Action Performance Announces Closure of Goodsports Subsidiary, Sale of Assets

    PHOENIX--Oct. 25, 2001--Action Performance Companies Inc. (Action) today announced the closure of its Goodsports Holdings Pty Ltd. (Goodsports) subsidiary and the sale of certain Goodsports' United Kingdom subsidiary's assets to Podia Group PLC (UK) (Podia). Goodsports designed, marketed and distributed Formula One apparel.
    The sale included Goodsports' F1 apparel licenses, trademarks, merchandising agreements and inventory associated with Jaguar Racing, BMW, Williams F1, Australian Grand Prix and Grand Prix Inc. Upon completion of the sale, Goodsports will be liquidated.
    Action will receive no proceeds from the sale or liquidation. However, the closure will result in Action receiving for fiscal 2001 a tax benefit arising from previously recorded losses on its investment in Goodsports that can now be utilized for tax purposes. As a result, Action anticipates that the closure will have a positive impact on its per-share earnings in an amount yet to be determined.
    Fred Wagenhals, Action Performance chairman, president and CEO, commented: "The closure of our UK operations will allow us to commit management resources to other operations where we are generating revenue growth and bottom line profits."
    David Martin, Action Performance CFO, added: "In fiscal 2001, this subsidiary accounted for approximately $11 million in revenues but incurred operating losses of approximately $2 million. As a result of the closure of this operation, Action will no longer incur these losses and related negative cash flow. Our efforts to bring Goodsports to profitability, by adding distribution channels and reducing costs and expenses through a restructuring, were not successful. We concluded that revenue growth and sustained profitability at Goodsports required substantial additional capital, which we were not prepared to commit."

    About Action Performance Companies

    Action Performance 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 sales and distribution channels, including the Racing Collectables Club of America (RCCA), trackside at racing events, mass retail department stores, and a worldwide network of wholesale distributors and specialty dealers.

    This news release contains forward-looking statements regarding terms of the sale, tax status and consequences, earnings, use of resources, and financial results. The Company's actual results could differ materially from those set forth in these forward-looking statements. Factors that might cause such differences include, among others, the inability of the parties to fully execute the agreement or changes in tax status, the inability to successfully execute its business plan, competitive pressures, acceptance of the Company's products and services in the marketplace, the success of new marketing programs, the Company's ability to successfully execute its agreements with other parties, and other risks discussed in the Company's Form 10-K, dated Sept. 30, 2000, on file with the U.S. Securities and Exchange Commission.