Action Performance Companies Inc. Announces Cost Reductions.

Business Editors

PHOENIX--(BUSINESS WIRE)--Aug. 14, 2000

Action Performance Companies Inc. (Nasdaq: ACTN) Monday announced restructuring plans for its United States die-cast and apparel operations.

The company renegotiated certain long-term contracts pertaining to various sponsorship, advertising and licensing agreements and reduced its labor force in an effort to minimize future operating expenses.

Action also announced an amendment to its bank credit facility under which the company received a waiver of the previously reported covenant violation.

Under the amendment, the credit facility will be secured by Action's personal property, and the line of credit and letter of credit facilities will be reduced to $5 million and $10 million, respectively. The amended credit facility will expire on Sept. 30, 2000. The company believes this to be an interim step toward a more permanent facility that it expects to have in place by that time.

David Husband, Action's chief operating officer, stated that these restructuring actions, along with the steps taken last quarter to eliminate future goracing.com operating losses, will assist in returning Action's operational expenses to historic levels.

"Our attention now will be focused on other operating efficiencies, including the further restructuring of non-performing operations and more cost-effective marketing and advertising campaigns," Husband said. "Action management is focused on returning the company to profitability and we are confident that with the dedication and expertise of our employees, we can make this happen."

"We anticipate that these recent actions will achieve savings of approximately $4.5 million in operating costs during fiscal year 2001," said David Martin, Action chief financial officer. "One-time costs, principally severance costs of approximately $700,000, will be recorded in the fourth quarter of fiscal year 2000."

Action Performance Companies Inc. is the leader in the design, 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 wide variety of channels, including 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 press release contains forward-looking statements. The company's actual results could differ materially from those set forth in the forward-looking statements.

Factors that might cause such a difference include, among others, competitive pressures, acceptance of the company's products and services in the marketplace, the company's ability to secure long-term credit facilities, the company's ability to reduce operating expenses, and other risks discussed in the company's Form 10-K for 1999, dated Sept. 30, 1999, which is on file with the U.S. Securities and Exchange Commission.