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Action Agrees to Licensing Partnership with Hendrick Motorsports and JG Motorsports Inc. - Continues Rights to Jeff Gordon and Jimmie Johnson

Action Performance Companies Inc. (NYSE:ATN), the leader in the design, marketing, promotion, and distribution of licensed motor sports merchandise, announced it has agreed to enter into a five-year licensing relationship with race team Hendrick Motorsports, winners of nine overall NASCAR championships, beginning Jan. 1, 2006.

Under the agreement, which mirrors its current deal with four-time NASCAR champion Jeff Gordon, Action Performance has the first right of refusal to produce products depicting the names, likenesses, images and signatures of Hendrick´s entire stable of popular NASCAR drivers and their race vehicles. The first right of refusal gives Action exclusive license for selected products and distribution channels.

Action currently has a licensing arrangement with Gordon and his company, JG Motorsports Inc., that expires Dec. 31, 2005, and a contract with driver Jimmie Johnson that concludes Dec. 31, 2004. The new pact will, in essence, lengthen those agreements while extending Action´s license rights to all Hendrick Motorsports drivers. In addition, the new agreement gives Action rights to expanded channels of distribution, particularly department stores and sporting goods chains.

The entire Hendrick Motorsports stable - which currently includes Gordon, Johnson, Terry Labonte, Brian Vickers and Kyle Busch - are considered to be top NASCAR contenders presently and in the coming years. Johnson and Gordon are currently ranked No. 1 and No. 3 respectively in the 2004 NEXTEL Cup championship standings.

Under the agreement terms, Hendrick Motorsports is guaranteed royalties through 2010 and each driver will receive a personal service contract. Action will have the first right of negotiation to extend the agreement for an additional five-year period. Consistent with all current agreements between Action, Gordon and Hendrick, royalty terms will be based upon product sales at current rates.

"We are pleased to extend our long-term relationship with Jeff Gordon and are excited about expanding this relationship to include all of the Hendrick teams," said Fred Wagenhals, chairman, president and CEO of Action Performance.

Said Rick Hendrick, owner of Hendrick Motorsports: "Action Performance has been a valuable partner for many years and we´re excited to extend our relationship with them."

"I´ve enjoyed my seven-year association with Action," Gordon said. "It´s exciting to be affiliated with a company that offers such high-quality products and first-class representation."

R. David Martin, chief financial officer of Action, stated: "We estimate this agreement will increase our annual revenues by a minimum of $25 million and will provide us with our first opportunity to sell product to department store and sporting goods chain stores. The addition of the entire Hendrick Motorsports stable increases our critical mass of licenses and our opportunity to leverage our numerous products and channels of distribution."

This licensing arrangement secures Action´s position as the leader in NASCAR licensing. Similar to its other contracts, this agreement provides Action Performance the right to expand to new products and channels when new products are developed or acquired.

Source: Action Performance Companies Inc.
Date: July 9, 2004

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