##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

|       |  |                                                                                        
|------ |  | ---------------------------------------------------------------------------------------
|(XBOX) |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

Commission file number 0-21630

ACTION PERFORMANCE COMPANIES, INC.

(Exact Name of Registrant as Specified in Its Charter)


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

4707 E. Baseline Road
Phoenix, AZ 85042
(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(XBOX) No(BOX)

Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date.

|                              |  |                             
|----------------------------- |  | ----------------------------
|CLASS                         |  | OUTSTANDING AT JULY 31, 2002
|                             
|                             
|                             
|                             
|Common Stock, $0.01 Par Value |  | 17,800,495 Shares           





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TABLE OF CONTENTS



|                                                                              |                                                                                               |  |  |  |  |  |  | 
|----------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I- FINANCIAL INFORMATION                                                
|                                                                              | ITEM 1. Financial Statements                                                                 
|ACTION PERFORMANCE COMPANIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                                                              | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                                              | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|PART II  OTHER INFORMATION                                                  
|                                                                              | ITEM 1. Legal Proceedings                                                                    
|                                                                              | ITEM 2. Changes in Securities and Use of Proceeds                                            
|                                                                              | ITEM 3. Defaults Upon Senior Securities                                                      
|                                                                              | ITEM 4. Submissions of Matters to a Vote of Security Holders                                 
|                                                                              | ITEM 5. Other Information                                                                    
|                                                                              | ITEM 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                                                                   
|Index to Exhibits                                                            
|EX-99.1                                                                      
|EX-99.2                                                                      



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##### Table of Contents






PART I- FINANCIAL INFORMATION




ITEM 1. Financial Statements

2



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##### Table of Contents



ACTION PERFORMANCE COMPANIES, INC.
Unaudited Condensed Consolidated Balance Sheets
June 30, 2002 and September 30, 2001
(in thousands, except per share data)

|                                     |                                    |                                                                                                    |                             |        |          |         |               |        |         |         | 
|------------------------------------ | ---------------------------------- | -------------------------------------------------------------------------------------------------- | --------------------------- | ------ | -------- | ------- | ------------- | ------ | ------- | ------- | 
|                                     |                                    |                                                                                                    |                             |        | June 30, |         | September 30,
|                                     |                                    |                                                                                                    |                             |        | 2002     |         | 2001         
|                                     |                                    |                                                                                                    |                             |        |          |         |              
|ASSETS                               |                                    |                                                                                                    |                             |        |          |         |               |       
|                                    
|                                    
|                                    
|                                    
|Current Assets:                      |                                    |                                                                                                    |                             |        |          |         |               |       
|                                    
|                                    
|                                    
|                                    
|                                     |                                    | Cash and cash equivalents                                                                          |                             | $      | 76,565   |         |               | $      | 64,514  |        
|                                    
|                                    
|                                    
|                                    
|                                     |                                    | Accounts receivable, net                                                                           |                             |        | 50,711   |         |               |        | 40,725  |        
|                                    
|                                    
|                                    
|                                    
|                                     |                                    | Inventories                                                                                        |                             |        | 24,063   |         |               |        | 25,120  |        
|                                    
|                                    
|                                    
|                                    
|                                     |                                    | Prepaid royalties                                                                                  |                             |        | 12,400   |         |               |        | 10,222  |        
|                                    
|                                    
|                                    
|                                    
|                                     |                                    | Deferred taxes                                                                                     |                             |        | 2,765    |         |               |        | 2,672   |        
|                                    
|                                    
|                                    
|                                    
|                                     |                                    | Prepaid expenses and other assets                                                                  |                             |        | 2,915    |         |               |        | 1,392   |        
|                                     |                                    |                                                                                                    |                             |        |          |         |               |        |         |        
|                                     |                                    |                                                                                                    | Total Current Assets        |        |          | 169,419 |               |        |         | 144,645 | 
|                                    
|                                    
|                                    
|                                    
|Property and Equipment, net          |                                    |                                                                                                    | 44,719                      |        |          |         | 40,356        |       
|                                    
|                                    
|                                    
|                                    
|Goodwill                             |                                    |                                                                                                    | 80,021                      |        |          |         | 76,937        |       
|                                    
|                                    
|                                    
|                                    
|Licenses and Trademark               |                                    |                                                                                                    | 16,979                      |        |          |         | 12,785        |       
|                                    
|                                    
|                                    
|                                    
|Other Assets                         |                                    |                                                                                                    | 5,473                       |        |          |         | 4,230         |       
|                                     |                                    |                                                                                                    |                             |        |          |         |               |        |         |        
|                                     |                                    | $                                                                                                  | 316,611                     |        |          | $       | 278,953       |       
|                                     |                                    |                                                                                                    |                             |        |          |         |               |        |         |        
|LIABILITIES AND SHAREHOLDERS EQUITY |                                    |                                                                                                    |                             |        |          |         |               |       
|                                    
|                                    
|                                    
|                                    
|Current Liabilities:                 |                                    |                                                                                                    |                             |        |          |         |               |       
|                                    
|                                    
|                                    
|                                    
|                                     |                                    | Accounts payable                                                                                   |                             | $      | 20,176   |         |               | $      | 18,371  |        
|                                    
|                                    
|                                    
|                                    
|                                     |                                    | Accrued royalties                                                                                  |                             |        | 17,350   |         |               |        | 16,792  |        
|                                    
|                                    
|                                    
|                                    
|                                     |                                    | Accrued expenses and other                                                                         |                             |        | 10,967   |         |               |        | 18,755  |        
|                                    
|                                    
|                                    
|                                    
|                                     |                                    | Current portion of long-term debt                                                                  |                             |        | 333      |         |               |        | 424     |        
|                                     |                                    |                                                                                                    |                             |        |          |         |               |        |         |        
|                                     |                                    |                                                                                                    | Total Current Liabilities   |        |          | 48,826  |               |        |         | 54,342  | 
|                                     |                                    |                                                                                                    |                             |        |          |         |               |        |         |        
|Long-Term Liabilities:               |                                    |                                                                                                    |                             |        |          |         |               |       
|                                    
|                                    
|                                    
|                                    
|                                     | 43⁄4% convertible subordinated notes |                                                                                                    |                             | 38,935 |          |         |               | 54,933 |        
|                                    
|                                    
|                                    
|                                    
|                                     | Other long-term debt               |                                                                                                    |                             | 1,287  |          |         |               | 2,063  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Deferred taxes and other           |                                                                                                    |                             | 6,602  |          |         |               | 4,710  |        
|                                     |                                    |                                                                                                    |                             |        |          |         |               |        |         |        
|                                     |                                    |                                                                                                    | Total Long-Term Liabilities |        |          | 46,824  |               |        |         | 61,706  | 
|                                     |                                    |                                                                                                    |                             |        |          |         |               |        |         |        
|Commitments
and Contingencies        |                                    |                                                                                                    |                             |        |          |         |               |       
|                                    
|                                    
|                                    
|                                    
|Minority Interests                   |                                    |                                                                                                    | 2,941                       |        |          |         | 3,079         |       
|                                    
|                                    
|                                    
|                                    
|Shareholders Equity:                |                                    |                                                                                                    |                             |        |          |         |               |       
|                                    
|                                    
|                                    
|                                    
|                                     |                                    | Common stock, $.01 par value, 62,500 and 25,000 shares authorized,
17,829 and 17,313 shares issued |                             |        | 178      |         |               |        | 173     |        
|                                    
|                                    
|                                    
|                                    
|                                     |                                    | Additional paid-in capital                                                                         |                             |        | 143,761  |         |               |        | 121,669 |        
|                                    
|                                    
|                                    
|                                    
|                                     |                                    | Treasury stock, at cost, 0 and 143 shares                                                          |                             |        |         |         |               |        | (1,221  | )      
|                                    
|                                    
|                                    
|                                    
|                                     |                                    | Accumulated other comprehensive loss                                                               |                             |        | (2,684   | )       |               |        | (5,625  | )      
|                                    
|                                    
|                                    
|                                    
|                                     |                                    | Retained earnings                                                                                  |                             |        | 76,765   |         |               |        | 44,830  |        
|                                     |                                    |                                                                                                    |                             |        |          |         |               |        |         |        
|                                     |                                    |                                                                                                    | Total Shareholders Equity  |        |          | 218,020 |               |        |         | 159,826 | 
|                                     |                                    |                                                                                                    |                             |        |          |         |               |        |         |        
|                                     |                                    | $                                                                                                  | 316,611                     |        |          | $       | 278,953       |       
|                                     |                                    |                                                                                                    |                             |        |          |         |               |        |         |        

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

3



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##### Table of Contents



ACTION PERFORMANCE COMPANIES, INC.
Unaudited Condensed Consolidated Statements of Operations
Three and Nine Months Ended June 30, 2002 and 2001
(in thousands, except per share data)

|                                                                |                                        |                                   |                                   |                          |       |                    |        |                   |      |       |         |        |       |        |         |        |      |        |        | 
|--------------------------------------------------------------- | -------------------------------------- | --------------------------------- | --------------------------------- | ------------------------ | ----- | ------------------ | ------ | ----------------- | ---- | ----- | ------- | ------ | ----- | ------ | ------- | ------ | ---- | ------ | ------ | 
|                                                                |                                        |                                   |                                   |                          |       | Three Months Ended |        | Nine Months Ended
|                                                                |                                        |                                   |                                   |                          |       |                    |        |                  
|                                                                |                                        |                                   |                                   |                          |       | 2002               |        | 2001              |      | 2002  |         | 2001  
|                                                                |                                        |                                   |                                   |                          |       |                    |        |                   |      |       |         |       
|Net sales                                                       |                                        | $                                 | 112,085                           |                          |       | $                  | 92,975 |                   |      | $     | 296,406 |        |       | $      | 214,937 |       
|                                                               
|                                                               
|                                                               
|                                                               
|Cost of sales                                                   |                                        |                                   | 68,347                            |                          |       |                    | 59,329 |                   |      |       | 181,960 |        |       |        | 139,222 |       
|                                                                |                                        |                                   |                                   |                          |       |                    |        |                   |      |       |         |        |       |        |         |       
|Gross profit                                                    |                                        |                                   | 43,738                            |                          |       |                    | 33,646 |                   |      |       | 114,446 |        |       |        | 75,715  |       
|                                                                |                                        |                                   |                                   |                          |       |                    |        |                   |      |       |         |        |       |        |         |       
|Operating expenses:                                             |                                        |                                   |                                   |                          |       |                    |        |                   |      |       |         |        |       |        |         |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Selling, general and administrative    |                                   |                                   | 20,225                   |       |                    |        | 17,951            |      |       |         | 56,326 |       |        |         | 49,450 |     
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Amortization of goodwill and trademark |                                   |                                   |                         |       |                    |        | 1,011             |      |       |         |       |       |        |         | 2,956  |     
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Amortization of intangibles            |                                   |                                   | 679                      |       |                    |        | 498               |      |       |         | 1,766  |       |        |         | 1,791  |     
|                                                                |                                        |                                   |                                   |                          |       |                    |        |                   |      |       |         |        |       |        |         |       
|                                                                |                                        |                                   |                                   | Total operating expenses |       |                    | 20,904 |                   |      |       | 19,460  |        |       |        | 58,092  |        |      |        | 54,197 | 
|                                                                |                                        |                                   |                                   |                          |       |                    |        |                   |      |       |         |        |       |        |         |       
|Income from operations                                          |                                        |                                   | 22,834                            |                          |       |                    | 14,186 |                   |      |       | 56,354  |        |       |        | 21,518  |       
|                                                               
|                                                               
|                                                               
|                                                               
|Interest expense                                                |                                        |                                   | (666                              | )                        |       |                    | (1,169 | )                 |      |       | (2,372  | )      |       |        | (4,155  | )     
|                                                               
|                                                               
|                                                               
|                                                               
|Minority interests and other, net                               |                                        |                                   | (35                               | )                        |       |                    | (556   | )                 |      |       | (406    | )      |       |        | (695    | )     
|                                                                |                                        |                                   |                                   |                          |       |                    |        |                   |      |       |         |        |       |        |         |       
|Income before income taxes and
extraordinary items              |                                        |                                   | 22,133                            |                          |       |                    | 12,461 |                   |      |       | 53,576  |        |       |        | 16,668  |       
|                                                               
|                                                               
|                                                               
|                                                               
|Income taxes                                                    |                                        |                                   | 8,587                             |                          |       |                    | 4,233  |                   |      |       | 20,787  |        |       |        | 5,917   |       
|                                                                |                                        |                                   |                                   |                          |       |                    |        |                   |      |       |         |        |       |        |         |       
|Income before extraordinary items                               |                                        |                                   | 13,546                            |                          |       |                    | 8,228  |                   |      |       | 32,789  |        |       |        | 10,751  |       
|                                                               
|                                                               
|                                                               
|                                                               
|Extraordinary gain (loss) on
extinguishment of debt, net of tax |                                        |                                   | (1,002                            | )                        |       |                    | 1,981  |                   |      |       | (854    | )      |       |        | 8,068   |       
|                                                                |                                        |                                   |                                   |                          |       |                    |        |                   |      |       |         |        |       |        |         |       
|Net income                                                      |                                        |                                   | 12,544                            |                          |       |                    | 10,209 |                   |      |       | 31,935  |        |       |        | 18,819  |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |                                        |                                   | Other comprehensive income (loss) |                          |       | 3,814              |        |                   |      | (703  | )       |        |       | 2,941  |         |        |      | (1,518 | )     
|                                                                |                                        |                                   |                                   |                          |       |                    |        |                   |      |       |         |        |       |        |         |       
|                                                                |                                        |                                   | Comprehensive income              |                          | $     | 16,358             |        |                   | $    | 9,506 |         |        | $     | 34,876 |         |        | $    | 17,301 |       
|                                                                |                                        |                                   |                                   |                          |       |                    |        |                   |      |       |         |        |       |        |         |       
|EARNINGS PER COMMON SHARE:                                      |                                        |                                   |                                   |                          |       |                    |        |                   |      |       |         |        |       |        |         |       
|                                                               
|                                                               
|                                                               
|                                                               
|Basic-                                                          |                                        |                                   |                                   |                          |       |                    |        |                   |      |       |         |        |       |        |         |       
|                                                                |                                        | Income before extraordinary items |                                   | $                        | 0.76  |                    |        | $                 | 0.51 |       |         | $      | 1.87  |        |         | $      | 0.67 |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |                                        | Extraordinary items, net of tax   |                                   |                          | (0.06 | )                  |        |                   | 0.12 |       |         |        | (0.04 | )      |         |        | 0.50 |       
|                                                                |                                        |                                   |                                   |                          |       |                    |        |                   |      |       |         |        |       |        |         |       
|                                                                |                                        | Net income                        |                                   | $                        | 0.70  |                    |        | $                 | 0.63 |       |         | $      | 1.83  |        |         | $      | 1.17 |       
|                                                                |                                        |                                   |                                   |                          |       |                    |        |                   |      |       |         |        |       |        |         |       
|Diluted-                                                        |                                        |                                   |                                   |                          |       |                    |        |                   |      |       |         |        |       |        |         |       
|                                                                |                                        | Income before extraordinary items |                                   | $                        | 0.72  |                    |        | $                 | 0.48 |       |         | $      | 1.76  |        |         | $      | 0.66 |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |                                        | Extraordinary items, net of tax   |                                   |                          | (0.06 | )                  |        |                   | 0.10 |       |         |        | (0.04 | )      |         |        | 0.49 |       
|                                                                |                                        |                                   |                                   |                          |       |                    |        |                   |      |       |         |        |       |        |         |       
|                                                                |                                        | Net income                        |                                   | $                        | 0.66  |                    |        | $                 | 0.58 |       |         | $      | 1.72  |        |         | $      | 1.15 |       
|                                                                |                                        |                                   |                                   |                          |       |                    |        |                   |      |       |         |        |       |        |         |       

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

4



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##### Table of Contents



ACTION PERFORMANCE COMPANIES, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
Nine Months Ended June 30, 2002 and 2001
(in thousands)

|                                                      |                                                              |                                                     |        |                            |         |      |        |         |         |  
|----------------------------------------------------- | ------------------------------------------------------------ | --------------------------------------------------- | ------ | -------------------------- | ------- | ---- | ------ | ------- | ------- | -
|                                                      |                                                              |                                                     |        | Nine Months Ended June 30,
|                                                      |                                                              |                                                     |        |                           
|                                                      |                                                              |                                                     |        | 2002                       |         | 2001
|                                                      |                                                              |                                                     |        |                            |         |     
|CASH FLOWS FROM OPERATING ACTIVITIES:                 |                                                              |                                                     |        |                            |         |      |        |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Net income                                                   |                                                     | $      | 31,935                     |         |      | $      | 18,819  |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Adjustments
to reconcile net income to cash from operations- |                                                     |        |                            |         |      |        |         |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                              | Deferred income taxes                               |        | 2,366                      |         |      |        | 5,907   |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                              | Depreciation and amortization                       |        | 17,346                     |         |      |        | 21,050  |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                              | Stock option tax benefits                           |        | 3,610                      |         |      |        | 809     |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                              | Extraordinary (gain) loss on extinguishment of debt |        | 1,361                      |         |      |        | (12,807 | )      
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                              | Other                                               |        | (144                       | )       |      |        | 1,651   |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Changes
in assets and liabilities, net-                      |                                                     |        | (144                       | )       |      |        | 1,651   |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                              | Accounts receivable, net                            |        |                            | (9,068  | )    |        |         | (21,688 | )
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                              | Accounts payable and accrued expenses               |        |                            | (3,168  | )    |        |         | (3,659  | )
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                              | Income tax payable and receivable                   |        |                            | (5,226  | )    |        |         | 19,638  |  
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                              | Inventories                                         |        |                            | 1,328   |      |        |         | 4,742   |  
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                              | Prepaid royalties and accrued royalties             |        |                            | (1,629  | )    |        |         | 1,442   |  
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                              | Other                                               |        |                            | (1,399  | )    |        |         | 58      |  
|                                                      |                                                              |                                                     |        |                            |         |      |        |         |         |  
|                                                      |                                                              | Net cash from operating activities                  |        |                            | 37,312  |      |        |         | 35,962  |  
|                                                      |                                                              |                                                     |        |                            |         |      |        |         |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                 |                                                              |                                                     |        |                            |         |      |        |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Capital expenditures, net                                    |                                                     |        | (18,011                    | )       |      |        | (10,872 | )      
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | (Acquisitions) and dispositions, net of costs                |                                                     |        | (6,122                     | )       |      |        | 2,512   |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Other                                                        |                                                     |        | (237                       | )       |      |        |        |        
|                                                      |                                                              |                                                     |        |                            |         |      |        |         |        
|                                                      |                                                              | Net cash used in investing activities               |        |                            | (24,370 | )    |        |         | (8,360  | )
|                                                      |                                                              |                                                     |        |                            |         |      |        |         |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                 |                                                              |                                                     |        |                            |         |      |        |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Long-term debt repayments                                    |                                                     |        | (7,384                     | )       |      |        | (10,538 | )      
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Common stock purchases for treasury                          |                                                     |        |                           |         |      |        | (1,385  | )      
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Stock option exercise proceeds                               |                                                     |        | 6,124                      |         |      |        | 2,051   |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Other                                                        |                                                     |        | 26                         |         |      |        |        |        
|                                                      |                                                              |                                                     |        |                            |         |      |        |         |        
|                                                      |                                                              | Net cash used in financing activities               |        |                            | (1,234  | )    |        |         | (9,872  | )
|                                                      |                                                              |                                                     |        |                            |         |      |        |         |        
|Effect of exchange rates on cash and cash equivalents |                                                              |                                                     | 343    |                            |         |      | (114   | )      
|                                                      |                                                              |                                                     |        |                            |         |      |        |         |        
|Net change in cash and cash equivalents               |                                                              |                                                     | 12,051 |                            |         |      | 17,616 |        
|                                                     
|                                                     
|                                                     
|                                                     
|Cash and cash equivalents, beginning of period        |                                                              |                                                     | 64,514 |                            |         |      | 22,758 |        
|                                                      |                                                              |                                                     |        |                            |         |      |        |         |        
|Cash and cash equivalents, end of period              |                                                              | $                                                   | 76,565 |                            |         | $    | 40,374 |        
|                                                      |                                                              |                                                     |        |                            |         |      |        |         |        
|Supplemental Disclosures:                             |                                                              |                                                     |        |                            |         |      |        |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Interest paid                                                |                                                     | $      | 2,650                      |         |      | $      | 4,981   |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Income taxes paid (refunded), net                            |                                                     |        | 19,349                     |         |      |        | (17,131 | )      

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

5



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##### Table of Contents






ACTION PERFORMANCE COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2002

INTERIM FINANCIAL REPORTING

The accompanying condensed consolidated financial statements for Action
Performance Companies, Inc. and subsidiaries have been prepared without audit
by independent public accountants pursuant to the rules and regulations of the
Securities and Exchange Commission. In our opinion, all normal recurring
adjustments necessary for a fair statement of financial position and results of
operations for the interim periods included herein have been made. Certain
information and note disclosures normally included in the financial statements
prepared in accordance with accounting principles generally accepted in the
United States have been condensed or omitted from these statements pursuant to
such rules and regulations. Accordingly, these financial statements should be
read in conjunction with our Form 10-K for the fiscal year ended September 30,
2001. The results of operations for the interim periods are not necessarily
indicative of the operating results that may be expected for the fiscal year
ending September 30, 2002.

Certain prior period amounts have been reclassified to conform to the current
year presentation.

RECENT ACCOUNTING PRONOUNCEMENTS

We adopted SFAS No. 142, Goodwill and Other Intangible Assets (SFAS 142),
effective October 1, 2001. This standard establishes new guidelines for
determining the accounting value of goodwill and other intangibles and
eliminates the amortization requirement for goodwill and intangibles with an
indefinite life. Goodwill and intangibles with indefinite lives will be
subject to an impairment test, based on fair value, at least annually.

We have completed evaluations of goodwill and of other intangibles, which
include licenses and the Winners Circle trademark, in accordance with SFAS
142. The reporting units for SFAS 142 are domestic die-cast, domestic apparel,
foreign die-cast and corporate and other, which are also our reporting
segments. Goodwill and the trademark, which has an indefinite life, have been
allocated to those reporting units as indicated below in Segment Information.
We have made no adjustments to income (loss) to date in connection with the
evaluations, and we do not anticipate making any adjustments.

As of October 1, 2001, goodwill and trademark amortization ceased, in
accordance with SFAS 142. The trademark was acquired in May 2001. For the
three and nine months ended June 30, 2001, goodwill amortization was $1.0
million and $3.0 million or $0.6 million and $2.1 million, net of tax.
Excluding the impact of goodwill amortization, net of tax, income before
extraordinary items and net income for the three and nine months ended June 30,
2001,would have been the following (in thousands, except per share data):

|                                  |          |                                   |        |        |      |        |        |   |      | 
|--------------------------------- | -------- | --------------------------------- | ------ | ------ | ---- | ------ | ------ | - | ---- | 
|                                  |          |                                   |        | Three  |      | Nine  
|                                  |          |                                   |        | Months |      | Months
|                                  |          |                                   |        | Ended  |      | Ended 
|                                  |          |                                   |        |        |      |       
|Income before extraordinary items |          | $                                 | 8,810  |        |      | $      | 12,853 |  
|                                 
|                                 
|                                 
|                                 
|Net income                        |          | $                                 | 10,791 |        |      | $      | 20,921 |  
|                                 
|                                 
|                                 
|                                 
|Earnings Per Common Share:        |          |                                   |        |        |      |        |        |  
|                                 
|                                 
|                                 
|                                 
|                                  | Basic-   |                                   |        |        |      |        |        |   |     
|                                  |          | Income before extraordinary items |        | $      | 0.55 |        |        | $ | 0.80 | 
|                                 
|                                 
|                                 
|                                 
|                                  |          | Net income                        |        | $      | 0.67 |        |        | $ | 1.30 | 
|                                 
|                                 
|                                 
|                                 
|                                  | Diluted- |                                   |        |        |      |        |        |   |     
|                                  |          | Income before extraordinary items |        | $      | 0.52 |        |        | $ | 0.78 | 
|                                 
|                                 
|                                 
|                                 
|                                  |          | Net income                        |        | $      | 0.62 |        |        | $ | 1.27 | 

6



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##### Table of Contents



SFAS No. 145, Rescission of FAS Nos. 4, 44, and 64, Amendment of FAS 13, and
Technical Corrections as of April 2002 (SFAS 145), changes the classification
of all gains and losses from extinguishment of debt, which under FASB Statement
No. 4 were required to be classified as an extraordinary item, net of related
income tax effect. Under SFAS No. 145, gains and losses from extinguishment of
debt will now be classified as a component of operations. We intend to adopt
SFAS No. 145 effective October 1, 2002. We will reclassify debt
extinguishments in all periods presented as a component of income before tax
and adjust income taxes accordingly. There will be no net impact on net income
previously reported.

SEGMENT INFORMATION

Reportable segments are based on divisions operating geographically, domestic
and abroad, and specializing in either die-cast or apparel and other souvenirs.
The domestic die-cast operation is based in Phoenix. The domestic apparel and
souvenir operation is based in Charlotte, with a screen-printing facility in
Atlanta, and includes trackside operations. The foreign die-cast operation is
based in Germany. The foreign apparel and souvenir operation (Goodsports) was
based in England. Goodsports was closed effective September 30, 2001.

We evaluate performance and allocate resources based on segment operating
income (loss). The accounting policies of the reportable segments are the same
as those used in the consolidated financial statements. Domestic apparel and
other consists of t-shirts, hats, jackets and memorabilia. Domestic licensing
costs and certain management and information systems costs are not allocated to
the domestic operating segments and are included in corporate and other.
Intangible licenses are included in corporate and other assets. Each domestic
segment is allocated royalty expense based on the incremental royalty due on
that segments sales. Domestic royalty guarantees advanced and unearned are an
expense of corporate and other. Financial information for the reportable
segments follows (in thousands):

|      |                     |                                            |   |                             |         |          |   |              |   |              |   |           |       |     |   |        |        | 
|----- | ------------------- | ------------------------------------------ | - | --------------------------- | ------- | -------- | - | ------------ | - | ------------ | - | --------- | ----- | --- | - | ------ | ------ | 
|      |                     |                                            |   | Three Months Ended June 30,
|      |                     |                                            |   |                            
|      |                     |                                            |   |                             |         |          |   | Inter-       |   | Depreciation |   | Operating
|      |                     |                                            |   | External                    |         | segment  |   | and          |   | Income      
|      |                     |                                            |   | Revenues                    |         | Revenues |   | Amortization |   | (Loss)      
|      |                     |                                            |   |                             |         |          |   |              |   |             
|      |                     |                                            |   |                             |         |          |   |              |   |              |   | (a)       |       | (a)
|2002: |                     |                                            |   |                             |         |          |   |              |   |              |   |           |       |     |   |       
|     
|     
|     
|     
|      | Domestic die-cast   |                                            | $ | 57,202                      |         |          | $ | 2,962        |   |              | $ | 2,418     |       |     | $ | 20,034 |       
|     
|     
|     
|     
|      | Domestic apparel    |                                            |   | 47,160                      |         |          |   |             |   |              |   | 647       |       |     |   | 9,700  |       
|     
|     
|     
|     
|      | Foreign die-cast    |                                            |   | 6,777                       |         |          |   |             |   |              |   | 1,085     |       |     |   | 1,157  |       
|     
|     
|     
|     
|      | Corporate and other |                                            |   | 946                         |         |          |   |             |   |              |   | 1,607     |       |     |   | (7,996 | )     
|     
|     
|     
|     
|      | Eliminations        |                                            |   |                            |         |          |   | (2,962       | ) |              |   |          |       |     |   | (61    | )     
|      |                     |                                            |   |                             |         |          |   |              |   |              |   |           |       |     |   |        |       
|      |                     | Total per consolidatedfinancial statements |   | $                           | 112,085 |          |   | $            |  |              |   | $         | 5,757 |     |   | $      | 22,834 | 
|      |                     |                                            |   |                             |         |          |   |              |   |              |   |           |       |     |   |        |       
|2001: |                     |                                            |   |                             |         |          |   |              |   |              |   |           |       |     |   |       
|     
|     
|     
|     
|      | Domestic die-cast   |                                            | $ | 34,396                      |         |          | $ | 3,946        |   |              | $ | 3,827     |       |     | $ | 9,392  |       
|     
|     
|     
|     
|      | Domestic apparel    |                                            |   | 48,380                      |         |          |   |             |   |              |   | 1,269     |       |     |   | 9,762  |       
|     
|     
|     
|     
|      | Foreign die-cast    |                                            |   | 7,399                       |         |          |   |             |   |              |   | 930       |       |     |   | 1,665  |       
|     
|     
|     
|     
|      | Foreign apparel     |                                            |   | 2,462                       |         |          |   |             |   |              |   | 20        |       |     |   | (62    | )     
|     
|     
|     
|     
|      | Corporate and other |                                            |   | 338                         |         |          |   |             |   |              |   | 1,345     |       |     |   | (5,877 | )     
|     
|     
|     
|     
|      | Eliminations        |                                            |   |                            |         |          |   | (3,946       | ) |              |   |          |       |     |   | (694   | )     
|      |                     |                                            |   |                             |         |          |   |              |   |              |   |           |       |     |   |        |       
|      |                     | Total
per consolidatedfinancial statements |   | $                           | 92,975  |          |   | $            |  |              |   | $         | 7,391 |     |   | $      | 14,186 | 
|      |                     |                                            |   |                             |         |          |   |              |   |              |   |           |       |     |   |        |       

7



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##### Table of Contents



|      |                     |                                            |   |                            |         |          |   |              |   |              |   |           |        |     |   |         |        | 
|----- | ------------------- | ------------------------------------------ | - | -------------------------- | ------- | -------- | - | ------------ | - | ------------ | - | --------- | ------ | --- | - | ------- | ------ | 
|      |                     |                                            |   | Nine Months Ended June 30,
|      |                     |                                            |   |                           
|      |                     |                                            |   |                            |         |          |   | Inter-       |   | Depreciation |   | Operating
|      |                     |                                            |   | External                   |         | segment  |   | and          |   | Income      
|      |                     |                                            |   | Revenues                   |         | Revenues |   | Amortization |   | (Loss)      
|      |                     |                                            |   |                            |         |          |   |              |   |             
|      |                     |                                            |   |                            |         |          |   |              |   |              |   | (a)       |        | (a)
|2002: |                     |                                            |   |                            |         |          |   |              |   |              |   |           |        |     |   |        
|     
|     
|     
|     
|      | Domestic die-cast   |                                            | $ | 158,289                    |         |          | $ | 9,154        |   |              | $ | 7,996     |        |     | $ | 53,629  |       
|     
|     
|     
|     
|      | Domestic apparel    |                                            |   | 113,927                    |         |          |   |             |   |              |   | 1,653     |        |     |   | 20,028  |       
|     
|     
|     
|     
|      | Foreign die-cast    |                                            |   | 21,590                     |         |          |   |             |   |              |   | 3,215     |        |     |   | 4,275   |       
|     
|     
|     
|     
|      | Corporate and other |                                            |   | 2,600                      |         |          |   |             |   |              |   | 4,482     |        |     |   | (21,177 | )     
|     
|     
|     
|     
|      | Eliminations        |                                            |   |                           |         |          |   | (9,154       | ) |              |   |          |        |     |   | (401    | )     
|      |                     |                                            |   |                            |         |          |   |              |   |              |   |           |        |     |   |         |       
|      |                     | Total
per consolidatedfinancial statements |   | $                          | 296,406 |          |   | $            |  |              |   | $         | 17,346 |     |   | $       | 56,354 | 
|      |                     |                                            |   |                            |         |          |   |              |   |              |   |           |        |     |   |         |       
|2001: |                     |                                            |   |                            |         |          |   |              |   |              |   |           |        |     |   |        
|     
|     
|     
|     
|      | Domestic die-cast   |                                            | $ | 81,230                     |         |          | $ | 6,588        |   |              | $ | 10,014    |        |     | $ | 18,016  |       
|     
|     
|     
|     
|      | Domestic apparel    |                                            |   | 100,115                    |         |          |   |             |   |              |   | 3,799     |        |     |   | 15,837  |       
|     
|     
|     
|     
|      | Foreign die-cast    |                                            |   | 21,894                     |         |          |   | 122          |   |              |   | 2,755     |        |     |   | 4,996   |       
|     
|     
|     
|     
|      | Foreign apparel     |                                            |   | 7,944                      |         |          |   | 190          |   |              |   | 138       |        |     |   | (837    | )     
|     
|     
|     
|     
|      | Corporate and other |                                            |   | 3,754                      |         |          |   |             |   |              |   | 4,344     |        |     |   | (15,800 | )     
|     
|     
|     
|     
|      | Eliminations        |                                            |   |                           |         |          |   | (6,900       | ) |              |   |          |        |     |   | (694    | )     
|      |                     |                                            |   |                            |         |          |   |              |   |              |   |           |        |     |   |         |       
|      |                     | Total
per consolidatedfinancial statements |   | $                          | 214,937 |          |   | $            |  |              |   | $         | 21,050 |     |   | $       | 21,518 | 
|      |                     |                                            |   |                            |         |          |   |              |   |              |   |           |        |     |   |         |       

|                        |                                             |   |                     |         |                        |   |          |         |           |   |        |        |  |   |        |        | 
|----------------------- | ------------------------------------------- | - | ------------------- | ------- | ---------------------- | - | -------- | ------- | --------- | - | ------ | ------ |  | - | ------ | ------ | 
|                        |                                             |   | Identifiable Assets |         | Goodwill and Trademark
|                        |                                             |   |                     |         |                       
|                        |                                             |   | June 30,            |         | Sept. 30,              |   | June 30, |         | Sept. 30,
|                        |                                             |   | 2002                |         | 2001                   |   | 2002     |         | 2001     
|                        |                                             |   |                     |         |                        |   |          |         |          
|Domestic die-cast (b)   |                                             | $ | 53,561              |         |                        | $ | 52,526   |         |           | $ | 13,368 |        |  | $ | 12,656 |       
|                       
|                       
|                       
|                       
|Domestic apparel        |                                             |   | 101,806             |         |                        |   | 92,136   |         |           |   | 52,890 |        |  |   | 51,079 |       
|                       
|                       
|                       
|                       
|Foreign die-cast        |                                             |   | 47,333              |         |                        |   | 40,599   |         |           |   | 15,490 |        |  |   | 14,277 |       
|                       
|                       
|                       
|                       
|Corporate and other (c) |                                             |   | 121,452             |         |                        |   | 95,869   |         |           |   |       |        |  |   |       |       
|                       
|                       
|                       
|                       
|Eliminations            |                                             |   | (7,541              | )       |                        |   | (2,177   | )       |           |   |       |        |  |   |       |       
|                        |                                             |   |                     |         |                        |   |          |         |           |   |        |        |  |   |        |       
|                        | Total
per consolidated
financial statements |   | $                   | 316,611 |                        |   | $        | 278,953 |           |   | $      | 81,748 |  |   | $      | 78,012 | 
|                        |                                             |   |                     |         |                        |   |          |         |           |   |        |        |  |   |        |       



---

|(a) |  | Goodwill and trademark ceased amortizing October 1, 2001, with the
adoption of SFAS 142. Depreciation and amortization and operating income
(loss), included goodwill and trademark amortization totaling $1.0 million
($0.1 million for domestic die-cast, $0.7 million for domestic apparel and
$0.2 million for foreign die-cast) for the three months ended June 30,
2001 and totaling $3.0 million ($0.4 million for domestic die-cast, $2.1
million for domestic apparel and $0.5 million for foreign die-cast) for
the nine months ended June 30, 2001.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(b) |  | Domestic die-cast identifiable assets include the Winners Circle
trademark, purchased from Hasbro in May 2001. As additional consideration
we pay 3% of the related product sales to Hasbro, quarterly through May
2006. The additional consideration is added to the cost of the trademark
quarterly.                                                                                                                                                                                                                                                       
|   
|   
|   
|   
|(c) |  | Corporate and other identifiable assets includes $72.3 million in cash at
June 30, 2002, and $60.9 million in cash at September 30, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                     

8



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##### Table of Contents



EARNINGS PER COMMON SHARE (EPS)

Reconciliations of the numerators and denominators in the EPS computations for
income before extraordinary items for the periods ended June 30 follow in
thousands:

|                                                                             |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        | 
|---------------------------------------------------------------------------- |  | ------------------ | ------ | ----------------- |  | ---- | ------ | ---- |  | - | ------ |  |  | - | ------ | 
|                                                                             |  | Three Months Ended |        | Nine Months Ended
|                                                                             |  |                    |        |                  
|                                                                             |  | 2002               |        | 2001              |  | 2002 |        | 2001
|                                                                             |  |                    |        |                   |  |      |        |     
|NUMERATOR:                                                                   |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        | 
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Basic  income before extraordinary items                                    |  | $                  | 13,546 |                   |  | $    | 8,228  |      |  | $ | 32,789 |  |  | $ | 10,751 | 
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Effect of dilutive convertible subordinated notes                            |  |                    | 319    |                   |  |      | 593    |      |  |   | 1,173  |  |  |   |       | 
|                                                                             |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        | 
|Diluted  adjusted income before extraordinary
items and assumed conversions |  | $                  | 13,865 |                   |  | $    | 8,821  |      |  | $ | 33,962 |  |  | $ | 10,751 | 
|                                                                             |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        | 
|DENOMINATOR:                                                                 |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        | 
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Basic  weighted average shares                                              |  |                    | 17,801 |                   |  |      | 16,138 |      |  |   | 17,493 |  |  |   | 16,142 | 
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Effect of dilutive stock options and warrants                                |  |                    | 777    |                   |  |      | 729    |      |  |   | 767    |  |  |   | 283    | 
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Effect of dilutive convertible subordinated notes                            |  |                    | 810    |                   |  |      | 1,649  |      |  |   | 991    |  |  |   |       | 
|                                                                             |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        | 
|Diluted  adjusted weighted average shares and
assumed conversions           |  |                    | 19,388 |                   |  |      | 18,516 |      |  |   | 19,251 |  |  |   | 16,425 | 
|                                                                             |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        | 

The impact of options and warrants outstanding for the purchases of 482
thousand shares of common stock, at an average price of $39.90 were not
included in the calculation of diluted EPS for the nine months ended June 30,
2002, because to do so would be antidilutive. The options and warrants had an
exercise price greater than the average market price of the common stock for
the nine months ended June 30, 2002, but could potentially dilute EPS in the
future.

GAIN ON EXTINGUISHMENT OF DEBT

During the three months ended June 30, 2002, we repurchased 43⁄4% convertible
subordinated notes with a face value of $10.0 million, at a loss of $1.0
million, net of tax, using 145 thousand shares from treasury and 95 thousand
newly issued shares at an average price of $47.60. During the nine months
ended June 30, 2002, we repurchased 43⁄4% convertible subordinated notes with
a face value of $16.0 million, at a loss of $854 thousand, using 5.7 million in
cash and 145 thousand shares from treasury and 95 thousand newly issued shares
at an average price of $47.60.

ACQUISITIONS

In June 2002, we acquired Trevco Trading Corp (Trevco). Trevco markets gifts
and ornaments, which are produced overseas, to mass retailers. The initial
cash purchase price of $5.5 million was allocated $0.6 million to tangible net
assets, $1.8 million to goodwill and $3.1 million to other intangible assets,
consisting of backlog, non-contractual customer relationships and a 5-year
non-compete agreement. The intangible assets are being amortized over lives
ranging from 3 months to 5 years. Under the terms of the merger agreement we
will pay additional consideration of $1.0 million in cash and 51,046 shares of
common stock, payable if Trevco achieves revenue and operating income targets
for the 5 months ended September 30, 2002. Under the terms of the merger
agreement, we may issue a second round of additional consideration, either
50,000 or 75,000 shares of common stock, if Trevco achieves revenue and
operating income targets for the year ended September 30, 2004. The additional
consideration will be added to the purchase price if and when the financial
targets are achieved. Trevcos annual net sales, which fall primarily in our
fourth fiscal quarter, are expected to total approximately $9 million. The
domestic apparel segment includes Trevcos net sales since the date of
acquisition of $1.0 million for the three and nine months ended June 30, 2002.

9



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##### Table of Contents



In July 2002, we acquired terry and golf product businesses, which will operate
as McArthur Towel and Sports, Inc. McArthur distributes terry and golf
products to specialty retailers and institutions. A portion of the product is
decorated with team logos under licenses with many of the major sports leagues
and college teams. The purchase price of $4.6 million in cash will be
allocated to tangible net assets, primarily inventory, and intangible assets,
consisting of backlog, patent, licenses and non-contractual customer
relationships and goodwill. McArthur will be included in the domestic apparel
reporting unit. The businesses had annual sales of approximately $14 million
in the last year.

Effective May 2001, we acquired Hasbros Winners Circle  brand name and
related die-cast inventory and tooling (Winners Circle). As additional
consideration, we pay 3% of related product sales to Hasbro, quarterly, for the
next five years. The additional consideration added to the price of the
trademark for the nine months ended June 30, 2002 was $0.6 million.

COMMITMENTS AND CONTINGENCIES

In the ordinary course of business, we are subject to certain lawsuits and
asserted and unasserted claims. We believe that the resolution of any such
matters will not have a material adverse effect on financial position or
results of operations.

In certain sublease arrangements, we remain the primary obligor under the terms
of the original lease agreements. One of our sublessees is in arrears on lease
payments and we have paid certain lease payments on behalf of the sublessee.
The subleases with this party include a building lease, which expires October
2009, and equipment leases, which expire October 2002. The building lease has
annual lease payments of $1.0 million. The sublessee is currently paying a
portion of the building rent. The future minimum lease payments, including
payments to acquire the equipment, and the payments we have made but have not
been reimbursed for on the equipment leases, total $1.6 million. While we
continue to pursue our options with respect to recovery of amounts due from the
sublessee, we have reserved $1.4 million for our current estimate of the
potential loss under these lease agreements.




ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We are the leading designer and marketer of licensed motorsports products
related to NASCAR, including die-cast scaled replicas of motorsports vehicles,
apparel and memorabilia. We currently have exclusive license arrangements with
many of the most recognized names in NASCAR. We also design and sell products
relating to other motorsports, including racing sanctioned by the NHRA, Formula
One, the IRL and the World of Outlaws. In Germany, we merchandise Formula One
and high-end auto manufacturer die-cast replica vehicles. We work closely with
drivers, team owners, track operators and sponsors to design and merchandise
our products. Third parties manufacture all of the replica motorsports
vehicles and most apparel and memorabilia, generally utilizing our designs,
tools and dies. We retain ownership and control over designs and tooling and
have close working relationships with our third-party manufacturers to help
assure product quality.

We have structured our operations to enable us to respond to challenging
business conditions and to service higher levels of sales with limited
increases in operating expenses and capital investments. The principal
elements of this operating structure include the following:



| |  |  | We have the ability to exert a high degree of control over product
pricing.                                                  
| | - |  | -----------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Manufacturing costs are largely fixed as a percentage of sales due
to outsourcing under fixed-price contracts.               
|
| |  |  | Royalties are paid generally as a percentage of sales.                                                                       
|
| |  |  | Due to our agreements with distributors and QVC, incremental volume
does not proportionately increase our operating expenses.
|
| |  |  | Research and development is limited to basic design and engineering.                                                         

10



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| |  |  | Capital expenditures are principally limited to tooling for die-cast.                          
| | - |  | -----------------------------------------------------------------------------------------------
|
| |  |  | Functions such as manufacturing and others outside of our core skills are generally outsourced.

Revenue
Our revenue is primarily derived from the sale of our licensed motorsports
products. The popularity and performance of drivers and teams under license,
the popularity of motorsports in general and NASCAR in particular, the general
demand for licensed sports merchandise and our ability to design, produce and
distribute our products in a timely manner, influence the level of our net
sales.

We distribute our products through a broad range of channels, including a
network of wholesale distributors, leading mass-market retailers, mobile
trackside stores, QVC, and our collectors club catalog. We recognize revenue
when persuasive evidence of an arrangement exists, title passes to the
customer, the fee is fixed or determinable and collection is probable. Most
distributor sales are recognized when product is shipped to a distributor
because title to the product passes to the distributors at shipment. Sales to
mass-market retailers are recognized when title to product passes to the
retailer, either at time of shipment to the retailer or receipt by the
retailer. Under terms of our consignment agreement with QVC, collectors club
catalog sales are recognized when QVC ships product to the consumer. We
recognize trackside sales when the consumer purchases product at the point of
sale. A portion of the product sold through television programming is
consignment product, for which sales are recognized when QVC ships the product
to the consumer. Internet and other sales are generally recognized when
delivered to the consumer.

Cost of Sales
Cost of sales consists primarily of the cost of products procured from
third-party manufacturers, royalty payments to licensors, depreciation of
tooling and dies and freight charges. Substantial portions of our die-cast
products are manufactured under an exclusive agreement with one manufacturer in
China. We obtain substantially all of our apparel and memorabilia products on
a purchase order basis from several third-party manufacturers and suppliers.
We screen print a portion of our apparel in our Atlanta facility.

Due to the variable nature of most of the components of our cost of sales, our
gross margin generally does not fluctuate significantly. However, certain
factors do affect our gross margin, including the following:



| |  |  | product mix,                                                                                                                                      
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | our ability to control product pricing without discounting,                                                                                       
|
| |  |  | the effect of amortizing the fixed cost components of cost of
sales, primarily depreciation of tooling and dies, over varying levels
of net sales,
|
| |  |  | the type of freight charges, and                                                                                                                  
|
| |  |  | additional charges related to lower than minimum order quantities
and cancellation of specific purchase orders.                                   

Selling, General and Administrative Expenses
Selling general and administrative expenses consist primarily of employee
compensation, advertising and promotion, rent and other facility costs, and
depreciation and amortization. The majority of these costs are fixed and, as a
result, incremental sales volume generally results in a decline in selling,
general and administrative expenses as a percentage of net sales.

Seasonality
Because the auto-racing season is concentrated between the months of February
and November, the second and third calendar quarters of each year (our third
and fourth fiscal quarters) are historically characterized by higher sales.

Application of Critical Accounting Policies

Our discussion and analysis of financial condition and results of operation are
based upon our financial statements, which have been prepared in accordance
with generally accepted accounting principles in the United States. During
preparation of these financial statements, we are required to make estimates
and judgments that affect the reported

11



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amounts of assets, liabilities, revenue and expenses, and related disclosure of
contingent assets and liabilities. On an on-going basis, we evaluate our
estimates, including those related to bad debts, inventories, fixed assets,
intangible assets, income taxes, royalties, contingencies and litigation. We
base our estimates on historical experience and various other assumptions that
we believe are reasonable under the circumstances. The results form the basis
for making judgments about the carrying values of assets and liabilities that
are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.

The following critical accounting policies require us to make significant
judgments and estimates used in the preparation of our financial statements.

Allowance for Doubtful Accounts
We maintain an allowance for doubtful accounts for estimated losses resulting
from the inability of our customers to make required payments. We determine
the adequacy of this allowance by regularly evaluating individual customer
receivables, and considering a customers financial condition, credit history
and current economic conditions. If the financial condition of our customers
were to deteriorate, additional allowances may be required.

Inventory Reserves
We write down our inventory for estimated obsolescence or unmarketable
inventory in an amount equal to the difference between the cost of inventory
and the estimated market value based upon assumptions about future demand and
market conditions. If actual market conditions are less favorable than those
projected by management, additional inventory write-downs may be required.

Royalties
Our license agreements generally require payments of royalties to drivers,
sponsors, teams and other parties on a calendar year basis. Royalties payable
are recognized as costs of sales when the related sale is recognized.
Guarantees advanced under license agreements are carried as prepaid royalties
until earned by the third party. We evaluate prepaid royalties regularly and
expense prepaids to cost of sales to the extent projected to be unrecoverable
through sales.

Goodwill
We evaluate goodwill for impairment at least annually, in accordance with SFAS
142. If the carrying amount of an intangible asset exceeds its fair value, we
would recognize an impairment loss. We first compare the fair value of a
reporting unit with its carrying amount, including goodwill. If the carrying
amount of a reporting unit exceeds the fair value of a reporting unit,
additional tests would be used to measure the amount of impairment loss, if
any. We use a present value technique to measure reporting unit fair value. We
have not recognized any impairment losses to date. If events occur and
circumstances change, causing the fair value of a reporting unit to fall below
its carrying amount, impairment losses may be recognized in the future.

Deferred Tax Assets
We estimate our actual current tax exposure together with the temporary
differences that have resulted from the differing treatment of items dictated
by generally accepted accounting principles versus U.S. and German tax laws.
These temporary differences result in deferred tax assets and liabilities. On
an on-going basis, we then assess the likelihood that our deferred tax assets
will be recovered from future taxable income. If we were to believe that the
recovery were not more likely than not, we would establish a valuation
allowance against the deferred tax asset and charge the amount as an income tax
expense in the period in which such a determination were made.

Results of Operations

The following table sets forth the percentage of total revenue represented by
certain expense and revenue items for the periods ended June 30:

12



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##### Table of Contents



|                                                   |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |       |  
|-------------------------------------------------- |  | ------------------ | ----- | ----------------- |  | ---- | ----- | ---- |  |  | ----- | - |  |  | ----- | -
|                                                   |  | Three Months Ended |       | Nine Months Ended
|                                                   |  |                    |       |                  
|                                                   |  | 2002               |       | 2001              |  | 2002 |       | 2001
|                                                   |  |                    |       |                   |  |      |       |     
|Sales                                              |  |                    | 100.0 | %                 |  |      | 100.0 | %    |  |  | 100.0 | % |  |  | 100.0 | %
|                                                  
|                                                  
|                                                  
|                                                  
|Cost of sales                                      |  |                    | 61.0  |                   |  |      | 63.8  |      |  |  | 61.4  |   |  |  | 64.8  |  
|                                                   |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |       |  
|Gross profit                                       |  |                    | 39.0  |                   |  |      | 36.2  |      |  |  | 38.6  |   |  |  | 35.2  |  
|                                                   |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |       |  
|Selling, general and
administrative expenses       |  |                    | 18.0  |                   |  |      | 19.3  |      |  |  | 19.0  |   |  |  | 23.0  |  
|                                                  
|                                                  
|                                                  
|                                                  
|Amortization of goodwill and
trademark (a)         |  |                    |      |                   |  |      | 1.1   |      |  |  |      |   |  |  | 1.4   |  
|                                                  
|                                                  
|                                                  
|                                                  
|Amortization of licenses                           |  |                    | 0.6   |                   |  |      | 0.5   |      |  |  | 0.6   |   |  |  | 0.8   |  
|                                                   |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |       |  
|Income from operations                             |  |                    | 20.4  |                   |  |      | 15.3  |      |  |  | 19.0  |   |  |  | 10.0  |  
|                                                  
|                                                  
|                                                  
|                                                  
|Interest Expense                                   |  |                    | (0.6  | )                 |  |      | (1.3  | )    |  |  | (0.8  | ) |  |  | (1.9  | )
|                                                  
|                                                  
|                                                  
|                                                  
|Minority Interest and other, net                   |  |                    | (0.1  | )                 |  |      | (0.6  | )    |  |  | (0.1  | ) |  |  | (0.3  | )
|                                                   |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |       |  
|Income before income taxes and
extraordinary items |  |                    | 19.7  |                   |  |      | 13.4  |      |  |  | 18.1  |   |  |  | 7.8   |  
|                                                  
|                                                  
|                                                  
|                                                  
|Income taxes                                       |  |                    | 7.6   |                   |  |      | 4.6   |      |  |  | 7.0   |   |  |  | 2.8   |  
|                                                   |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |       |  
|Income before extraordinary items                  |  |                    | 12.1  |                   |  |      | 8.8   |      |  |  | 11.1  |   |  |  | 5.0   |  
|                                                   |  |                    |       |                   |  |      |       |      |  |  |       |   |  |  |       |  



---

|(a) |  | Goodwill and trademark amortization ceased effective October 1,
2001 with the adoption of SFAS No. 142, Goodwill and Other Intangible
Assets.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------

Three Months Ended June 30, 2002 Compared with Three Months Ended June 30, 2001

Net sales increased 20.6% to $112.1 million for the three months ended June 30,
2002, from $93.0 million in the prior year period. Domestic die-cast sales
increased 66.3% from the prior year quarter to $57.2 million and foreign
die-cast sales decreased 8.4% from the prior year quarter to $6.8 million. The
increase in domestic die-cast sales reflects consumer demand levels, which rose
as the popularity of NASCAR increased beginning in the second fiscal quarter of
2001. In the third quarter of 2001, the Company scheduled sufficient
production to meet this increased demand. Sales of Winners Circle brand
die-cast, acquired in May 2001, contributed $8.1 million of the $22.8 million
increase in domestic die-cast sales. Domestic apparel segment sales, exclusive
of trackside, decreased 5.5% from the prior year quarter to $27.9 million due
to the decline in sales of Dale Earnhardt Sr. product compared to a year ago.
Trackside sales increased 2.2% to $19.3 million from $18.9 million last year,
due primarily to the date of Easter weekend, which caused the revenue from the
Texas Winston Cup race to fall into the third fiscal quarter this year, versus
the second fiscal quarter of last year.

Gross profit improved to 39.0% of sales in the third quarter of fiscal 2002
from 36.2% in the comparable fiscal 2001 period. Domestic die-cast margins
improved as the depreciation of tooling and dies has declined since last year
because we focused our product line on fewer drivers. In addition, segments
are generally benefiting from improved selling prices while costs per unit have
generally remained stable or fallen due to improved cost controls and increased
volume. Effective September 30, 2001, we also closed the Goodsports foreign
apparel operation, which had a lower margin than the corporate average. These
improvements in gross margin were offset by the negative impacts of mix.
Higher margin apparel sales were a smaller component of total sales this
quarter than in same quarter last year.

Selling, general and administrative expenses were $20.2 million, or 18.0% of
sales, in the quarter ended June 30, 2002, compared to $18.0 million, or 19.3%
of sales in the comparable prior year quarter, reflecting strong expense
controls, the leverage we obtain from increased revenues and the leverage from
our economic model in which there is only limited variability of expense in
each seasonal quarter.

Goodwill and trademark amortization ceased effective October 1, 2001, with the
adoption of SFAS 142. Goodwill and trademark amortization in the prior fiscal
third quarter was $1.0 million, or 1.1% of sales.

Interest expense of $0.7 million for the three months ended June 30, 2002, was
$0.5 million lower than interest expense for the comparable period in the prior
year as a result of the convertible subordinated note repurchases and other
long-term debt reductions.

13



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The effective tax rate of 38.8% in the three months ended June 30, 2002,
reflects current expectations for the effective tax rate for fiscal 2002. The
38.8% effective tax rate for fiscal 2002 is higher than the 30.7% effective
rate for fiscal 2001 because fiscal 2001 benefited from the recognition of U.S.
tax benefits from the closure of our UK operation and valuation allowance
reductions.

Nine Months Ended June 30, 2002 Compared with Nine Months Ended June 30, 2001

Net sales increased 37.9% to $296.4 million for the nine months ended June 30,
2002, from $214.9 million in the prior year period. Sales increased in both
die-cast and apparel distribution channels. Domestic die-cast sales increased
94.9% from the prior year period to $158.3 million and foreign die-cast sales
decreased 1.4% from the prior year period to $21.6 million. The increase in
domestic die-cast sales reflects consumer demand levels, which rose as the
popularity of NASCAR increased beginning in the second fiscal quarter of 2001.
In the third quarter of 2001, the Company scheduled sufficient production to
meet this increased demand. Sales of Winners Circle brand die-cast, acquired
in May 2001, contributed $21.4 million of the $77.1 million increase in
domestic die-cast sales. Domestic apparel segment sales, exclusive of
trackside, increased 23.0% from the prior year period to $74.7 million
reflecting increased demand from both wholesale and mass retail channels.
Trackside sales decreased 0.4% to $39.2 million from $39.4 million. Excluding
Dale Earnhardt Sr. sales, trackside sales increased approximately 20%.

Gross profit improved to 38.6% of sales in the first nine months of fiscal 2002
from 35.2% in the comparable fiscal 2001 period. Domestic die-cast margins
improved as the depreciation of tooling and dies has slightly declined since
last year because we focused our product line on fewer drivers. In addition,
segments are generally benefiting from improved selling prices while costs per
unit have generally remained stable or fallen due to improved cost controls and
increased volume. Effective September 30, 2001, we also closed the Goodsports
foreign apparel operation, which had a lower margin than the corporate average.
These improvements in gross margin were offset by the negative impacts of mix.
Higher margin apparel sales were a smaller component of total sales this
quarter than in same quarter last year.

Selling, general and administrative expenses were $56.3 million, or 19.0% of
sales in the first nine months of fiscal 2002, compared to $49.5 million, or
23.0% of sales in the comparable fiscal 2001 period, reflecting strong expense
controls, the leverage we obtain from increased revenues and the leverage from
our economic model in which there is only limited variability in each seasonal
quarter.

Goodwill and trademark amortization ceased effective October 1, 2001, with the
adoption of SFAS 142. Goodwill and trademark amortization in the fiscal 2001
period was $3.0 million, or 1.4% of sales.

Interest expense of $2.4 million for the nine months ended June 30, 2002, was
$1.8 million lower than interest expense for the comparable period in the prior
year as a result of the convertible subordinated note repurchases and other
long-term debt reductions.

The effective tax rate of 38.8% in the nine months ended June 30, 2002,
reflects current expectations for the effective tax rate for fiscal 2002. The
38.8% effective tax rate for fiscal 2002 is higher than the 30.7% effective
rate for fiscal 2001 because fiscal 2001 benefited from the recognition of U.S.
tax benefits from the closure of our UK operation and valuation allowance
reduction.

Liquidity and Capital Resources

Working capital improved $30.3 million to $120.6 million at June 30, 2002, from
$90.3 million at September 30, 2001. Cash increased $12.1 million to $76.6
million at June 30, 2002, from $64.5 million at September 31, 2001. Cash
increased as a result of proceeds upon exercise of stock options ($6.1 million)
and other operating activities. The increases in cash were offset by
reductions in cash for repurchases of convertible subordinated notes ($5.7
million), other debt ($1.7 million), expenditures for equipment ($18.0
million), acquisitions ($6.1 million) and other operating activities including
U.S. tax payments ($19.3 million).

Days sales outstanding, calculated on quarterly sales, improved 5.1% to 41.2
days as of June 30, 2002, compared to 43.4 days as of June 30, 2001. Improved
receivables management contributed to the improvements.

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Days in inventory, calculated on quarterly cost of sales, improved 22.9% to
32.0 days as of June 30, 2002, compared to 41.5 days as of June 30, 2001.
Improvement was the result of the implementation of a build-to-order approach
in die-cast operations and better inventory management. Our backlog at June
30, 2002, was approximately $118 million compared to $120 million at September
30, 2001.

During the nine months ended June 30, 2002, we
repurchased 43⁄4% convertible
subordinated notes with a face value of $16.0 million, at a loss of $854
thousand, using 5.7 million in cash and 145 thousand shares from treasury and
95 thousand newly issued shares at an average price of $47.60. In total, since
January 1, 2001, we have repurchased notes with a face value of $61.1 million,
using $16.9 million in cash and 1.1 million shares of common stock. We
continually evaluate opportunities to redeem or repurchase the notes.

As of June 30, 2002, 43⁄4% convertible subordinated notes with a face value
of $38.9 million remained outstanding. The subordinated 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 notes is payable semi-annually on April 1 and October 1 of each
year. The notes mature on April 1, 2005. The notes are general unsecured
obligations of our company, subordinated in right of payment to all existing
and future senior indebtedness, as defined in the notes. The indenture
governing the notes does not limit or prohibit our company or our subsidiaries
from incurring additional debt, including senior indebtedness. We have the
option to 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.

Capital expenditures related principally to ongoing investments in tooling and
totaled $18.0 million during the nine months ended June 30, 2002, including
$7.2 million applicable to foreign operations. Capital expenditures for fiscal
year 2002 are not expected to exceed $25 million.

As amended January 2002, the loan and security agreement with Bank One (the
Agreement), provides for borrowings of up to $20.0 million, subject to the
limitation of a calculated borrowing base. The Agreement consists of a $20.0
million revolving line of credit, which currently includes up to $20.0 million
of letters of credit. Prior to the amendment, the Agreement had included a
revolving line of credit of up to $30.0 million. The $10.0 million reduction
in available line of credit reduces commitment fees payable. We have never
borrowed under the Agreement (originally dated September 2000). We believe
that the line of credit reduction was warranted by this fact and current cash
flow and cash positions. We believe that the Agreement will be adequate to
cover letter of credit and other liquidity needs for the next 12 months after
considering our current cash position and anticipated cash flows from
operations.

The line of credit bears interest at Bank Ones base rate, or LIBOR plus 2.5%.
A commitment fee of 0.5% of the average unused line of credit and 1.5%-2.5% of
the average letters of credit is payable annually on the loan. The Agreement
maturity date was extended from December 2002 to March 2003. Outstanding
letters of credit total $12.4 million at June 30, 2002. The Agreement is
secured principally by inventory, receivables, and equipment and no longer
prohibits the payment of dividends

Under the Agreement, as amended, we are required to meet certain financial
tests principally related to debt coverage, tangible net worth and funded
indebtedness to EBIDA. We were in compliance with those covenants at June 30,
2002.

In May 2002, at a special meeting of shareholders, the shareholders approved an
increase in the number of authorized common shares from 25.0 million shares to
62.5 million shares.

In July 2001, the Board of Directors approved a one-year program in which we
may purchase up to 1.0 million shares of our common stock in the open market or
in privately negotiated transactions. Under this program, 80,000 shares were
purchased at an average price of $24.70 per share. In July 2002, the Board of
Directors approved a one-year program in which we may purchase up to 1.0
million shares of our common stock in the open market or in privately
negotiated transactions. No shares have been purchased under the program.

In May 2002, we issued warrants to purchase 150 thousand shares of common stock
at an exercise price of $36.30 per share, the fair market value on the grant
date, in connection with three license agreements. The warrants had a

15



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##### Table of Contents



fair value of $2.2 million, as determined by the Black-Scholes option pricing
method (average assumed volatility 38%, risk-free rate 4.13% and term of 5
years). Issuance resulted in increases in additional paid-in-capital and
intangible assets. The licenses are being amortized through 2007.

In July 2002, we issued warrants to purchase 50 thousand shares of common stock
at an exercise price of $22.25 per share, the fair market value on the grant
date, in connection with a license agreement. The warrants had a fair value of
$0.5 million, as determined by the Black Scholes option pricing method (average
assumed volatility 47%, risk-free rate 3.58% and term of 5 years). Issuance
resulted in increases in additional paid in capital and intangible assets. The
license is being amortized through 2007.

Cautionary Statement Regarding Forward-Looking Statements

This report contains forward-looking statements, including statements regarding
business strategies, business, and the industry in which we operate. These
forward-looking statements are based primarily on our expectations and are
subject to a number of risks and uncertainties, some of which are beyond our
control. Actual results could differ materially from the forward-looking
statements as a result of numerous factors, including those set forth in our
Form 10-K for the year ended September 30, 2001, as filed with the Securities
and Exchange Commission.




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has been no significant change in our exposure to market risk since
year-end. The risk is limited to interest rate risk associated with credit
instruments and foreign currency exchange rate risk associated with operations
in Germany. We have never used derivative financial instruments to manage or
reduce market risk.

16



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##### Table of Contents






PART II  OTHER INFORMATION




ITEM 1. Legal Proceedings

Not applicable




ITEM 2. Changes in Securities and Use of Proceeds

During April 2002, we issued 240 thousand shares of common stock to repurchase
4 3/4% convertible subordinated notes with a face value of $10.0 million from
existing noteholders. We issued these shares without registration under the
Securities Act in reliance upon the exemption provided by Section 3(a)(9) of
the Securities Act as an exchange by the issuer with its existing security
holders where no commission or other remuneration is paid or given directly or
indirectly for soliciting such exchange.

In May 2002, we issued warrants to purchase 150 thousand shares of common stock
at an exercise price of $36.30 per share, the fair market value on the grant
date, in connection with three license agreements. We issued the warrants
without registration in reliance on the exemption provided by Section 4(2) of
the Securities Act as a transaction by an issuer not involving a public
offering.

During June 2002, we issued 51,046 shares of common stock at $39.18 per share
to the former shareholder of Trevco Trading Corp. in connection with our
acquisition of Trevco. We issued the shares without registration under the
Securities Act in reliance on the exemption provided by Section 4(2) of the
Securities Act as a transaction by an issuer not involving a public offering.

In July 2002, we issued warrants to purchase 50 thousand shares of common stock
at an exercise price of $22.25 per share, the fair market value on the grant
date, in connection with a license agreement. We issued the warrants without
registration in reliance on the exemption provided by Section 4(2) of the
Securities Act as a transaction by an issuer not involving a public offering.




ITEM 3. Defaults Upon Senior Securities

Not applicable




ITEM 4. Submissions of Matters to a Vote of Security Holders

A special meeting of shareholders was held on May 28, 2002 to approve an
amendment to our Articles of Incorporation to increase the number of authorized
common shares from 25.0 million shares to 62.5 million shares. The proposed
increase in the number of authorized shares will allow the board of directors
to consider a stock split in the form of a stock dividend. The shareholders
approved the amendment and increase in the authorized common shares by the
following vote: 14,257,369 for, 1,825,232 against, and 9,014 abstaining.




ITEM 5. Other Information

On February 20, 2002, we transferred our stock listing from Nasdaq (ACTN) to
the New York Stock Exchange. We now trade on the New York Stock Exchange under
the ticker symbol ATN.




ITEM 6. Exhibits and Reports on Form 8-K



|(a) |  | Exhibits
|--- |  | --------



| | (1) |  | Exhibit 99.1 Certification of the Chief Executive
Officer of the Registrant, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (2) |  | Exhibit 99.2 Certification of the Chief Financial
Officer of the Registrant, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



|(b) |  | Reports on Form 8-K  None
|--- |  | --------------------------

17



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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.

|                                       |  |                                                                                               |  |                
|-------------------------------------- |  | --------------------------------------------------------------------------------------------- |  | ---------------
|Signature                              |  | Capacity                                                                                      |  | Date           
|                                       |  |                                                                                               |  |                
|                                       |  |                                                                                               |  |                
|                                      
|/s/ Fred W. WagenhalsFred W. Wagenhals |  | Chairman of the Board, President, and
Chief Executive Officer
(Principal Executive Officer)   |  | August 13, 2002
|                                      
|                                       |  |                                                                                               |  |                
|                                      
|/s/ R. David MartinR. David Martin     |  | Chief Financial Officer, Secretary and Treasurer
(Principal Financial and Accounting Officer) |  | August 13, 2002

18



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Index to Exhibits

Exhibits



| | (1) |  | Exhibit 99.1 Certification of the Chief Executive
Officer of the Registrant, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (2) |  | Exhibit 99.2 Certification of the Chief Financial
Officer of the Registrant, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002