Action Performance Reports Third Quarter 2005 Results
PHOENIX, August 2, 2005Action 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 years
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
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 companys position as we look to the remainder
of fiscal 2005 and beyond to 2006.
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.
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 Companys 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,