Action Performance Reports Third Quarter 2005 Results.PHOENIX -- Action Performance Companies, Inc. (NYSE NYSE See: New York Stock Exchange :ATN ATN Acute tubular necrosis, see there ), the leader in the design, marketing, promotion, and distribution of licensed motorsports merchandise MERCHANDISE. By this term is understood all those things which merchants sell either wholesale or retail, as dry goods, hardware, groceries, drugs, &c. It is usually applied to personal chattels only, and to those which are not required for food or immediate support, but such as remain , today announced financial results for the fiscal third quarter ended June June: see month. 30, 2005. For the quarter, the company reported revenues from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the 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 Adj. 1. die-cast - formed by forcing molten metal into a die; "a die-cast seal" formed - having or given a form or shape products to wholesale customers and mass merchandisers, and to a lesser extent, lower apparel and memorabilia mem·o·ra·bil·i·a pl.n. 1. Objects valued for their connection with historical events, culture, or entertainment: posters, publicity photographs, and other movie memorabilia. 2. 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 pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charges relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible 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 To deprive or take away. Divest is usually used in reference to the relinquishment of authority, power, property, or title. If, for example, an individual is disinherited, he or she is divested of the right to inherit money. a business. The Company is currently in negotiations to sell its McArthur McArthur may refer to: Places:
adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. net loss of $1.7 million. This charge will be reflected as a component of discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . In addition, the Company announced its decision to discontinue dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: its Jeff Hamilton Jeff Hamilton may refer to the following:
Arden, Enoch shipwrecked sailor; lost for eleven years. [Br. Lit.: “Enoch Arden” in Benét, 316] Bligh, Captain commander of H.M.S. Bounty who was cast adrift by mutinous crew. [Am. Lit. collectible collectible An asset of limited supply that is sought for a variety of reasons including, it is hoped, an increase in value. Stamps, antiques, coins, and works of art are among the many things usually classified as collectibles. 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 (Friendly Rollabout Engineered for Doctors) A mobile medical conferencing unit. See videoconferencing. 1. FRED - Robert Carr. Language used by Framework, Ashton-Tate. 2. Wagenhals, Chief Executive Officer, commented "As we continue to execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution our restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). plan, we are pleased to make incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. strategic progress each quarter. To that end, we plan to sell our McArthur Towel business, which had been operating near breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations , and recorded write-downs of assets associated with the Jeff Hamilton business. In addition, we continued to realign re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. 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 October: see month. 1, 2005. Dividend Policy The Board of Directors has decided not to declare TO DECLARE. To make known or publish. By tho constitution of the United States, congress have power to declare war. In this sense the word, declare, signifies, not merely to make it known that war exists, but also to make war and to carry it on. 4 Dall. 37; 1 Story, Const. Sec. a quarterly dividend of $0.05 per share. The Board believes that it is prudent to take this action coincident co·in·ci·dent adj. 1. Occupying the same area in space or happening at the same time: a series of coincident events. See Synonyms at contemporary. 2. 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 Earlier document exchange software from Farallon Communications, Inc. that converted a Windows or Mac document into a proprietary viewing format. The viewer could be distributed separately or embedded within the document itself, turning it into a single-document viewer. 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 America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. , QVC QVC Quality Value Convenience QVC Question Valid Command , goracing.com, trackside track·side n. The area near a track, especially a racetrack. at racing events, direct corporate promotions, mass retail, department stores This is a list of department stores. In the case of department store groups the location of the flagship store is given. This list does not include large specialist stores, which sometimes resemble department stores. , and specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. dealers. Additional information about Action Performance can be found at http://www.action-performance.com/. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , including statements regarding the Company's anticipated revenues during the fourth quarter, the results of its restructuring and the anticipated sale of the McArthur Towel business. 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 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, general economic conditions, and other risks discussed in the Company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , dated September September: see month. 30, 2004, under the caption "Business-Risk Factors" and in Exhibit 99.1 to the Company's Form 10-Q Form 10-Q See 10-Q. dated March 31, 2005, each of which is on file with the U.S. Securities and Exchange Commission. In addition, the ability of the company to successfully complete the proposed sale of its McArthur Towel business is subject to various risks, many of which are outside of our control, including the successful negotiation of a mutually satisfactory definitive agreement and customary conditions to the closing of the sale.
ACTION PERFORMANCE COMPANIES, INC.
Unaudited Condensed Consolidated Balance Sheets
June 30, 2005 and September 30, 2004
(in thousands)
June 30, Sept. 30,
2005 2004
------ ------
ASSETS
Current Assets:
Cash and cash equivalents $ 6,336 $ 12,580
Accounts receivable, net 31,263 47,050
Inventories 46,457 48,514
Prepaid royalties 5,608 2,774
Taxes receivable 1,132 306
Deferred income taxes 9,700 7,006
Prepaid expenses and other 4,140 5,740
Assets to be disposed 13,846 24,068
-------- --------
Total current assets 118,482 148,038
-------- --------
Long-Term Assets:
Property and equipment, net 57,275 64,691
Goodwill 85,472 86,056
Licenses and other intangibles, net 40,931 52,302
Other 2,092 3,196
-------- --------
Total long-term assets 185,770 206,245
-------- --------
$304,252 $354,283
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 15,597 $ 28,044
Accrued royalties 10,388 10,002
Accrued expenses 6,270 8,453
Taxes payable 2,312 1,742
Current portion of long-term debt 373 4,009
Liabilities related to assets to be disposed 1,954 1,729
-------- --------
Total current liabilities 36,894 53,979
-------- --------
Long-Term Liabilities:
Long-term debt 3,908 11,882
Deferred income taxes 22,313 24,979
Other 241 298
-------- --------
Total long-term liabilities 26,462 37,159
-------- --------
Commitments and Contingencies
Minority Interests 2,466 2,518
Shareholders' Equity 238,430 260,627
-------- --------
$304,252 $354,283
======== ========
ACTION PERFORMANCE COMPANIES, INC.
Unaudited Condensed Consolidated Statements of Operations
Three and Nine Months Ended June 30, 2005 and 2004
(in thousands, except per share data)
Three Months Ended Nine Months Ended
2005 2004 2005 2004
-------- ------- -------- --------
Net sales $ 72,693 $88,334 $216,050 $232,662
Cost of sales 50,583 58,827 155,999 164,135
-------- ------- -------- --------
Gross profit 22,110 29,507 60,051 68,527
-------- ------- -------- --------
Operating expenses:
Selling, general, and
administrative 21,037 20,307 62,489 57,346
Amortization of licenses and
other intangibles 892 937 2,640 2,715
Impairment losses on trademark
and licenses 12,674 - 12,674 -
-------- ------- -------- --------
Total operating expenses 34,603 21,244 77,803 60,061
-------- ------- -------- --------
Operating income (loss) (12,493) 8,263 (17,752) 8,466
Interest expense (303) (468) (1,000) (1,370)
Foreign exchange gains (losses) (1,122) (196) (214) 957
Earnings (losses) from joint
venture (59) 204 343 966
Other income 25 47 106 159
Other expense (540) (280) (1,309) (1,060)
-------- ------- -------- --------
Total other expense (1,999) (693) (2,074) (348)
-------- ------- -------- --------
Income (loss) from continuing
operations before income taxes (14,492) 7,570 (19,826) 8,118
Income taxes (5,014) 2,869 (6,012) 3,042
-------- ------- -------- --------
Income (loss) from continuing
operations (9,478) 4,701 (13,814) 5,076
Loss from discontinued
operations, net of income taxes (5,972) (868) (8,089) (1,660)
-------- ------- -------- --------
Net income (loss) $(15,450) $ 3,833 $(21,903) $ 3,416
======== ======= ======== ========
Earnings (Loss) Per Common Share:
Basic
Income (loss) from
continuing operations $ (0.51) $ 0.26 $ (0.75) $ 0.28
Loss from discontinued
operations (0.32) (0.05) (0.43) (0.09)
-------- ------- -------- --------
Net income (loss) $ (0.83) $ 0.21 $ (1.18) $ 0.19
======== ======= ======== ========
Diluted
Income (loss) from
continuing operations $ (0.51) $ 0.26 $ (0.75) $ 0.27
Loss from discontinued
operations (0.32) (0.05) (0.43) (0.09)
-------- ------- -------- --------
Net income (loss) $ (0.83) $ 0.21 $ (1.18) $ 0.18
======== ======= ======== ========
Weighted Average Shares
Outstanding:
Basic 18,574 18,336 18,516 18,315
Diluted 18,574 18,606 18,516 18,619
ACTION PERFORMANCE COMPANIES, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
Nine Months Ended June 30, 2005 and 2004
(in thousands)
2005 2004
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(21,903) $ 3,416
Adjustments to reconcile net income (loss) to
cash provided by operations-
Discontinued operations and related impairment
charges 11,002 (3,810)
Depreciation and amortization 24,612 21,473
Impairment losses on trademark and licenses 12,674 -
Provision for doubtful accounts 2,741 991
Deferred taxes (6,400) 690
Other 921 170
Changes in assets and liabilities, net of
businesses acquired and disposed-
Accounts receivable 12,967 15,172
Accounts payable and accrued expenses (10,624) (3,264)
Taxes payable and receivable, net (199) (394)
Inventories 1,927 (12,173)
Prepaid royalties and accrued royalties (2,421) 1,524
Other 2,487 (4,433)
-------- --------
Net cash provided by operating
activities 27,784 19,362
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net (18,787) (20,208)
Acquisition of businesses and intangibles,
net of costs (2,103) (2,890)
Other 675 265
-------- --------
Net cash used in investing activities (20,215) (22,833)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line-of-credit - 11,700
Long-term debt repayments (11,636) (478)
Dividends paid - common shareholders (1,842) (2,746)
Dividends paid - minority interest shareholders (1,115) (1,414)
Stock option and other exercise proceeds 918 270
-------- --------
Net cash provided by (used in)
financing activities (13,675) 7,332
-------- --------
Effect of exchange rates on cash and cash
equivalents (138) 178
-------- --------
Net change in cash and cash equivalents (6,244) 4,039
Cash and cash equivalents, beginning of period 12,580 49,462
-------- --------
Cash and cash equivalents, end of period $ 6,336 $ 53,501
======== ========
ACTION PERFORMANCE COMPANIES, INC.
Unaudited Schedule of Net Sales by Channel
Three and Nine Months Ended June 30, 2005 and 2004
(in thousands)
Three Months Ended Nine Months Ended
2005 2004 2005 2004
------- ------- ------- -------
Domestic Die-cast:
Wholesale distribution and
promotion $19,234 $25,651 $ 43,264 $ 48,973
Wholesale to mass-merchant
retailers 4,492 9,389 29,859 40,884
Retail through collector's
catalog club 4,009 5,701 11,878 13,750
------- ------- -------- --------
Total domestic die-cast 27,735 40,741 85,001 103,607
Foreign Die-cast - wholesale
distribution and promotion 9,430 8,698 29,530 27,135
------- ------- -------- --------
Total die-cast 37,165 49,439 114,531 130,742
------- ------- -------- --------
Domestic Apparel and Memorabilia:
Wholesale distribution and
promotion 9,278 14,705 32,769 39,520
Wholesale to mass-merchant
retailers 6,887 6,745 28,646 26,462
------- ------- -------- --------
Total apparel and
memorabilia 16,165 21,450 61,415 65,982
------- ------- -------- --------
Retail at Trackside 18,715 16,695 37,698 33,617
Royalties and Other 648 750 2,406 2,321
------- ------- -------- --------
Net Sales $72,693 $88,334 $216,050 $232,662
======= ======= ======== ========
Note: Amounts have been restated in prior periods to reflect only
continuing operations
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