Action Performance in Definitive Agreement to Acquire Hasbro's Winner's Circle

    PHOENIX--May 14, 2001--Action Performance Companies Inc. (Action) , the leader in the design, marketing, promotion, and distribution of licensed motorsports merchandise, and Hasbro Inc. , a worldwide leader in children's and family leisure time entertainment products and services, today announced they have entered into a definitive agreement for Action to acquire Hasbro's "Winner's Circle(TM)" brand name and related die cast inventory and tooling.
    Action will immediately begin designing, manufacturing and marketing licensed die cast race car toy replicas for the mass retail market, with first deliveries scheduled later this month.
    Action's entry into the mass retail die cast market completes its strategy to establish a presence in all licensed die cast race car replica marketing channels and expands its line of licensed motorsports merchandise for mass retail customers to include both die cast and apparel. Action's "Competitors View" licensed apparel had previously been the company's only mass retail offering.
    Action will use its licenses with approximately 15 drivers, including Dale Earnhardt, Dale Earnhardt Jr., Bill Elliott, John Force, Jeff Gordon, Kevin Harvick, Dale Jarrett, Bobby Labonte, Tony Stewart and Rusty Wallace, to produce die cast replicas of their race cars, including both standard and special paint schemes.
    Prior to the agreement, Hasbro produced products for the mass market, while Action produced collectible licensed die cast replicas for sale through specialty retailers, RCCA and at trackside.
    "While we enjoyed success building the Winner's Circle business," said Alan G. Hassenfeld, Hasbro's chairman and CEO, "we are deploying our creative and financial resources to core brands that can provide us with the strongest return on investment."
    Commenting on the agreement, Fred Wagenhals, Action Performance chairman, president and CEO, said, "We are excited to add Winner's Circle die cast to Action's recognized line of licensed motorsports products. Winner's Circle expands our mass retail product offerings and our overall product line, as well. This acquisition fits our strategy to not only focus on core drivers, teams and sponsors, but also to increase sales by broadening our product and market coverage."
    The agreement does not include the acquisition by Action of any Hasbro facilities, nor does it include the hiring of any Hasbro employees. Action anticipates that its current employees will be able to substantially handle design and manufacturing functions and that independent sales representatives will be utilized for sales purposes.
    Sales from this channel are expected to be $16 million to $20 million annually, with cyclical sales strongest in Action's first and second quarters, historically the weakest revenue quarters of Action's fiscal year.
    David Martin, Action Performance CFO, stated that he expects the new product line to add incrementally to Action's fiscal year 2001 net income but cautioned that normalized revenue contributions would likely not be realized until the fourth quarter because of lead times required to produce die cast products.
    Martin added, "This is an excellent opportunity to leverage our licenses, technical capabilities and infrastructure to increase revenues and gross margins without corresponding increases in SG&A expenses."
    Additional terms of the agreement were not disclosed.

    About Hasbro Inc.

    Hasbro is a worldwide leader in children's and family leisure time entertainment products and services, including the design, manufacture and marketing of games and toys ranging from traditional to high-tech. Both internationally and in the U.S., its PLAYSKOOL, TONKA, SUPER SOAKER, MILTON BRADLEY, PARKER BROTHERS, TIGER AND WIZARDS OF THE COAST brands and products provide the highest quality and most recognizable play experiences in the world.

    About Action Performance

    Action Performance Companies Inc. is the leader in the design, marketing, promotion and distribution of licensed motorsports merchandise. Its products include a broad range of motorsports-related die cast car replica collectibles, apparel, souvenirs and other memorabilia.
    The company markets and distributes products through a variety of channels, including trackside at racing events, a worldwide network of wholesale distributors and specialty dealers, QVC, the Racing Collectables Club of America (RCCA), goracing.com, and mass retail department stores and chains.

    This press release contains forward-looking statements regarding products, marketing, sales, revenues, timing of revenues, margins, costs, expenses, net income, business strategy, use of resources and return on investment. Actual results could differ materially from those set forth in those forward-looking statements. Factors that might cause such differences include, among others, the inability of Action and Hasbro to consummate the definitive agreement or to successfully execute the terms of the agreement, demand for their products, competitive pressures, the ability to achieve gross margins and maintain expenses, the success of their marketing programs, and other risks discussed in the companies' respective Forms 10-K on file with the U.S. Securities and Exchange Commission.