UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

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

EDELBROCK CORPORATION

(310)781-2222

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

Yes [X]         No [  ]

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

   Yes [  ]         No [X]

As of May 7, 2004, the Company had 5,485,392 shares of Common Stock outstanding.

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EDELBROCK CORPORATION
FORM 10-Q FOR THE QUARTER ENDED MARCH 25, 2004
INDEX

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EDELBROCK CORPORATION

The accompanying notes are an integral part of the interim financial statements.

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EDELBROCK CORPORATION

The accompanying notes are an integral part of the interim financial statements.

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EDELBROCK CORPORATION

The accompanying notes are an integral part of the interim financial statements.

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EDELBROCK CORPORATION

Note 1 — Summary of Significant Accounting Policies

Basis of Presentation

The consolidated interim financial statements of Edelbrock Corporation (the “Company” or “Edelbrock”) at March 25, 2004 and for the three and nine month periods ended March 25, 2004 and 2003, are unaudited, but include all adjustments (consisting only of normal recurring adjustments) which the Company considers necessary for a fair presentation. The June 30, 2003 balance sheet was derived from the balance sheet included in the Company’s audited consolidated financial statements as included in the Company’s Form 10-K for its fiscal year ended June 30, 2003 (File No. 000-24802).

These unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes for a complete presentation, and should be read in conjunction with the Company’s audited consolidated financial statements included in the Form 10-K indicated above. Operating results for the three and nine month periods ended March 25, 2004 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2004.

Accounts Receivable and Accounts Receivable Reserves

The Company maintains reserves for cash and other discounts, returns and potential credit losses. Accounts receivable reserves are based on (i) the Company’s estimate of the rate at which customers take credit discounts allowed and, (ii) the Company’s specific assessment of the collectibility of all past due accounts. The actual cash and other discounts, returns and credit losses have not differed materially from accrued estimated amounts for the nine months ended March 25, 2004.

Inventories

Inventories, which consist of raw materials, work in process, and finished goods, are stated at the lower of cost (first-in, first-out method) or market value and have been reduced by an allowance for excess and obsolete inventories. The estimated allowance is based on management’s review of inventories on hand compared to estimated future usage and sales.

Long-Lived Assets

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

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Note 1 — Summary of Significant Accounting Policies (continued)

Stock – Based Compensation

Statement of Financial Accounting Standards No. 148 “Accounting for Stock-Based Compensation Transition and Disclosure an amendment of SFAS 123” (“SFAS No. 148”) requires the Company to provide pro forma information regarding net income and income per share as if compensation expensed for the Company’s stock option plans had been determined in accordance with the fair value based method prescribed in SFAS No.148. Under the accounting provisions of SFAS No. 148, the Company’s net income and income per share for 2004 and 2003 would have been reduced to the pro forma amounts indicated below:

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Note 1 – Summary of Significant Accounting Policies (continued)

Basic and Diluted Net Income Per Share Information

Basic net income per share is based upon the weighted average number of common shares outstanding. Diluted net income per share is based on the assumption that options and warrants are included in the calculation of diluted net income per share, except when their effect would be anti-dilutive. Dilution is computed by applying the “treasury stock” method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later) and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

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

Product Warranties

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

The changes in the Company’s product warranty liability are as follows:

Segment Reporting

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

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Note 1 – Summary of Significant Accounting Policies (concluded)

Controlling Shareholder

As of March 25, 2004, O. Victor Edelbrock, the Company’s Chairman, President, and Chief Executive Officer, has beneficial ownership of 51.3% of the Company’s common shares. As a result, Mr. Edelbrock has the ability to control the Company’s operations. See also Note 9.

Reclassifications

Certain prior period amounts have been reclassified for comparison with the 2004 presentation.

Note 2 – New Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board (“FASB”) issued Interpretation No.46 (FIN No. 46), “Consolidation of Variable Interest Entities.” This is and interpretation of Accounting Research Bulletin No. 51, and revises the requirements for consolidation by business enterprises of variable interest entities. FIN No. 46 applies immediately to variable interest entities created after January 31, 2003, and to variable interest entitles in which an enterprise obtains an interest after that date. It applies in the first fiscal year or interim period beginning after June 15, 2003, to variable interest entities in which an enterprise hold a variable interest that it acquired before February 1, 2003. FIN No. 46 applies to public enterprises as of the beginning of the applicable interim or annual period, and it applies to nonpublic enterprises as of the end of the applicable annual period. FIN No. 46 may be applied prospectively with a cumulative-effect adjustment as of the date on which it is first applied or by restating previously issued financial statements for one or more years with a cumulative-effect adjustment as of the beginning of the first year restated.

In December 2003, FASB issued a revised Interpretation No. 46 (“FIN 46R”), Consolidation of Variable Interest Entities. FIN 46R addresses consolidation by business enterprises of variable interest entities and significantly changes the consolidation application of consolidation policies to variable interest entities and, thus improves comparability between enterprises engaged in similar activities when those activities are conducted through variable interest entities. As of March 25, 2004, the Company is not a party to any variable interest entity. The Company does not expect that adoption of FIN No. 46 or FIN 46R will have a material effect on its financial position or results of operations.

On May 15, 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity” (“SFAS 150”), which improves the accounting for certain financial instruments that, under previous guidance, issuers could account for as equity or “mezzanine” equity, by now requiring those instruments to be classified as liabilities in the statement of financial position. SFAS 150 requires disclosure regarding the terms of those instruments and settlement alternatives. SFAS 150 affects an entity’s classification of the following freestanding instruments: a) mandatorily redeemable instruments, b) financial instruments to repurchase an entity’s own equity instruments, c) financial instruments embodying obligations that the issuer must or could choose to settle by issuing a variable number of its shares or other equity instruments based solely on (i) a fixed monetary amount known at inception or (ii) something other than changes in its own equity instruments, d) SFAS 150 does not apply to features embedded in a financial instrument that is not a derivative in its entirety. The Company does not expect that adoption of this statement will have any material effect on its results of operations or financial position.

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Note 3 – Inventories

Inventories at March 25, 2004 and June 30, 2003 consisted of the following:

Note 4 – License Agreement

The Company currently has a License Agreement with JG Engine Dynamics, Inc. and Automotive Systems Group, Inc. (the “Licensor”). In September 2003, the Company determined that its relationship with the Licensor had changed because the parties are no longer jointly developing future import aftermarket products. The Company continues to utilize the License Agreement and pay royalties to the Licensor on existing co-developed products.

Based on this change in relationship, the Company has determined that the useful life of the License Agreement has changed from an indefinite life to a finite life of 15 years. The Company has also evaluated the recoverability of the carrying amount of this long-lived asset through an impairment test by estimating future net cash flows over the remaining life of this License Agreement. Accordingly, based on this impairment test, the Company recorded an impairment charge of $36,000 for the three months ended September 25, 2003 and is amortizing the License Agreement over a 15 year period utilizing a units method as a basis for amortization.

License agreement activity:

Note 5 – Tax Contingency

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

Note 6 – Dependence on Key Supplier

The Company has an agreement with Magneti Marelli Powertrain, USA, Inc., who is the key supplier of automotive carburetors for the Company. The agreement expires in December of 2009 and 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 each calendar year and (iii) the Company price the carburetors so as to remain market competitive.

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Note 6 – Dependence on Key Supplier (concluded)

On October 31, 2003, the Company amended this agreement, changing the Company’s aggregate minimum purchase obligation from January 1, 2004 to the agreement’s expiration in December of 2009. Pursuant to the amended agreement, the Company’s minimum purchase obligation increased by $6,723,000 for the 2004 calendar year only. Each subsequent calendar year through 2009 remained substantially unchanged, decreasing by $183,000 per year. Any material failure of the supplier to supply carburetors to the Company would have a material adverse effect on the Company’s results of operations because alternative sources for obtaining the types of automotive carburetors marketed by the Company are not readily available. The Company’s inability to source supply with other manufacturers, the Company’s failure to sell automotive carburetors in excess of the minimum purchase requirement, or the contractual limitations on the Company’s pricing of automotive carburetors also could have a material adverse effect on the Company. The Company has met all minimum purchase obligations to date.

Note 7 – Gain on Sale of Asset

The Company recognized a gain of $315,000 in the quarter ended March 25, 2004 related to the sale of real property. The gain is included in gain on sale of assets in the consolidated statement of income. Cash proceeds received by the Company totaled $370,000.

Note 8 – Shareholders’ Equity

The Company issued 20,389 shares of its common stock from the exercise of employee stock options.

Note 9 – Subsequent Event

On April 12, 2004, the Company announced that O. Victor Edelbrock, the Company’s Chairman, President, and Chief Executive Officer, had presented a proposal to the Company’s Board of Directors to acquire the outstanding shares of the Company’s common stock not already beneficially owned or controlled by Mr. Edelbrock for $14.80 per share in cash. Following receipt of the proposal, the Company’s Board of Directors formed a Special Committee consisting of disinterested members of the Board to consider the proposal. The Special Committee has retained independent legal counsel and the Company expects the committee to retain an independent financial advisor to assist the Special Committee in evaluating the proposed transaction. As stated in Mr. Edelbrock’s proposal, the transaction is subject to conditions including the necessary corporate and stockholder approvals, the securing by Mr. Edelbrock of financing, and the negotiation and execution of definitive documentation. No definitive time frame for consideration of the transaction or completion of the same, as the case may be, has been determined and the Special Committee has only recently begun to evaluate the proposal.

On April 13, 2004, an action styled as Robert Garfield v. O. Victor Edelbrock, et al., No. 374-N was filed in the Court of Chancery for New Castle County, Delaware. The named plaintiff in the case purports to bring claims on behalf of a class of all the Company’s stockholders (other than the defendants) against the Company and its directors. The plaintiff alleges that terms of the proposal presented by Mr. Edelbrock are unfair and inadequate and that the defendants other than Mr. Edelbrock have responded to that proposal in a manner that violates their fiduciary duties to the plaintiff class. The action seeks to enjoin consummation of the transaction contemplated by the proposal or, if it has been consummated, rescission of the transaction and/or damages. On April 13 and 15, 2004, respectively, two other purported class actions making similar allegations and seeking substantially similar relief were filed in the same Court and styled as William Steiner v. Edelbrock Corporation, et al., No. 377-N; and Roger Delgado v. Edelbrock Corporation, et al., No. 388-N. The Company believes that these three actions are without merit and intends to defend them vigorously.

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Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations

The following is a discussion and analysis of the consolidated financial condition and results of operations of the Company for the three and nine months ended March 25, 2004 and 2003. The following should be read in conjunction with the Consolidated Interim 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, shock absorbers and other performance components for most domestic V8 and selected V6 engines; and sport compact four cylinder domestic and import engines. In addition, the Company offers performance aftermarket manifolds, camshafts, cylinder heads, air cleaners, and carburetors for Harley-Davidson and other selected brand motorcycles. Also, through its Russell division, the Company offers performance plumbing and brake lines which include street-legal brake lines, oil lines, fuel lines, and filters for both automotive and motorcycle use. The Company currently offers over 8,200 performance automotive and motorcycle aftermarket parts for street, off-road, recreational and competition vehicle 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 the product mix of the Company’s sales during the period.

     Seasonality

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

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Three Months Ended March 25, 2004, Compared to Three Months Ended March 25, 2003:

     Revenues

Revenues increased 11.3% to $28.6 million for the three months ended March 25, 2004 from $25.7 million for the same period of 2003. This increase was primarily the result of an increase of $454,000, or 12.1%, in the sale of automotive aluminum cylinder heads; an increase of $451,000, or 7.8%, in the sale of aluminum automotive intake manifolds; an increase of $409,000, or 37.3%, in the sale of automotive chrome air cleaners and valve covers; an increase of approximately $279,000, or 3.0%, in the sale of Edelbrock automotive carburetors; an increase of $194,000, or 37.6%, in the sale of exhaust systems; an increase of $163,000, or 12.2%, in the sale of products from its Russell division; and an increase of $158,000, or 24.9%, in the sale of shock absorbers. Edelbrock attributed its improved sales to improvements in the national economy, favorable weather conditions that enabled consumers to perform desired upgrades, and continued strong customer acceptance of the Edelbrock brand and products.

     Cost of Sales

Cost of sales increased 11.1% to $18.2 million for the three months ended March 25, 2004 from $16.4 million for the same period of 2003. As a percent of revenues, cost of sales remained relatively unchanged at 63.9% for the three months ended March 25, 2004 and 2003. The overall increase in cost of sales was primarily the result of an increase in revenues.

     Selling, General and Administrative Expense

Selling, general and administrative expense increased 2.6% to $8.3 million for the three months ended March 25, 2004 from $8.1 million for the same period of 2003. As a percent of revenues, selling, general and administrative expense decreased to 29.0% for the three months ended March 25, 2004 from 31.4% for the same period of 2003. The overall increase was primarily due to higher commissions based on increased revenues. The decrease as a percentage of sales was mainly attributed to slightly higher fixed costs spread over the 11.3% increase in revenues.

     Research and Development Expense

Research and development (“R & D”) expense increased 8.4% to $938,000 for the three months ended March 25, 2004 from $865,000 for the same period of 2003. The increase was primarily due to an increase in labor and development costs associated with new products. As a percent of revenues, R & D expense decreased to 3.3% for the three months ended March 25, 2004 from 3.4% for the same period of 2003.

     Interest Expense

Interest expense decreased to $1,000 for the three months ended March 25, 2004 from $7,000 for the same period of 2003. The decrease was due to a decrease in the average principal amount of debt outstanding.

     Interest Income

Interest income increased to $9,000 for the three months ended March 25, 2004 compared to $8,000 in the same period for 2003. The increase was primarily due to an increase in the balance of invested cash.

     Gain on Sale of Assets and Other Income

Gain on sale of assets and other income were $322,000 and $12,000 for the three months ended March 25, 2004 and 2003, respectively. The increase for the three months ended March 25, 2004 can be primarily attributed to a $315,000 gain on the sale of a real estate asset.

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Three Months Ended March 25, 2004, Compared to Three Months Ended March 25, 2003 (concluded):

     Taxes on Income

The provision for income taxes was $532,000 for the three months ended March 25, 2004 and $124,000 for the same period of 2003. The effective tax rate for both periods was approximately 37%.

     Net Income

The Company’s net income for the three months ended March 25, 2004 increased to $905,000 from $210,000 for the same period of 2003. The increase in net income was primarily the result of the items mentioned above.

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Nine Months Ended March 25, 2004, Compared to Nine Months Ended March 25, 2003:

     Revenues

Revenues increased 6.5% to $88.0 million for the nine months ended March 25, 2004 from $82.5 million for the same period of 2003. This increase was primarily the result of an increase of $1.4 million, or 75.7%, from sales by its aluminum foundry to third party customers; an increase of $659,000, or 3.5%, in the sale of aluminum automotive intake manifolds; an increase of approximately $531,000, or 26.8%, in the sale of shock absorbers; an increase of approximately $404,000, or 31.1%, in the sale of automotive camshafts; an increase of $398,000, or 3.4%, in the sale of automotive aluminum cylinder heads; an increase of $340,000, or 8.1%, in the sale of automotive chrome air cleaners and valve covers; an increase of approximately $327,000, or 17.8%, in the sale of exhaust systems; and an increase of $226,000, or 4.7%, in the sale of products from its Russell division. Edelbrock attributed its improved sales to improvements in the national economy, favorable weather conditions that enabled consumers to perform desired upgrades, and continued strong customer acceptance of the Edelbrock brand and products.

     Cost of Sales

Cost of sales increased 8.3% to $56.5 million for the nine months ended March 25, 2004 from $52.2 million for the same period of 2003. As a percent of revenues, cost of sales increased to 64.2% for the nine months ended March 25, 2004 from 63.2% for the same period of 2003. The increase in cost of sales as a percentage of revenues was primarily due to increases in labor costs, workers’ compensation insurance, and labor cost overruns at its aluminum foundry during the first six months of the Company’s fiscal year.

     Selling, General and Administrative Expense

Selling, general and administrative expense increased 3.7% to $25.1 million for the nine months ended March 25, 2004 from $24.2 million for the same period of 2003. As a percent of revenues, selling, general and administrative expense decreased to 28.5% for the nine months ended March 25, 2004 from 29.3% for the same period of 2003. The overall increase was primarily due to higher commissions based on increased revenues. The decrease as a percentage of sales was mainly attributed to slightly higher costs spread over the 6.5% increase in revenues.

     Research and Development Expense

R & D expense remained relatively unchanged at $2.6 million for the nine months ended March 25, 2004 and 2003. As a percent of revenues, R & D expense decreased to 3.0% for the nine months ended March 25, 2004 from 3.2% for the same period of 2003.

     Interest Expense

Interest expense decreased to $6,000 for the nine months ended March 25, 2004 from $38,000 for the same period of 2003. The decrease was mainly attributed to a decrease in the average principal amount of debt outstanding.

     Interest Income

Interest income decreased to $30,000 for the nine months ended March 25, 2004 from $46,000 for the same period in 2003. The decrease was primarily due to a decrease in the balance of invested cash.

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Nine Months Ended March 25, 2004, Compared to Nine Months Ended March 25, 2003 (concluded):

     Gain on Sale of Assets and Other Income

Gain on sale of assets and other income were $457,000 and $16,000 for the nine months ended March 25, 2004 and 2003, respectively. The increase for the nine months ended March 25, 2004 can be primarily attributed to a $453,000 gain on the sale of two real estate assets.

     Taxes on Income

The provision for income taxes increased to $1.6 million for the nine months ended March 25, 2004 from $1.3 million for the 2003 period. The effective tax rate for both periods was approximately 37%.

     Net Income

The Company’s net income for the nine months ended March 25, 2004 increased 17.6% to $2.7 million from $2.3 million for the same period of 2003. This increase in net income was primarily the result of the items mentioned above.

Recent Developments:

On April 12, 2004, the Company announced that O. Victor Edelbrock, the Company’s Chairman, President, and Chief Executive Officer, had presented a proposal to the Company’s Board of Directors to acquire the outstanding shares of the Company’s common stock not already beneficially owned or controlled by Mr. Edelbrock for $14.80 per share in cash. Following receipt of the proposal, the Company’s Board of Directors formed a Special Committee consisting of disinterested members of the Board to consider the proposal. The Special Committee has retained independent legal counsel and the Company expects the committee to retain an independent financial advisor to assist the Special Committee in evaluating the proposed transaction. As stated in Mr. Edelbrock’s proposal, the transaction is subject to conditions including the necessary corporate and stockholder approvals, the securing by Mr. Edelbrock of financing, and the negotiation and execution of definitive documentation. No definitive time frame for consideration of the transaction or completion of the same, as the case may be, has been determined and the Special Committee has only recently begun to evaluate the proposal.

On April 13, 2004, an action styled as Robert Garfield v. O. Victor Edelbrock, et al., No. 374-N was filed in the Court of Chancery for New Castle County, Delaware. The named plaintiff in the case purports to bring claims on behalf of a class of all the Company’s stockholders (other than the defendants) against the Company and its directors. The plaintiff alleges that terms of the proposal presented by Mr. Edelbrock are unfair and inadequate and that the defendants other than Mr. Edelbrock have responded to that proposal in a manner that violates their fiduciary duties to the plaintiff class. The action seeks to enjoin consummation of the transaction contemplated by the proposal or, if it has been consummated, rescission of the transaction and/or damages. On April 13 and 15, 2004, respectively, two other purported class actions making similar allegations and seeking substantially similar relief were filed in the same Court and styled as William Steiner v. Edelbrock Corporation, et al., No. 377-N; and Roger Delgado v. Edelbrock Corporation, et al., No. 388-N. The Company believes that these three actions are without merit and intends to defend them vigorously.

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Critical Accounting Policies

The Company’s financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses.

The Company believes that the estimates, assumptions and judgments involved in the accounting policies described in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of its most recent Annual Report on Form 10-K have the greatest potential impact on its financial statements, so it considers these to be its critical accounting policies. Because of the uncertainty inherent in these matters, actual results could differ from the estimates the Company uses in applying the critical accounting policies. Certain critical accounting policies affect working capital account balances, including the policies for revenue recognition, accounts receivable reserves, inventory reserves, and product warranty and self-insurance liabilities. These policies require that the Company make estimates in the preparation of its financial statements as of a given date.

Within the context of these critical accounting policies, the Company is not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported.

Liquidity and Capital Resources

The Company’s liquidity requirements arise primarily from the funding of its seasonal working capital needs and capital expenditures. Historically, the Company has met these liquidity requirements through cash flow generated from operating activities and with borrowed funds under the Company’s $8.0 million revolving credit facility with Bank of America, NT & SA (“Revolving Credit Facility”) which expires on February 1, 2005. Due to seasonal demand for the Company’s products, the Company builds inventory during the first and second fiscal quarters in advance of the typically stronger selling periods during the third and fourth fiscal quarters.

The Company believes that funds generated from operations and funds available under the Revolving Credit Facility together with cash balances will be adequate to meet its working capital, debt service and capital expenditure requirements through the next twelve months. The Company has made capital expenditures of approximately $3.6 million during the first three quarters of fiscal year 2004 mainly for new machinery and computer equipment and anticipates making additional capital expenditures of approximately $1.0 - $2.0 million for the remainder of fiscal year 2004 primarily for additional capital equipment to increase production capacity and efficiency.

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Contractual Obligations

The Company has an agreement with Magneti Marelli Powertrain, USA, Inc., who is the key supplier of automotive carburetors for the Company. The agreement expires in December of 2009 and 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 each calendar year and (iii) the Company price the carburetors so as to remain market competitive.

On October 31, 2003, the Company amended this agreement, changing the Company’s aggregate minimum purchase obligation from January 1, 2004 to the agreement’s expiration in December of 2009. Pursuant to the amended agreement, the Company’s minimum purchase obligation increased by $6,723,000 for the 2004 calendar year only. Each subsequent calendar year through 2009 remained substantially unchanged, decreasing by $183,000 per year. Any material failure of the supplier to supply carburetors to the Company would have a material adverse effect on the Company’s results of operations because alternative sources for obtaining the types of automotive carburetors marketed by the Company are not readily available. The Company’s inability to source supply with other manufacturers, the Company’s failure to sell automotive carburetors in excess of the minimum purchase requirement, or the contractual limitations on the Company’s pricing of automotive carburetors also could have a material adverse effect on the Company. The Company has met all minimum purchase obligations to date.

The Company has a license agreement with Ricor Racing and Development L.P. (“Ricor”), under which the Company has licensed rights to intellectual property relating to manufacturing techniques and design specifications for shock absorbers. The Company has been manufacturing and selling shock absorbers manufactured using technology licensed under this agreement since 1997. Ricor recently filed for bankruptcy protection on April 6, 2004. To date, the Ricor bankruptcy has not affected performance of the parties under the license agreement, and the Company has not received notice of any pending threat of a detrimental impact on the relationship. However, any materially adverse effect as a result of the bankruptcy on the Company’s continued access to the intellectual property licensed under this agreement could have a detrimental impact on the Company’s business and financial condition.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:

Any statements set forth above which are not historical facts, including statements relating to future economic and climatic conditions, 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, sales growth and activity levels, cash flows, dependence on key suppliers, market acceptance, manufacturing efficiencies, new product development, the success of planned advertising, marketing and promotional campaigns, and other risks identified herein and in other documents filed by the Company with the Securities and Exchange Commission. Other potential risks and uncertainties that may affect the Company’s business and financial condition include the potential effects of the proposal by Mr. Edelbrock to acquire the outstanding shares of the Company’s common stock not already beneficially owned or controlled by him such as (i) the distraction of the Company’s management from the operation of the Company’s business caused by the pendency of the proposed transaction and related litigation and any subsequent developments; and (ii) material increases in the Company’s expenses for professional services and other transaction and litigation related costs and expenses which are expected to be incurred whether or not the proposed transaction is consummated.

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Item 3. Quantitative and Qualitative Disclosure About Market Risk

The Company’s exposure to interest rate changes is primarily related to its variable rate debt which may be outstanding from time to time under the Company’s Revolving Credit Facility. The Company’s Revolving Credit Facility is an $8 million line of credit with an interest rate based on the bank’s prime rate (4.00% as of March 25, 2004). It expires on February 1, 2005. Because the interest rate on the Revolving Credit Facility is variable, the Company’s cash flow may be affected by increases in the prime rate. Management does not believe that any risk inherent in the variable rate nature of the loan is likely to have a material effect on the Company. As of March 25, 2004, the Company’s outstanding balance on the Revolving Credit Facility was zero.

Item 4. Controls and Procedures

The Company’s President, Chief Executive Officer, and Chairman of the Board, O. Victor Edelbrock, and the Company’s Vice-President of Finance and Chief Financial Officer, Aristedes T. Feles, have evaluated the Company’s disclosure controls and procedures as of March 25, 2004. These controls and procedures are designed to ensure that all of the information required to be disclosed by the Company in its periodic reports filed with the Securities and Exchange Commission (the “Commission”) is recorded, processed, summarized and reported within the time periods specified by the Commission and that the information is communicated to Messrs. Edelbrock and Feles on a timely basis.

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

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Not applicable.

Item 2. Changes in Securities and Use of Proceeds

Not applicable.

Item 3. Defaults upon Senior Securities

Not applicable.

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

Not applicable

Item 5. Other Information

Not applicable.

Item 6. Exhibits and Reports on Form 8-K

Exhibits

Reports on Form 8-K

The Company furnished a report on Form 8-K:

(i)		on February 6, 2004, under Item 12, related to its earnings release for the quarter ended December 25, 2003: and
(ii)		on April 12, 2004, under Item 5, related to its going private proposal from the Company’s Chairman, President, and Chief Executive Officer.

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SIGNATURES

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

	EDELBROCK CORPORATION

Date: May 7, 2004	/s/ARISTEDES T. FELES
	Aristedes T. Feles
	Vice President Finance, Chief Financial Officer and Director

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