
the first 20% vesting on December 31, 1996. The Warrants expire on February 2,
2006.

<PAGE> 1
Exhibit 10.22

===============================================================================

[LOGO] Bank of America Amendment to Documents

- -------------------------------------------------------------------------------

AMENDMENT NO. 4 TO BUSINESS LOAN AGREEMENT

This Amendment No. 4 (the "Amendment") dated as of January 25, 1996, is
between Bank of America National Trust and Savings Association (the "Bank") and
EDELBROCK CORPORATION (formerly known as "Edelbrock Corp.") (the "Borrower").

RECITALS
---------

A. The Bank and the Borrower entered into a certain Business Loan
Agreement dated as of January 25, 1993, as previously amended (the "Agreement").

B. The Bank and the Borrower desire to further amend the Agreement.

AGREEMENT
---------

1. DEFINITIONS. Capitalized terms used but not defined in this
Amendment shall have the meaning given to them in the Agreement.

2. AMENDMENTS. The Agreement is hereby amended as follows:

2.1 In Paragraph 1.2 of the Agreement, the date "FEBRUARY 1,
1997" is substituted for the date "FEBRUARY 1, 1996".

2.2 In Paragraph 6.4 of the Agreement, the amount "TEN MILLION
DOLLARS ($10,000,000)" is substituted for the amount "FIVE
MILLION DOLLARS ($5,000,000)".

2.3 In Paragraph 6.5 of the Agreement, the amount "THIRTY SEVEN
MILLION FIVE HUNDRED THOUSAND DOLLARS ($37,500,000)" is
substituted for the amount "THIRTEEN MILLION DOLLARS
($13,000,000)".

2.4 In Paragraph 6.6 of the Agreement, the ratio "1.50:1.00" is
substituted for the ratio "2.85:1.00".

3. EFFECT OF AMENDMENT. Except as provided in this Amendment, all of
the terms and conditions of the Agreement shall remain in full force and effect.

This Amendment is executed as of the date stated at the beginning of
this Amendment.

<S> <C>
Bank of America
National Trust and Savings Association Edelbrock Corporation

X /s/ Robert J. Lovie X /s/ Jeffrey L. Thompson
--------------------------------- ---------------------------------
By: Robert J. Lovie, Vice President By: Jeffrey L. Thompson, Executive Vice President

</TABLE>

- -------------------------------------------------------------------------------
AmendL (10/92) - 1 - 003922-10062

<PAGE> 1
CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS

Edelbrock Corporation

We hereby consent to the use in the Registration Statement on Form S-8,
Registration Number 33-91354 of our report dated August 27, 1996, relating to
the audit of the consolidated financial statements of Edelbrock Corporation,
which are contained in and incorporated by reference to the Annual Report on
Form 10-K for the year ended June 30, 1996.

BDO SEIDMAN, LLP

Los Angeles, California
September 20, 1996

<PAGE> 1

Exhibit 24.1.a

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints Jeffrey L. Thompson and Aristedes T. Feles, and each
of them, the true and lawful attorney and attorneys-in-fact, with full power of
substitution and resubstitution, for him and in his name, place and stead, to
sign on his behalf as director or officer or both, as the case may be, of
Edelbrock Corporation, a Delaware corporation (the "Company"), the Company's
annual report on Form 10-K for the fiscal year ended June 30, 1996, and to sign
any and all amendments to such annual report, and to deliver and file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney or
attorneys-in-fact, and each of them with or without the others, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he/she might or could do in person, hereby ratifying and confirming
all that said attorney or attorneys-in-fact, or any of them or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 26th day of September, 1996.

O. VICTOR EDELBROCK
-------------------
O. Victor Edelbrock

<PAGE> 1
Exhibit 24.1.b

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 26th day of September, 1996.

JEFFREY L. THOMPSON
-------------------
Jeffrey L. Thompson

<PAGE> 1
Exhibit 24.1.c

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 26th day of September, 1996.

ARISTEDES T. FELES
------------------
Aristedes T. Feles

<PAGE> 1
Exhibit 24.1.d

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 26th day of September, 1996.

CATHLEEN EDELBROCK
------------------
Cathleen Edelbrock

<PAGE> 1
Exhibit 24.1.e

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 26th day of September, 1996.

AL BREITENBACH
--------------
Al Breitenbach

<PAGE> 1
Exhibit 24.1.f

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 26th day of September, 1996.

ALEXANDER MICHALOWSKI
---------------------
Alexander Michalowski

<PAGE> 1
Exhibit 24.1.g

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 26th day of September, 1996.

RICHARD WILBUR
--------------
Richard Wilbur

<PAGE> 1
Exhibit 24.1.h

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 26th day of September, 1996.

JERRY HERBST
------------
Jerry Herbst

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUN-30-1995
<PERIOD-END> JUN-30-1996
<CASH> 8,771,000
<SECURITIES> 0
<RECEIVABLES> 18,118,000
<ALLOWANCES> 145,000
<INVENTORY> 9,735,000
<CURRENT-ASSETS> 36,915,000
<PP&E> 43,281,000
<DEPRECIATION> 15,899,000
<TOTAL-ASSETS> 66,430,000
<CURRENT-LIABILITIES> 12,962,000
<BONDS> 3,148,000
0
0
<COMMON> 52,400
<OTHER-SE> 48,367,600
<TOTAL-LIABILITY-AND-EQUITY> 66,430,000
<SALES> 79,032,000
<TOTAL-REVENUES> 79,032,000
<CGS> 47,043,000
<TOTAL-COSTS> 47,043,000
<OTHER-EXPENSES> 22,619,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 292,000
<INCOME-PRETAX> 9,823,000
<INCOME-TAX> 3,346,000
<INCOME-CONTINUING> 6,477,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,477,000
<EPS-PRIMARY> 1.24
<EPS-DILUTED> 0

</TABLE>