Action Performance Acquires Major League Sports Licensee, McArthur Towel and Sports; Action's First Expansion of Licensed Sports Merchandise Outside of Motorsports

    PHOENIX--July 1, 2002--Action Performance Companies, Inc. (Company) , the leader in the design, marketing, promotion, and distribution of licensed motorsports merchandise, today announced the acquisition of the McArthur Towel and Sports businesses (McArthur), a privately held marketer of event and team towels, terry products and golf accessories under licenses of professional sports leagues, colleges and universities.
    Action acquired the businesses and the majority of the operating assets for $4.6 million in cash. For 2001, McArthur reported sales of approximately $13 million and the acquisition is expected to be accretive to Action's EBITDA and net income. McArthur has 29 employees and facilities in San Diego, California, and Baraboo, Wisconsin.
    "McArthur is a great fit for us," said Action CEO Fred Wagenhals. "This acquisition will allow us to expand our corporate promotion business as well as provide us with initial product opportunities outside of motorsports."
    Founded in 1885, McArthur designs and distributes products under licenses with professional teams in the National Football League, National Hockey League, National Basketball Association, Major League Baseball, Professional Golf Association, and college and universities. Products are distributed to teams for in-stadium promotions and to specialty and mass retailers, golf pro shops, and other organizations that promote and sponsor sports events with licensed premiums and gifts.
    McArthur will expand its existing products by designing and producing similar specialty licensed products with Action-licensed NASCAR driver and team logos and images. As a result, McArthur's current retail customers will benefit from a wider choice of licensed products, while Action will continue to increase its portfolio of licensed motorsports merchandise for its distribution channels.
    McArthur's operations in San Diego, California, will be consolidated into Action's Phoenix, Arizona, corporate headquarters, and McArthur presidents Gregg McArthur and Philip Welp will join Action's management team as marketing vice presidents under three-year contracts.
    Wagenhals added: "We are pleased that Gregg McArthur and Philip Welp are joining Action and are excited about the marketing expertise that they will bring to our management team."
    Action Performance CFO David Martin also commented: "The McArthur acquisition is a component of our on-going strategy to expand our product portfolio and channels of distribution. We anticipate that Action will be able to use its licenses on McArthur products for their channels of distribution and their capability will allow us to expand products and programs that will allow Action to expand its corporate promotion business. While McArthur revenues and net income are included in our previous guidance for 2003, our guidance does not anticipate additional revenues and income from these synergies."

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

    This press release contains forward-looking statements regarding the terms of the acquisition, expected closing, EBITDA and net income, expansion strategy, operational plans, marketing plans, margins, sales, profits, and guidance for future periods. 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 ability of the parties to execute the terms of the acquisition, the ability of the Company 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 September 30, 2001, on file with the U.S. Securities and Exchange Commission.