Action Performance Companies Inc (892147) SEC Filing 10-Q Quarterly report for the period ending Thursday, June 30, 2005

Exhibit 99.1

Action Performance Reports Third Quarter 2005 Results

PHOENIX, August 2, 2005—Action Performance Companies, Inc. (NYSE:ATN), the leader in the design, marketing, promotion, and distribution of licensed motorsports merchandise, today announced financial results for the fiscal third quarter ended June 30, 2005. For the quarter, the company reported revenues from continuing operations of $72.7 million compared with $88.3 million in the prior year period. The decrease in revenue for the quarter resulted primarily from lower sales of die-cast products to wholesale customers and mass merchandisers, and to a lesser extent, lower apparel and memorabilia sales to wholesale channels.

The Company reported a net loss from continuing operations of $9.5 million, or $0.51 per share, compared with net income from continuing operations of $4.7 million, or $0.26 in the prior year’s quarter. Included in loss from continuing operations for the current quarter were pre-tax charges relating to the write-down of intangible assets of $12.7 million ($8.0 million after tax) as well as foreign currency exchange losses of $1.1 million ($0.7 million after tax).

The Company also announced its decision to divest a business. The Company is currently in negotiations to sell its McArthur Towel business and based on the current status of such negotiations, anticipates completing the sale in the fourth quarter of fiscal 2005. In connection with this decision and the anticipated sale of the division, the Company recorded in the third fiscal quarter an after-tax net loss of $1.7 million. This charge will be reflected as a component of discontinued operations.

In addition, the Company announced its decision to discontinue its Jeff Hamilton apparel business and the Castaway collectible business. In connection with this action, the Company recorded in the third fiscal quarter an after-tax net loss of $4.3 million, primarily related to the write-down of the businesses’ remaining assets. These charges will be reflected as a component of discontinued operations.

For the nine months ended June 30, 2005, the company reported revenues from continuing operations of $216.1 million, compared with revenues of $232.7 million in the prior year, a decrease of 7.1%. The company reported a net loss from continuing operations of $13.8 million, or $0.75 per share, compared with net income of $5.1 million, or $0.27 per share in the prior year.

Fred Wagenhals, Chief Executive Officer, commented “As we continue to execute our restructuring plan, we are pleased to make incremental strategic progress each quarter. To that end, we plan to sell our McArthur Towel business, which had been operating near breakeven, and recorded write-downs of assets associated with the Jeff Hamilton business. In addition, we continued to realign our distribution model, and we were ultimately pleased that revenues and income from operations were consistent with our expectations. We believe each of these items represent progress consistent with our previously announced plans and improves the company’s position as we look to the remainder of fiscal 2005 and beyond to 2006.”

Business Outlook

While Action Performance refrains from giving specific revenue and earnings guidance, the Company expects fiscal fourth quarter 2005 revenue to be higher than the third quarter of 2005, but lower than revenue in the fourth quarter of 2004, largely as a result of lower anticipated sales of die-cast and apparel to wholesale distributors leading up to the transition to the direct to dealer distribution approach on October 1, 2005.

Dividend Policy

The Board of Directors has decided not to declare a quarterly dividend of $0.05 per share. The Board believes that it is prudent to take this action coincident with the restructuring initiatives in place. The evaluation of future dividends will be made on a quarter-by-quarter basis.

About Action Performance

Action Performance Companies Inc. (NYSE:ATN — News) is the leader in the design, promotion, marketing and distribution of licensed motorsports merchandise. The Company’s products include a broad range of motorsports-related die-cast replica collectibles, apparel, souvenirs and other memorabilia. Action Performance markets and distributes products through a variety of channels including the Action Racing Collectables network of wholesale distributors, the Racing Collectables Club of America, QVC, goracing.com,