<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 1999

                         Commission file number 0-21630

                       ACTION PERFORMANCE COMPANIES, INC.
             (Exact Name of Registrant as Specified in Its Charter)


         ARIZONA                                         86-0704792
(State of Incorporation)                    (I.R.S. Employer Identification No.)

                              4707 E. Baseline Road
                                Phoenix, AZ 85040
                                 (602) 337-3700

   (Address, including zip code, and telephone number, including area code, of
                          principal executive offices)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes  X    No
                                       ----     ----

As of May 6, 1999, there were outstanding 16,877,196 shares of the registrant's
Common Stock, par value $.01 per share.
<PAGE>   2
PART I, ITEM 1    FINANCIAL STATEMENTS


                       ACTION PERFORMANCE COMPANIES, INC.
                           CONSOLIDATED BALANCE SHEETS
                   AS OF MARCH 31, 1999 AND SEPTEMBER 30, 1998
                        (IN THOUSANDS, EXCEPT SHARE DATA)


<TABLE>
<CAPTION>
                                                                                  March 31,      September 30,
                                                                                    1999             1998       
                                                                                  ---------        ---------
                                                                                 (Unaudited)
<S>                                                                              <C>             <C>
ASSETS

CURRENT ASSETS:
     Cash and cash equivalents ............................................       $  45,760        $  60,867
     Accounts receivable, net of allowance for
       doubtful accounts of $1,245 and $986, respectively .................          37,238           36,314
     Inventories ..........................................................          34,390           35,790
     Prepaid royalties ....................................................           9,760            5,745
     Prepaid expenses and other assets ....................................           4,998            4,961
                                                                                  ---------        ---------
         Total current assets .............................................         132,146          143,677

PROPERTY AND EQUIPMENT, net ...............................................          51,862           46,053

GOODWILL AND OTHER INTANGIBLES, net .......................................         104,572          106,146

OTHER ASSETS, net .........................................................          12,018           10,058
                                                                                  ---------        ---------
                                                                                  $ 300,598        $ 305,934
                                                                                  =========        =========
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
     Accounts payable .....................................................       $  13,624        $  11,430
     Accrued royalties ....................................................          10,401           10,589
     Accrued expenses and other ...........................................          12,721           10,973
     Current portion of long-term debt ....................................           3,696           23,746
                                                                                  ---------        ---------
         Total current liabilities ........................................          40,442           56,738
                                                                                  ---------        ---------

LONG-TERM DEBT:
     Convertible subordinated notes .......................................         100,000          100,000
     Other long-term debt .................................................          10,095           11,850
                                                                                  ---------        ---------
         Total long-term debt .............................................         110,095          111,850
                                                                                  ---------        ---------

MINORITY INTEREST .........................................................           1,488              914
                                                                                  ---------        ---------
COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
     Preferred stock, no par value, 5,000,000 shares
        authorized, no shares issued and outstanding ......................              --               --
     Common stock, $.01 par value, 25,000,000 shares authorized, 16,872,496
        and 16,423,238 shares issued and outstanding, respectively ........             169              164
     Additional paid-in capital ...........................................          94,493           91,974
     Accumulated other comprehensive income (loss) ........................            (128)           1,682
     Retained earnings ....................................................          54,039           42,612
                                                                                  ---------        ---------
         Total shareholders' equity .......................................         148,573          136,432
                                                                                  ---------        ---------
                                                                                  $ 300,598        $ 305,934
                                                                                  =========        =========
</TABLE>

                 The accompanying notes are an integral part of
                        these consolidated balance sheets


                                        2
<PAGE>   3
                       ACTION PERFORMANCE COMPANIES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
     FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED MARCH 31, 1999 AND 1998

                                   (UNAUDITED)
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                             Three Months Ended                  Six Months Ended
                                                                   March 31                         March 31         
                                                          --------------------------        --------------------------
                                                            1999             1998             1999             1998   
                                                          ---------        ---------        ---------        ---------
<S>                                                       <C>              <C>              <C>              <C>
Sales:
     Collectibles .................................       $  46,439        $  28,254        $  92,306        $  49,194
     Apparel and souvenirs ........................          30,092           24,235           54,428           45,625
     Other ........................................           2,397              666            3,759            1,254
                                                          ---------        ---------        ---------        ---------
         Net sales ................................          78,928           53,155          150,493           96,073

Cost of sales .....................................          48,933           32,994           94,764           60,855
                                                          ---------        ---------        ---------        ---------

Gross profit ......................................          29,995           20,161           55,729           35,218
                                                          ---------        ---------        ---------        ---------
Operating expenses:
     Selling, general and administrative expenses .          16,101           10,535           30,701           18,735
     Non-recurring charge for litigation settlement              --              950               --              950
     Amortization of goodwill and other intangibles           1,501            1,209            2,958            1,690
                                                          ---------        ---------        ---------        ---------
         Total operating expenses .................          17,602           12,694           33,659           21,375
                                                          ---------        ---------        ---------        ---------
Income from operations ............................          12,393            7,467           22,070           13,843
                                                          ---------        ---------        ---------        ---------
Other income (expense):
     Interest income and other, net ...............             649              172            1,345              464
     Interest expense .............................          (1,632)            (913)          (3,726)          (1,488)
                                                          ---------        ---------        ---------        ---------
         Total other income (expense) .............            (983)            (741)          (2,381)          (1,024)
                                                          ---------        ---------        ---------        ---------
Income before income taxes and minority interest ..          11,410            6,726           19,689           12,819
Minority interest in earnings .....................            (570)              --             (644)              -- 
                                                          ---------        ---------        ---------        ---------
Income before income taxes ........................          10,840            6,726           19,045           12,819
Provision for income taxes ........................          (4,336)          (2,690)          (7,618)          (5,128)
                                                          ---------        ---------        ---------        ---------
NET INCOME ........................................       $   6,504        $   4,036        $  11,427        $   7,691
                                                          ---------        ---------        ---------        ---------
Other comprehensive income (expense) net of tax:
     Foreign currency translation adjustment ......          (1,842)              --           (1,810)              -- 
                                                          ---------        ---------        ---------        ---------
COMPREHENSIVE INCOME ..............................       $   4,662        $   4,036        $   9,617        $   7,691
                                                          =========        =========        =========        =========
NET INCOME PER COMMON SHARE:
     Basic ........................................       $    0.39        $    0.25        $    0.69        $    0.48
                                                          =========        =========        =========        =========
     Diluted ......................................       $    0.38        $    0.24        $    0.67        $    0.46
                                                          =========        =========        =========        =========
WEIGHTED AVERAGE SHARES OUTSTANDING:
     Basic ........................................          16,820           16,086           16,668           16,039
                                                          =========        =========        =========        =========
     Diluted ......................................          17,179           16,666           17,025           16,591
                                                          =========        =========        =========        =========
</TABLE>

                 The accompanying notes are an integral part of
                    these consolidated financial statements.


                                        3
<PAGE>   4
                       ACTION PERFORMANCE COMPANIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE SIX MONTHS ENDED MARCH 31, 1999 AND 1998
                                   (UNAUDITED)
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                                 1999             1998       
                                                                               ---------        ---------
<S>                                                                            <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .............................................................       $  11,427        $   7,691
     Adjustments to reconcile net income to
        net cash provided by operating activities:
     Depreciation and amortization .....................................          10,580            4,364
     Undistributed earnings to minority shareholders ...................             644               --
     Change in assets and liabilities, net of businesses acquired:
         Accounts receivable ...........................................            (178)          (6,540)
         Inventories ...................................................           1,875          (10,058)
         Prepaid royalties .............................................          (4,015)            (510)
         Prepaid expenses and other assets .............................          (1,342)           1,289
         Accounts payable ..............................................              79            5,158
         Accrued royalties .............................................            (188)            (286)
         Accrued expenses and other ....................................           1,291              244
                                                                               ---------        ---------
              Net cash provided by operating activities ................          20,173            1,352
                                                                               ---------        ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of property and equipment ................................         (13,560)          (8,871)
     Deposits on property and equipment ................................              --           (1,783)
     Proceeds from sale of equipment ...................................             155              287
     Acquisition of businesses and other intangibles, less cash acquired          (3,046)         (23,091)
                                                                               ---------        ---------
              Net cash used in investing activities ....................         (16,451)         (33,458)
                                                                               ---------        ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Borrowings on line of credit ......................................           1,275            9,600
     Payments on line of credit ........................................          (1,275)          (2,500)
     Net proceeds from issuance of common stock
        upon exercise of stock options .................................           3,568            1,008
     Payments on long-term debt ........................................         (22,302)          (4,430)
     Issuance of convertible subordinated notes ........................              --          100,000
     Payments for offering-related expenses ............................              --           (3,500)
     Collections on notes receivable ...................................               8               15
                                                                               ---------        ---------
              Net cash provided by (used in) financing activities ......         (18,726)         100,193
                                                                               ---------        ---------
     Effect of exchange rate changes on cash and cash equivalents ......            (103)              -- 
                                                                               ---------        ---------

     Net change in cash and cash equivalents ...........................         (15,107)          68,087
     Cash and cash equivalents, beginning of period ....................          60,867           29,318
                                                                               ---------        ---------
     Cash and cash equivalents, end of period ..........................          45,760        $  97,405
                                                                               =========        =========
</TABLE>

                 The accompanying notes are an integral part of
                    these consolidated financial statements.


                                        4
<PAGE>   5
                       ACTION PERFORMANCE COMPANIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1999


(1)      INTERIM FINANCIAL REPORTING

The accompanying unaudited consolidated financial statements for Action
Performance Companies, Inc. and subsidiaries (the "Company") have been prepared
in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q. Accordingly, they do
not include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of operations, and
cash flows for the periods presented have been made. The results of operations
for the six-month period ended March 31, 1999 are not necessarily indicative of
the operating results that may be expected for the entire year ending September
30, 1999. Certain prior period amounts have been reclassified to conform to the
March 31, 1999 presentation. These financial statements should be read in
conjunction with the Company's Form 10-K/A for the fiscal year ended September
30, 1998.

(2)      RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

In fiscal 1999, the Company adopted SFAS No. 130, "Reporting Comprehensive
Income," issued by the Financial Accounting Standards Board. The adoption of
SFAS No. 130 did not have a material effect on the Company's financial position
or results of operations. At March 31, 1999, the Company's accumulated other
comprehensive income (loss) balance consisted of cumulative foreign currency
translation adjustments of approximately $(128,000).

(3)      SUPPLEMENTAL CASH FLOW INFORMATION

The supplemental cash flow disclosures and non-cash transactions for the
six-month periods ended March 31, 1999 and 1998 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                     1999          1998    
                                                                    -------       -------
<S>                                                                 <C>           <C>
Supplemental disclosures:
     Interest paid ..........................................       $ 1,562       $ 1,122
     Income taxes paid ......................................         7,744         5,110

Non-cash transactions:
     Common stock issued in connection with license agreement            --         1,000
     Debt and liabilities incurred or assumed in acquisitions         4,016        16,014

     Sale of equipment for notes receivable .................            --            35
     Assets acquired under capital lease ....................            --           183
     Assets acquired under note .............................            --         1,562
</TABLE>


                                        5
<PAGE>   6
(4)      RECENT ACQUISITIONS AND LICENSE AGREEMENTS

         On October 27, 1998, the Company acquired all of the outstanding stock
of Intellectual Properties Group, Inc. ("IPG") in exchange for 35,000 shares of
the Company's restricted common stock. IPG creates and develops promotional
programs for corporate sponsors of motorsports. The transaction has been
accounted for as a pooling of interests. Prior period financial statements have
not been restated because IPG's historical operating results and financial
position are not material in relation to the Company's operating results and
financial position.

         On November 23, 1998, the Company acquired Tech 2000 Worldwide, Inc.
("Tech 2000"), a privately held Massachusetts-based Internet company, through a
merger of Tech 2000 and Action Interactive, Inc., a wholly owned subsidiary of
the Company. Under the terms of the merger agreement, the Company issued 137,925
shares of its restricted common stock in exchange for all of the issued and
outstanding common stock of Tech 2000. The transaction has been accounted for as
a pooling of interests. Prior period financial statements have not been restated
because Tech 2000's historical operating results and financial position are not
material in relation to the Company's operating results and financial position.

         On November 30, 1998, the Company entered into an exclusive licensing
agreement with CART Licensed Products, L.P., the licensing arm of Championship
Auto Racing Teams, Inc. ("CART"). Under the terms of the licensing agreement,
the Company obtained the exclusive rights to the CART series and FedEx
Championship Series logos, as well as exclusive rights to five teams in the CART
series, including Newman/Haas Racing, PacWest Racing Group, Target/Chip Ganassi
Racing, Team Green, Inc., and Team Rahal, Inc. In addition, the Company also
obtained the non-exclusive rights for a minimum of 75% of the other teams and
drivers that participate in CART sanctioned race events. The rights granted
under the agreement allow the Company to create a line of collectible vehicles
consistent with the detail and quality featured in its existing die-cast
collectibles and allow the Company to market or sublicense a broad range of toy
products such as plastic and remote control vehicles, action figures, miniature
helmets, board games, plush toys, and puzzles. The initial term of the agreement
is for five years with a five-year renewal option.

         On January 11, 1999, the Company acquired all of the outstanding stock
of Goodsports Holdings Pty. Ltd., an Australian-based marketer of Formula
One-related apparel and other merchandise. The consideration paid by the Company
consisted of the assumption of certain liabilities and contingent payments of up
to $3.6 million to be paid over a four-year period based upon the attainment of
certain performance objectives. The acquisition was accounted for as a purchase.

(5)      REPAYMENT OF SENIOR NOTES

         On January 4, 1999, the Company repaid $20 million of 8.05% Senior
Notes, which matured on January 2, 1999.

(6)      COMMITMENTS AND CONTINGENCIES

         The Company is subject to certain asserted and unasserted claims
encountered in the normal course of business. The Company believes that the
resolution of these matters will not have a material adverse effect on the
Company's financial position or results of operations. The Company cannot
provide assurance, however, that damages that result in a material adverse
effect on the Company's financial position or results of operations will not be
imposed in these matters.


                                        6
<PAGE>   7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

OVERVIEW

         The Company designs and markets licensed motorsports products,
including die-cast scaled replicas of motorsports vehicles, apparel, and
souvenirs. The Company also develops promotional programs for sponsors of
motorsports that feature the Company's die-cast replicas or other products and
that are intended to increase brand awareness of the products or services of the
corporate sponsors. In addition, the Company represents popular race car drivers
in a broad range of licensing and other revenue producing opportunities,
including product licenses, corporate sponsorships, endorsement contracts, and
speaking engagements. Third parties manufacture all of the Company's motorsports
collectibles and most of the Company's apparel and souvenirs, generally
utilizing the Company's designs, tools, and dies. The Company screen prints and
embroiders a portion of the licensed motorsports apparel that it sells.

         The Company was incorporated in Arizona in May 1992 and began marketing
die-cast collectibles in July 1992. During fiscal 1997, fiscal 1998, and the
first two quarters of fiscal 1999, the Company completed a number of
acquisitions that expanded the Company's product offerings and distribution
channels and secured a number of exclusive license agreements with race car
drivers and team owners. The following table sets forth the acquisitions
completed since October 1, 1996 and the nature of the businesses acquired.

<TABLE>
<CAPTION>
            Acquisitions                           Date                          Business                   
            ------------                           ----                          --------                   
<S>                                                <C>            <C>
Sports Image, Inc.                                 Nov-96         Markets and distributes licensed motorsports
                                                                  apparel and souvenirs; trackside sales

Motorsport Traditions Limited Partnership          Jan-97         Markets and distributes licensed motorsports
and Creative Marketing and Promotions, Inc.                       apparel and souvenirs; trackside sales

Robert Yates Promotions, Inc.                      Jul-97         Markets and distributes licensed motorsports
                                                                  apparel and souvenirs; trackside sales

Image Works, Inc.                                  Jul-97         Manufactures and markets licensed motorsports
                                                                  apparel through mass-merchandise markets

Motorsports collectibles product lines of          Aug-97         Manufactures and markets licensed "mini-
Simpson Products, Inc.                                            helmets" and other motorsports collectibles and
                                                                  souvenirs

Assets related to sales of merchandise             Dec-97         Markets and distributes licensed motorsports 
licensed by NASCAR driver Rusty Wallace                           apparel and souvenirs; trackside sales 
(the "Rusty Wallace Acquisition")

Assets related to motorsports die-cast             Dec-97         Manufactures and markets "Revell" licensed
collectibles product lines of Revell-                             die-cast collectibles; strategic alliance with
Monogram, Inc. (the "Revell Acquisition")                         Revell-Monogram, Inc. involving extensive
                                                                  product licensing and distribution arrangements

Brookfield Collectors Guild, Inc.                  Jan-98         Markets and distributes licensed motorsports
("Brookfield")                                                    collectibles and ensembles

Chase Racewear, L.L.C. ("Chase")                   May-98         Licensed motorsports apparel and accessories

Paul's Model Art/MiniChamps                        Aug-98         Markets and distributes die-cast replicas of
("MiniChamps")                                                    Formula One and GT race cars, as well as factory
                                                                  production cars, driver figurines, and other
                                                                  motorsport collectibles

Performance Plus Nutritional, L.L.C.               Sep-98         Develops and markets driver-endorsed
                                                                  nutritional products, including vitamins, energy
                                                                  bars, and energy drinks

Intellectual Properties Group, Inc. ("IPG")        Oct-98         Creates and develops promotional programs for
                                                                  corporate sponsors of motorsports

Tech 2000 Worldwide, Inc. ("Tech 2000")            Nov-98         Operates the "goracing.com" internet website;
                                                                  designs, develops, implements, and maintains
                                                                  motorsports-related and other internet websites,
                                                                  including electronic commerce capabilities

Goodsports Holdings Pty Ltd. ("Goodsports")        Jan-99         Markets and distributes licensed Formula
                                                                  One apparel and related products
</TABLE>


                                        7
<PAGE>   8
         The Company markets its products to approximately 11,500 specialty
retailers throughout the world either directly or through its wholesale
distributor network; to motorsports enthusiasts directly through its Racing
Collectables Clubs of America (the "Collectors' Club"), which currently has
approximately 161,000 members; via electronic commerce through its
"goracing.com" web site; and through mobile trackside souvenir stores,
promotional programs for corporate sponsors, and fan clubs. The Company also
distributes certain of its products to mass retailers through its in-house sales
force and wholesale distributors. In addition, the Company has a license
agreement with Hasbro, Inc. ("Hasbro"), a multi-billion dollar toy and game
manufacturer, covering the exclusive sale by Hasbro of a line of
motorsports-related products in the mass-merchandise market.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the percentage of
total revenue represented by certain expense and revenue items.

<TABLE>
<CAPTION>
                                                            Three Months Ended           Six Months Ended
                                                                 March 31                    March 31        
                                                            -------------------         -------------------
                                                            1999          1998          1999          1998   
                                                            -----         -----         -----         -----
                                                         (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
<S>                                                      <C>           <C>           <C>           <C>
Sales:
     Collectibles ...................................        58.9%         53.2%         61.3%         51.2%
     Apparel and souvenirs ..........................        38.1          45.6          36.2          47.5
     Other ..........................................         3.0           1.2           2.5           1.3
                                                            -----         -----         -----         -----
        Net sales ...................................       100.0         100.0         100.0         100.0
     Cost of sales ..................................        62.0          62.1          63.0          63.3
                                                            -----         -----         -----         -----
     Gross Profit ...................................        38.0          37.9          37.0          36.7
     Selling, general and administrative expenses ...        20.4          19.8          20.4          19.5
     Settlement costs ...............................          --           1.8            --           1.0
     Amortization of goodwill and other intangibles .         1.9           2.3           1.9           1.8
                                                            -----         -----         -----         -----
     Income from operations .........................        15.7          14.0          14.7          14.4
     Interest income (expense) and other, net .......        (1.3)         (1.4)         (1.6)         (1.1)
                                                            -----         -----         -----         -----
     Income before income taxes and minority interest        14.4          12.6          13.1          13.3
     Minority interest in earnings ..................        (0.7)           --          (0.4)           --
     Provision for income taxes .....................        (5.5)         (5.0)         (5.1)         (5.3)
                                                            -----         -----         -----         -----
     Net income .....................................         8.2%          7.6%          7.6%          8.0%
                                                            =====         =====         =====         =====
</TABLE>

THREE MONTHS ENDED MARCH 31, 1999 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1998

         Net sales increased 48.5% to $78.9 million for the three months ended
March 31, 1999 from $53.2 million for the three months ended March 31, 1998. The
Company attributes the improvement in sales during the second quarter of fiscal
1999 primarily to (i) revenue from the Company's acquisitions during the third
and fourth quarter of fiscal 1998 and the first two quarters of fiscal 1999;
(ii) the Company's ability to capitalize on the continued strong growth in the
base of motorsports enthusiasts and to produce and sell increased quantities of
die-cast collectible goods, apparel, and souvenirs; (iii) sales of the Company's
products via its newly functional e-commerce solution, "Speedmall," which
resides in the Company's "goracing.com" internet web site; (iv) an increase in
membership in the Collectors' Club to approximately 161,000 members at March 31,
1999 from approximately 123,000 members at March 31, 1998; and (v) increased
sales in conjunction with the NASCAR race event in Dallas, Texas during March
1999, which was held in April of the prior year.

         Gross profit increased to $30.0 million in the second quarter of fiscal
1999 from $20.2 million in the second quarter of fiscal 1998, representing 38.0%
and 37.9% of net sales, respectively. The increase in gross profit as a
percentage of net sales resulted from increased sales of die-cast collectible
products, which typically provide higher margins than sales of the Company's
apparel and souvenir products.

         Selling, general and administrative expenses increased to $16.1 million
in the three-month period ended March 31, 1999 from $10.5 million in the
three-month period ended March 31, 1998, representing 20.4% and 19.8% of net
sales, respectively. The increase in such expenses as a percentage of sales
resulted primarily from costs associated with the operation and development of
the Company's "goracing.com" web site.


                                        8
<PAGE>   9
         During the three-month period ended March 31, 1998, the Company
recorded a non-recurring charge of $950,000, or $0.03 per share, for the
settlement of a pending lawsuit and related charges. This settlement represents
1.8% of net sales for the three months ended March 31, 1998. There were no
non-recurring charges in the three-month period ended March 31, 1999.

         Amortization of goodwill and other intangibles increased to $1.5
million for the three-month period ended March 31, 1999 from $1.2 million for
the three-month period ended March 31, 1998. The increase in amortization of
goodwill and other intangibles is related to the acquisitions made during the
second, third, and fourth quarters of fiscal 1998 and the second quarter of
fiscal 1999, as well as various long-term license agreements. The Company
recorded goodwill and other intangibles of $31.6 million in connection with the
acquisitions completed during the second, third, and fourth quarters fiscal
1998, and recorded an additional $2.9 million of goodwill and other intangibles
from the acquisition completed in the second quarter of fiscal 1999. The Company
is amortizing the goodwill and other intangibles over periods of 3 to 25 years.

         The change in interest income (expense) and other, net, was primarily
attributable to an increase in interest expense associated with the convertible
subordinated notes issued in March 1998, which was partially offset by interest
income earned on the remaining proceeds from the offering.

SIX MONTHS ENDED MARCH 31, 1999 COMPARED WITH SIX MONTHS ENDED MARCH 31, 1998

         Net sales increased 56.6% to $150.5 million for the six months ended
March 31, 1999 from $96.1 million for the six months ended March 31, 1998. The
Company attributes the improvements in sales during the first two quarters of
fiscal 1999 primarily to (i) revenue from the acquisitions completed during
fiscal 1998 and the first six months of fiscal 1999; (ii) the Company's ability
to capitalize on the continued strong growth in the base of motorsports
enthusiasts and to produce and sell increased quantities of die-cast collectible
goods, apparel, and souvenirs; (iii) sales of the Company's products via its
newly functional e-commerce solution, "Speedmall" which resides in the Company's
"goracing.com" internet web site; (iv) an increase in membership in the
Company's Collectors' Club to approximately 161,000 members at March 31, 1999
from approximately 123,000 members at March 31, 1998; and (v) increased sales in
conjunction with the NASCAR race event held in Dallas, Texas during March 1999,
which was held in April during the prior year.

         Gross profit increased to $55.7 million in the six months ended March
31, 1999 from $35.2 million in the six months ended March 31, 1998, representing
37.0% and 36.7% of net sales, respectively. The increase in gross profit as a
percentage of net sales resulted from increased sales of die-cast collectible
products, which typically provide higher margins than sales of the Company's
apparel and souvenir products. Sales of die-cast collectibles grew to 61.3% of
net sales in the six months ended March 31, 1999 from 51.2% for the six-month
period ended March 31, 1998.

         Selling, general and administrative expenses increased to $30.7 million
in the six-month period ended March 31, 1999 from $18.7 million in the six-month
period ended March 31, 1998, representing 20.4% and 19.5% of net sales,
respectively. The increase in such expenses as a percentage of sales resulted
primarily from the operation and development of the Company's e-commerce line of
business through "Speedmall" at the "goracing. com" web site and costs
associated with special programs completed during the first quarter of fiscal
1999.

         During the six-month period ended March 31, 1998, the Company recorded
a non-recurring charge of $950,000, or $0.03 per share, for the settlement of a
pending lawsuit and related charges. This settlement represented 1.0% of net
sales for the six months ended March 31, 1998. There were no non-recurring
charges in the six-month period ended March 31, 1999.

         Amortization of goodwill and other intangibles increased to $3.0
million for the six-month period ended March 31, 1999 from $1.7 million for the
six-month period ended March 31, 1998. The increase in amortization of goodwill
and other intangibles is related to the acquisitions made during the second,
third, and fourth quarters of fiscal 1998 and the first two quarters of fiscal
1999 as well as various long-term license agreements. The Company recorded
goodwill and other intangibles of $31.6 million in connection with acquisitions
completed during the second, third, and fourth quarters of fiscal 1998, and
recorded an additional $2.9 million of goodwill and other intangibles from the
acquisition completed in the second quarter of fiscal 1999. The Company is
amortizing the goodwill and other intangibles over periods of 3 to 25 years.


                                        9
<PAGE>   10
         The change in interest income (expense) and other, net, was primarily
attributable to an increase in interest expense associated with the convertible
subordinated notes issued in March 1998, which was partially offset by interest
income on the remaining proceeds from the offering.

PRO FORMA RESULTS OF OPERATIONS

         The following table sets forth the unaudited pro forma income statement
data of the Company for the six-month period ended March 31, 1999 and 1998,
giving effect to the Rusty Wallace Acquisition and the Revell Acquisition, as
well as the acquisitions of Brookfield, Chase, MiniChamps, IPG, Tech 2000, and
Goodsports, as if they had occurred on October 1, 1997, using the purchase
method of accounting for business combinations, except for IPG and Tech 2000,
which were accounted for as poolings of interest. The unaudited pro forma income
statement data presented herein does not purport to represent what the Company's
actual results of operations would have been had those acquisitions occurred on
that date or to project the Company's results of operations for any future
period.

<TABLE>
<CAPTION>
                                              (in thousands, except per share data)
                                                    For the Six Months Ended       
                                              -------------------------------------
                                                March 31, 1999    March 31, 1998   
                                                   --------          --------
                                                  (Unaudited)       (Unaudited)
<S>                                             <C>               <C>     
Net sales..................................        $153,556          $121,580
                                                                    
Net income.................................          10,940             7,836(1)
                                                                    
Net income per common share, diluted.......        $   0.64          $   0.47(1)
</TABLE>
                                                                    
(1)      Excludes a non-recurring legal settlement charge of $950,000 or $0.03
         per share

         The pro forma results shown above do not account for efficiencies
gained upon the consolidation of operations, including the elimination of
duplicative functions and reduction of salaries expense and other related costs.
The pro forma results of operations for the six-month periods ended March 31,
1999 and 1998 reflect the amortization of goodwill and other intangibles arising
from the acquisitions described above and include additional interest expense
associated with any financing related to the acquisitions.

SEASONALITY

         Because the auto racing season is concentrated between the months of
February and November, the second and third calendar quarters of each year (the
Company's third and fourth fiscal quarters) generally are characterized by
higher sales of motorsports products. The Company believes, however, that the
acquisitions described above have provided additional distribution channels that
increase holiday sales, with the effect of reducing seasonal fluctuations.

LIQUIDITY AND CAPITAL RESOURCES

         The Company's working capital position increased to $91.7 million at
March 31, 1999 from $86.9 million at September 30, 1998. The increase of $4.8
million is primarily attributable to cash flow from operations.

         Capital expenditures for the six-month period ended March 31, 1999
totaled approximately $13.6 million, of which approximately $7.9 million was
utilized for the Company's continued investment in tooling.

         During the six-month period ended March 31, 1999, the Company issued
276,335 shares of Common Stock upon the exercise of stock options, resulting in
total proceeds to the Company of approximately $3.6 million.

         On January 2, 1997, the Company issued an aggregate of $20.0 million
principal amount of senior notes to three insurance companies (the "Senior
Notes"). The Senior Notes bore interest at the rate of 8.05% per annum, and
matured on January 2, 1999. On January 4, 1999, the Company repaid the Senior
Notes.

         On March 24, 1998, the Company sold $100.0 million of 4 3/4%
Convertible Subordinated Notes due 2005 (the "Notes"). The Notes are
convertible, at the option of the holders, into shares of Common Stock at the
initial conversion price of $48.20 per share, subject to adjustments in certain
events. Interest on the Notes is payable semi-annually on April 1 and October 1
of each year, beginning October 1, 1998. The Notes mature on April 1, 2005. The
Notes are general unsecured obligations of the Company, subordinated in right of
payment to all existing and future senior indebtedness of the Company, as
defined in the Notes. The Indenture governing the Notes does not limit or
prohibit the incurrence of additional indebtedness, including senior
indebtedness, by the Company or its 


                                       10
<PAGE>   11
subsidiaries. The Company, at its option, may redeem the Notes in whole or in
part at any time on or after April 1, 2001, at redemption prices set forth in
the Indenture governing the Notes. Upon the occurrence of a "change in control"
or a "termination of trading," as defined in the Indenture, the holders of the
Notes will have the right to require the Company to repurchase all or any part
of such holders' Notes at 100% of their principal amount, plus accrued and
unpaid interest. The net proceeds to the Company from the offering were
approximately $96.5 million, after deducting offering expenses and the Initial
Purchasers' discount of 3.0%.

         On August 5, 1998, the Company entered into an amended and restated
credit agreement (the "Credit Facility") with First Union National Bank of North
Carolina ("First Union"). The Credit Facility consists of a revolving line of
credit for up to $20.0 million, which includes up to $5.0 million for standby
letters of credit (the "Line of Credit") and a $30.0 million letter of
credit/bankers' acceptance facility (the "Letter of Credit/BA Facility"). The
Company did not have any outstanding borrowings under the Line of Credit as of
March 31, 1999. The Company had outstanding purchase commitments of
approximately $4.5 million under the Letter of Credit/BA Facility as of March
31, 1999. The Line of Credit bears interest, at the Company's option, at a rate
equal to (i) the Alternate Base Rate (as described below) plus an applicable
margin as defined in the credit agreement. The "Alternate Base Rate" under the
Line of Credit is the greater of (a) the bank's publicly announced prime rate or
(b) the Federal Funds Effective Rate (as defined) plus 0.5%. The Line of Credit
matures on April 1, 2001 with respect to the revolving line of credit portion of
the Line of Credit, and on April 1, 2000 with respect to the standby letter of
credit portion of the Line of Credit and the Letter of Credit/BA Facility,
subject to extensions by First Union. The Credit Facility is guaranteed by
certain of the Company's subsidiaries.

         On October 27, 1998, the Company acquired all of the outstanding stock
of IPG in exchange of 35,000 shares of the Company's restricted common stock.
IPG creates and develops promotional programs for corporate sponsors of
motorsports.

         On November 23, 1998, the Company acquired Tech 2000, a privately held
Massachusetts-based Internet company, through a merger of Tech 2000 and Action
Interactive, Inc., a wholly owned subsidiary of the Company. Under the terms of
the merger agreement, the Company issued 137,925 shares of its restricted common
stock in exchange for all of the issued and outstanding common stock of Tech
2000.

         On January 11, 1999, the Company acquired all of the outstanding stock
of Goodsports Holdings Pty. Ltd., an Australian-based marketer of Formula
One-related apparel and other merchandise. The consideration paid by the Company
consisted of the assumption of certain liabilities and contingent payments of up
to $3.6 million to be paid over a four-year period based upon the attainment of
certain performance objectives.

         The Company is subject to certain asserted and unasserted claims
encountered in the normal course of business. The Company believes that the
resolution of these matters will not have a material adverse effect on the
Company's financial position or results of operations. The Company cannot
provide assurance, however, that damages that result in a material adverse
effect on the Company's financial position or results of operations will not be
imposed in these matters.

         The Company believes that its current cash resources, the Credit
Facility, and expected cash flows from operations will be sufficient to fund the
Company's capital needs during the next 12 months at its current level of
operations, apart from capital needs resulting from additional acquisitions.
However, the Company may be required to obtain additional capital to fund its
planned growth during the next 12 months and beyond. Potential sources of any
such capital may include the proceeds from the exercise of outstanding options,
bank financing, strategic alliances, and additional offerings of the Company's
equity or debt securities. There can be no assurance that such capital will be
available from these or other potential sources, and the lack of such capital
could have a material adverse effect on the Company's business.

YEAR 2000 COMPLIANCE

         During 1997, the Company commenced a program to install new computer
software programs that are intended to integrate the Company's management
information systems throughout its organizational structure, as well as to
comply with Year 2000 requirements. The Company has experienced delays in
completing this program. As of the filing date of this Report, the installation
program is approximately 90% complete. The Company currently anticipates that
the new software systems will be fully installed and tested in the second
quarter of calendar 1999 and intends to commence using the new system at the
beginning of the third calendar quarter of 1999 (the Company's fourth fiscal
quarter). The Company believes that its new software system will comply with the
Year 2000 requirements, and the Company currently does not anticipate that it
will experience any material disruption to its operations as a result of the
failure of any of its systems to function properly beyond December 31, 1999.

                                       11
<PAGE>   12
         If by July 1999, the Company has not completed the installation and
start-up of its new computer software systems, the Company intends to initiate
its contingency program, which consists of upgrading certain of its existing
software programs to bring them into Year 2000 compliance.

         Computer systems operated by third parties, including customers,
vendors, credit card transaction processors, and financial institutions, with
which the Company's systems interface may not continue to properly interface
with the Company's systems and may not otherwise be compliant on a timely basis
with Year 2000 requirements. The Company's third-party manufacturers of
die-cast, apparel, and other products do not rely heavily on computer-operated
systems in their manufacturing processes. Accordingly, the Company does not
believe that Year 2000 issues pose a significant risk with respect to the
manufacture of its products. Because the Company's business typically does not
generate a large volume of purchase orders for its products, the Company
believes it could rely on non-automated ordering systems if its vendors'
computer systems fail as a result of Year 2000 issues. Any failure of the
Company's computer system or the systems of third parties to timely achieve Year
2000 compliance, however, could have a material adverse effect on the Company's
business, financial condition, and operating results.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

         This Report contains forward-looking statements, including statements
regarding the Company's business and the industry in which the Company operates.
These forward-looking statements are based primarily on the Company's
expectations and are subject to a number of risks and uncertainties, some of
which are beyond the Company's control. Actual results could differ materially
from the forward-looking statements as a result of numerous factors, including
those set forth in the Company's Form 10-K/A for the year ended September 30,
1998, as filed with the Securities and Exchange Commission.


                                       12
<PAGE>   13
PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         Not applicable

ITEM 2. CHANGES IN SECURITIES

         Not applicable

ITEM 3. DEFAULTS UPON SECURITIES

         Not applicable

ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company's 1999 Annual Meeting of Shareholders was held on March 25, 1999.
The following items were voted upon by the Company's shareholders.

         (a)      The following nominees were elected to the Company's Board of
                  Directors to serve until their successors are elected or have
                  been qualified, or until their earlier resignation or removal:

                  Nominee                   Votes in Favor             Withheld
                  -------                   --------------             --------
                  Fred W. Wagenhals           15,242,456                944,525
                  Tod J. Wagenhals            15,242,656                944,325
                  Christopher S. Besing       15,242,456                944,525
                  Melodee L. Volosin          15,242,456                944,525
                  John S. Bickford, Sr.       15,242,456                944,525
                  Paul G. Lang                15,242,456                944,525
                  John M. Lloyd               15,242,756                944,225
                  Robert H. Manschot          15,242,756                944,225
                  Edward Bauman               15,242,716                944,265
                                          
         (b)      Proposal to amend the Company's First Amended and Restated
                  Articles of Incorporation to (i) increase the number of
                  authorized shares of Common Stock, par value $.01 per share,
                  from 25,000,000 to 100,000,000 shares, and (ii) eliminate the
                  authorization to issue Class A Preferred Stock, no par value
                  per share.

<TABLE>
<CAPTION>
                  Votes in Favor      Opposed      Abstained     Broker Non-Vote
                  --------------      --------     ---------     ---------------
<S>                                  <C>           <C>           <C>      
                  6,329,795          6,889,157        23,490        2,944,539
</TABLE>

         (c)      Proposal to approve the Company's 1999 Incentive Stock Plan

<TABLE>
<CAPTION>
                  Votes in Favor      Opposed      Abstained     Broker Non-Vote
                  --------------      --------     ---------     ---------------
<S>                                  <C>           <C>           <C>      
                  5,733,655          7,441,773        26,901        2,984,652
</TABLE>

         (d)      Proposal to approve the Company's 1999 Stock Purchase Plan

<TABLE>
<CAPTION>
                  Votes in Favor      Opposed      Abstained     Broker Non-Vote
                  --------------      --------     ---------     ---------------
<S>                                  <C>           <C>           <C>      
                  6,949,667          6,231,752        20,910        2,984,652
</TABLE>

         (e)      Proposal to ratify the appointment of Arthur Andersen LLP as
                  the independent auditors of the Company for the fiscal year
                  ending September 30, 1999.

<TABLE>
<CAPTION>
                  Votes in Favor      Opposed      Abstained     Broker Non-Vote
                  --------------      --------     ---------     ---------------
<S>                                   <C>          <C>           <C>
                  16,169,327             4,865        12,789           -0-
</TABLE>


                                       13
<PAGE>   14
ITEM 5.  OTHER INFORMATION

         Not applicable

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a) Exhibits

                  11.1     Computation of Basic Earnings Per Share

                  11.2     Computation of Diluted Earnings Per Share

                  27       Financial Data Schedule

         (b) Reports on Form 8-K

                  Not applicable.


                                       14
<PAGE>   15
                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                       ACTION PERFORMANCE COMPANIES, INC.

<TABLE>
<CAPTION>
Signature                           Capacity                                     Date
---------                           --------                                     ----
<S>                          <C>                                             <C> 
/s/ Fred W. Wagenhals        Chairman of the Board, President, and           May 14, 1999
---------------------        Chief Executive Officer
Fred W. Wagenhals            (Principal Executive Officer)

/s/ Christopher S. Besing    Vice President, Chief Financial Officer,        May 14, 1999
-------------------------    Treasurer, and Director
Christopher S. Besing        (Principal Financial and Accounting Officer)

/s/ David A. Husband         Vice President, Chief Accounting Officer        May 14, 1999
--------------------         (Principal Accounting Officer)
David A. Husband    
</TABLE>
                   

                                       15
<PAGE>   16
                                 EXHIBIT INDEX

               Exhibit No.         Description
               -----------         -----------
                  11.1     Computation of Basic Earnings Per Share

                  11.2     Computation of Diluted Earnings Per Share

                  27       Financial Data Schedule