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Action Performance Reports Fiscal Fourth Quarter and Fiscal Year 2004 Financial Results

Action Performance Companies, Inc. (NYSE: ATN), the leader in the design, marketing, promotion and distribution of licensed motorsports merchandise, today reported financial results for the fourth quarter and fiscal year ended September 30, 2004.

Action also announced the company´s board elected one of its independent members, Herbert M. Baum, to serve as lead director.

The company reported revenues of $97.4 million for the fourth quarter, a decline of $8.5 million, or 8.0%, from revenues of $105.8 million for the same period last year. Revenues for the fourth quarter included $12.0 million from Funline, which was acquired in September of 2003 and contributed $0.5 million in the prior year quarter. Excluding the impact of the Funline acquisition, revenues were down $20.0 million, or 19.0% from the same period last year.

For the quarter, the company had a net loss of $2.9 million, or $0.16 per share (fully diluted), which was down from income of $2.7 million, or $0.15 per share (fully diluted) for the fourth quarter of 2003.

Included in the results for the fourth quarter of 2004 was a $4.0 million (pre-tax) expense for a reserve for distributor accounts receivable, a $2.2 million (pre-tax) expense to write inventory and accounts receivable for the Jeff Hamilton business down to estimated net realizable value, and an $0.8 million (pre-tax) expense for settlement of litigation with New Hampshire International Speedway. Action looks forward to continuing its relationship with the New Hampshire track during the 2005 race season.

For the full 2004 fiscal year, revenues were $344.3 million, a decline of $25.1 million, or 6.8%, from the 2003 fiscal year. Revenues for the year included $42.1 million from Funline, which was acquired in 2003 and contributed $0.5 million in that year. Excluding the impact of the Funline acquisition, revenues were down $66.8 million, or 18.1% from last year.

For 2004, the company had net income of $0.5 million, or $0.03 per share (fully diluted), which was down from $24.2 million, or $1.33 per share (fully diluted), for 2003.

"This ends what has been a challenging and disappointing year for Action Performance," Chief Executive Officer Fred Wagenhals said. "At the same time, I believe that we recognize the problems we face, have the right team to address them, and have begun to make the changes necessary to bring Action back to the level of performance our shareholders deserve."

Specifically, Wagenhals explained that the company needs to provide a more focused product line, and that product line needs to be delivered to the market in a manner that meets our consumers´ expectations. In addition, the company needs to further penetrate more traditional retail outlets. Action intends to provide more detailed turnaround plans later in the first half of fiscal 2005.

Wagenhals concluded, "Most importantly of all, in 2005 Action will be a profit focused company, determined to create value for our shareholders."

Another measure to further strengthen the company and position it for turnaround was the board´s naming of a lead director, reflecting a growing corporate governance trend among U.S. public companies. Baum, who first became an Action director in 2000, was elected lead director by the company´s board during its regular November meeting. Baum is president and chief executive officer of The Dial Corporation, and is one of seven independent directors on Action´s 10-member board.

Read the entire release here.

Source: Action Performance Companies Inc.
Date: November 15, 2004

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