K2 Inc.

views updated Jun 11 2018

K2 Inc.

5818 El Camino Real
Carlsbad, California 92008
U.S.A.
Telephone: (760) 494-1000
Toll Free: (888) 5K2-SPRT
Fax: (760) 494-1099
Web site: http://www.k2inc.net

Public Company
Incorporated: 1959 as Anthony Pools, Inc.
Employees: 4,700 (est.)
Sales: $1.31 billion (2005)
Stock Exchanges: New York
Ticker Symbol: KTO
NAIC: 339920 Sporting and Athletic Goods Manufacturing

A thriving recreational products company, K2 Inc. owns a host of widely recognized sporting goods and outdoor recreation brands, including K2, Völkl, Ride, Rawlings, Worth, Shakespeare, Stearns, Brass Eagle, Marmot, and Ex Officio. K2 products can be found among the possessions of skiers and snowboarders, baseball players and other team sport participants, fishing enthusiasts, and outdoor adventurers. In addition to classic sports gear, K2's product line also includes paintball equipment, snowshoes, and mountain-climbing apparel. For decades the company operated as Anthony Industries Inc., which began in the swimming pool business and then diversified, largely through acquisitions, to become an industrial and recreational products conglomerate. By the dawn of the twenty-first century, K2 Inc. had become a giant in the field of recreational products, boasting some of the most recognized brands in a broad array of fields.

When Anthony Industries changed its name to K2 Inc. in mid-1996, the switch represented an acknowledgment by the company's management of the importance of a business acquired 11 years earlier, ski manufacturer K2 Corporation. At the time of the name change, K2 was Anthony Industries' largest division and its greatest contributor of sales, and it enjoyed brand-name recognition that stretched around the globe. For these reasons alone, the name change seemed a fitting tribute to its strongest brand name, but the fact that Anthony Industries adopted the name of one of its acquired companies also represented a fitting tribute to the importance acquisitions had played in its history.

During the two decades leading up to the name change, Anthony Industries had assumed an aggressive, yet prudent, acquisitive stance, purchasing a number of small companies with strong brand names. The result was a flourishing, ever-growing recreational and industrial products manufacturer, its business underpinned by a host of brand names that were driving robust growth. By aligning itself with the K2 brand in 1996, however, the company signaled a new direction: over the next few years, K2 Inc. gradually moved away from the manufacture of industrial products and toward its position as a leading producer of sports and recreational equipment. Known by the early 2000s for its strong brand recognition and diverse offerings, K2 Inc. had traveled a great distance from its origins. For years, Anthony Industries was a one-product company with little name recognition among consumers. Its historical roots stretched back to the post–World War II era in Los Angeles, where the company first began business as a manufacturer and installer of swimming pools.

1940S ORIGINS

In 1946, Phil Anthony invested his entrepreneurial dreams in his new company, opening a business propitiously founded when the U.S. economy was about to embark on its historic postwar rebirth. Discretionary income levels for many Americans rose to unprecedented heights following the conclusion of World War II, as a decade-long economic depression and four years of military conflagration gave way to an era of prosperity. For Anthony, the resurgence of the U.S. economy would mean a greater demand for the sole product his new company sold—swimming pools—something only those with ample savings could afford. Located in Los Angeles, Anthony Pools, Inc., as the company was incorporated in 1959, enjoyed success as a marketer and installer of in-ground swimming pools, eventually becoming the largest builder of swimming pools in its field. Anthony's company would score its greatest success, however, under the stewardship of Bernard I. "Bif" Forester, who would lead the company toward diversification and engender the multifaceted conglomerate that thrived during the 1990s.

Forester joined Anthony Pools in 1966, when the company still operated exclusively as a pool contractor in Southern California. Three years after Forester's arrival, Anthony Pools changed its name to Anthony Industries, Inc. Then, in 1973, Forester took charge, assuming control over a small company that had diversified once in 1969, acquiring mobile home manufacturer Explorer Motor Home Corp., but still relied overwhelmingly on one product: concrete in-ground swimming pools. Forester would waste little time in taking the company in several new directions, directing a diversification program that would have a lasting effect on Anthony Industries.

DIVERSIFICATION BEGINS IN 1974

One year after assuming leadership over Anthony Industries, Forester completed two pivotal acquisitions, as would become his habit during the ensuing two decades. In 1974, Anthony Industries acquired Chicago-based Hilton Athletic Apparel, a maker of bowling shirts and jackets, among other apparel items, and also acquired a 50 percent interest in Simplex Industries, Inc. By 1978, Anthony Industries had acquired the remaining interest in Simplex Industries, thereby gaining full control over what would become an integral part of its industrial products business. In the years ahead, Anthony Industries' Simplex division would manufacture a wide range of laminated, coated, and reinforced paperboard products, selling these products to the residential and manufactured housing industries, as well as to the container and industrial packaging industries.

COMPANY PERSPECTIVES

K2 has been dedicated to celebrating the human passion for sport and adventure since its inception…. The equipment and accessories we manufacture and market today have gained worldwide recognition and are embraced by everyone from novices to Olympic champions to professional athletes. As we look to the future, there can be only one course. Like so many of the people who use our products, K2 will accept nothing less than the best. All our efforts are focused on reaching the summit of our industry. We will create ever better products that raise the bar of performance and celebrate the human spirit. We will build value by growing and succeeding where others have failed. We will get to the top of our game. Not many people get to breathe that rarified air. But the people at K2 are determined to try.

Under Forester's guiding hand, Anthony Industries developed into a company supported by two main business segments: recreational products and industrial products. The acquisition of Simplex had paved the way for the future growth of the company's industrial side, while the addition of Hilton Athletic Apparel had marked the beginning of Forester's program to further develop Anthony Industries' recreational side. The company's next acquisition fulfilled both objectives, diversifying the mix of recreational products and adding to the industrial products manufactured by Simplex. The acquisition, completed in 1980, brought the Shakespeare Company into the Anthony Industries fold, leading the Los Angeles-based swimming pool, athletic apparel, and industrial products company in four new directions. As part of the deal, Anthony Industries acquired Shakespeare Fishing Tackle, a well-known maker of fishing rods, reels, and tackle, and three businesses involved in industrial markets, Shakespeare Electronics & Fiberglass, Shakespeare Monofilament, which manufactured custom-blended extruded lines used in paper weaving and in products such as automobile tire cords, and Shakespeare Flexible Controls, which was sold in 1981.

The acquisition of Shakespeare represented a significant step in Anthony Industries' bid to become a recreational and industrial powerhouse, opening doors to each market. Meanwhile, as the company slowly began to take on the characteristics that would identify it as a conglomerate in the 1990s, a firm that would play a defining role in Anthony Industries' future was enjoying booming business 1,000 miles to the north. There, on a small island near Seattle, Washington, K2 Corporation was revolutionizing the ski industry with its fiberglass skis and their hallmark red, white, and blue stripes.

1967: THE FOUNDING OF THE "OTHER" K2

K2 Corporation originated with the Kirschner Manufacturing Co., a small, family-owned business run by Otto Kirschner and his two sons, Don and William. Kirschner Manufacturing began operating at roughly the same time Phil Anthony started Anthony Pools, doing business during the postwar years as a designer and manufacturer of fiberglass animal splints, before broadening its business scope to include a line of "chew-proof" fiberglass dog cages.

The Kirschner family recorded its greatest success, however, with another use for fiberglass. William Kirschner borrowed a pair of skis in the late 1950s to use as a pattern, and he then constructed his own pair of fiberglass skis. At the time of Kirschner's home experiments, Howard Head and his all-black Head aluminum skis had revolutionized the sport of skiing, introducing the first major technological breakthrough to sweep through the ski industry since skiing had become a popular recreational activity. A short time after Head introduced his skis in 1950, aluminum skis sold out in retail shops across the country, quickly supplanting the wood skis that had been the only choice for decades. Head skis became the preferred choice for legions of skiers. Kirschner and his fiberglass skis would change all that, however, giving birth to K2 Corporation and creating what would become Anthony Industries' most valuable asset.

KEY DATES

1946:: Phil Anthony launches Anthony Pools, a swimming pool installation company.
1959:: Company incorporates as Anthony Pools, Inc.
1967:: William and Don Kirschner form K2 Corporation, a company that revolutionizes the alpine skiing industry with its fiberglass skis.
1969:: Anthony Pools becomes Anthony Industries, Inc.
1973:: Bernard I. Forester becomes chief executive officer and begins making key acquisitions to build the company into a recreational and industrial conglomerate.
1985:: Anthony Industries acquires Sitca Corporation, owner of K2 Corporation.
1996:: Anthony Industries is renamed K2 Inc.; longtime CEO Forester retires, ceding control to Richard Rodstein.
2000:: K2 Inc. sells industrial products manufacturer Simplex.
2002:: Richard Heckmann becomes chairman and CEO, launching a period of aggressive acquisitions.
2003:: Company acquires Rawlings and Worth; moves headquarters from Los Angeles to Carlsbad, California.
2004:: Company acquires numerous brands, including ski equipment companies Völkl and Marker and apparel manufacturers Marmot and Ex Officio.
2005:: Company acquires fishing-gear producers Hodgman, Inc., and JRC Products Limited.

By 1964, Kirschner Manufacturing was ready to add fiberglass skis to its product line, producing 250 pairs of the innovative skis that year. The skis quickly sold out, and the following year 1,600 pairs were made, followed by 4,000 pairs in 1966. At that point, William Kirschner decided the time was right to form his own company, along with his brother Don, to manufacture skis. In 1967, K2 Corporation was formed, named after the two Kirschner brothers and the world's second highest mountain, Mount Godwin Austen (K2) in the Karakoram Range in Kashmir. At the time of K2 Corporation's founding, Head skis were still the most popular skis in the United States. Yet Kirschner's colorful fiberglass skis eclipsed Head and all other domestic ski manufacturers by the late 1970s, propelled by strong marketing, the technological innovation the skis represented, and affiliations with prominent ski celebrities, most notably Jean-Claude Killy and Phil and Steve Mahre, the American twins who won the gold and silver medal, respectively, in the slalom event at the 1984 Winter Olympic Games.

1985 ACQUISITION OF K2

As K2 Corporation grew from fledgling upstart to dominant champion, the company underwent several ownership changes, although its management remained essentially autonomous throughout the various shifts in ownership. The company's initial success during the late 1960s came too quickly, creating a sprawling enterprise that Kirschner found difficult to manage. Consequently, he sold K2 Corporation to Cummins Engine Company in 1970, when the Indiana-based manufacturing company was in the midst of diversifying into banking, ranching, and leisure goods. Six years later, Kirschner and five other partners regained control of K2 Corporation and formed Sitca Corporation as a holding company for K2 Corporation. Several seasons of low snowfall in the early 1980s, however, drained K2 Corporation's cash flow, forcing the company to seek an equity partner to ameliorate its financial difficulties. It was an opportunity Forester and Anthony Industries could not pass up.

Supported by an exceptionally strong brand image and nearly $30 million in annual sales, K2 Corporation represented a perfect fit for Anthony Industries' operations. In 1985, negotiations were concluded, and Anthony Industries acquired Sitca Corporation and its sole asset, K2 Corporation, for $3.3 million, five years after the Shakespeare acquisition was completed. During the years immediately following the purchase of K2 Corporation, Anthony Industries continued to acquire additional companies, including Stearns Manufacturing Co. in 1988, a maker of life jackets and other flotation devices, and Olin Corp. in 1989, the nation's number-two ski manufacturer behind K2 Corporation.

GROWTH IN THE 1990S

The company continued to experience significant growth during the 1990s; annual sales leaped from under $300 million to more than $500 million during the first half of the decade. During that decade, Anthony Industries acquired several sporting goods manufacturers and diversified its existing businesses, particularly its K2 division, intent on broadening its product mix to take advantage of its existing distribution network of sporting goods chains and other national retailers. On the lookout for exceptional and recognizable product lines, Anthony Industries added greatly to what already stood as a solid collection of brands and companies.

At the beginning of the 1990s, the company's Anthony Pools division, the progenitor of all that followed from its establishment in 1946, ranked as the largest builder of in-ground swimming pools in the United States; its Shakespeare Fishing Tackle group operated as a leading domestic producer and distributor of fishing rods, reels, and tackle; K2 ranked as the leading brand of alpine skis; and Hilton competed as the top U.S. brand of jackets, shirts, and other apparel for the advertising, specialty, and screen-print markets. Not to be forgotten among the array of the company's recreational brands was Anthony Industries' industrial products segment, which contributed a mighty 68 percent of the company's total annual profits. In all, the growing Anthony Industries empire was a solid, well-rounded enterprise, with sales spread across nine distinct product categories in the recreational segment and three distinct product groups in the industrial segment.

As the 1990s began, Anthony Industries added to its industrial products segment first by acquiring in 1990 Nymofil, Ltd., a Britain-based business that was merged into Shakespeare Monofilament. In 1991 the Stanhope decorative light pole business was acquired to strengthen the company's Shakespeare Electronic & Fiberglass business. Next, Anthony Industries moved on the recreational front, acquiring Girvin, Inc., the maker of ProFlex mountain bicycles, in 1993. Through its K2 division, the company entered other fast-growing markets to go along with the burgeoning sales of mountain bikes, introducing a line of K2 snowboards in 1990 and then extending the K2 brand name further by launching a line of K2 Exotech in-line skates in 1994. The company's in-line skates, after recording $10.5 million in sales for its inaugural year, generated $38.9 million in sales in 1995, an enormous 267 percent increase. K2 snow-boards were strongly positioned in a market growing 30 percent annually, enabling the company to achieve a 125 percent annual growth rate in its snowboard business for the first three years of sales.

NEW FOCUS FOR THE 21ST CENTURY

Under Rodstein's leadership, the newly renamed K2 Inc. shifted its focus to its recreational and sporting-goods product lines while gradually selling the industrial divisions. Through the divestiture of industrial divisions such as Simplex, which was sold in 2000, and the acquisition of numerous sports equipment brands, K2 deepened its presence in the field of sports equipment and apparel. The company established itself as a leader in innovation, developing cutting-edge technologies. K2 produced the first in-line skates with a soft boot, introduced step-in snowboard bindings, and released mountain bikes and alpine skis with advanced methods of shock absorption.

The turn of the century, however, proved a difficult time for the company. The poor state of the nation's economy in general, and of wholesale sporting goods sales in particular, contributed to a period of slow growth and even losses for K2. In October 2002, at the urging of the company's board of directors, Rodstein resigned as CEO. He was replaced by Richard Heckmann, a K2 board member and the former head of U.S. Filter. Heckmann, an executive known for his appetite for acquisitions, announced his ambition to make K2 Inc. into a billion-dollar company, a goal he achieved by the end of 2004. As chairman and CEO, Heckmann continued the trend begun under Rodstein, acquiring established recreational and sports brands to bolster the company's core divisions—which evolved to become team sports, marine and outdoor recreation, action sports, and apparel and footwear—while shedding most of the industrial units. The company's drive to consolidate was largely a response to the widespread consolidation among sporting-goods retailers. Increasingly, large retail chains expressed a preference for dealing with a smaller number of large producers rather than myriad small manufacturers. As K2's product line expanded, the company reduced expenses by relocating much of its manufacturing to a large complex it runs in China.

During 2003, Heckmann's first full year at the helm, a number of significant changes emphasized the company's transition to a recreational and sports powerhouse. First, the company headquarters moved from Los Angeles to Carlsbad, California, a Southern California community known as Sports City. Carlsbad earned that nickname by housing a number of sporting-goods manufacturers, including Calloway Golf Co. and Titleist, as well as the Upper Deck Co. and No Fear, Inc. In addition, two key acquisitions in 2003 bolstered K2 Inc.'s team sports division. During the spring of that year, K2 acquired Rawlings, a sporting-goods manufacturer boasting the title of official supplier of baseballs for Major League Baseball (MLB). In September 2003, K2 further expanded into the team sports realm with the acquisition of Worth, Inc., maker of bats, balls, and gloves for baseball and softball. That same year, K2 sold another branch of its industrial products division, namely the unit of Shakespeare that produced light poles. In an article in the San Diego Business Journal, chairman and CEO Richard Heckmann explained the reason for the sale of the light pole business, summarizing the change in the company's identity: "It just didn't fit. It just didn't belong in a sporting goods company."

Heckmann continued his acquisition spree over the next three years, acquiring more than a dozen additional brands in that period. He sought to buy companies that produced top-selling products and that allowed K2 to achieve synergy with existing brands. Adding to its line of ski equipment with the purchase of Völkl and Marker in 2004, for example, allowed K2 Inc. to sell these new products to the same retailers that bought K2 skis. Additional acquisitions allowed the company to broaden its offerings of fishing gear (Hodgman, Inc., and JRC Products Limited in 2005) and of paintball equipment (Worr Games in 2004). K2 extended its reach into the outdoor apparel market with the 2004 purchase of Marmot and Ex Officio, two brands associated with high-quality outdoor clothing and adventure gear.

Also in 2004, the company acquired Fotoball USA, a manufacturer of licensed souvenir items and sporting goods. This acquisition led to the establishment of K2 Licensing & Promotions, a division devoted to developing licensing deals to promote K2's major brands. Heckmann's drive to strategically acquire key brands positioned the company for a future of rapid growth in the recreational and sporting goods industries. In a 2005 interview with the Daily News Record, Heckmann explained his simple yet ambitious approach to acquisitions: "We're so focused on our own business and industry, we know who fits with us and who doesn't. So we go after the ones we want."

Jeffrey L. Covell

Updated, Judy Galens

PRINCIPAL DIVISIONS

Brass Eagle; Rawlings; Ex Officio; K2 Sports; Marmot; Shakespeare; Stearns; Völkl.

PRINCIPAL OPERATING UNITS

Marine and Outdoor; Team Sports; Action Sports; Apparel and Footwear.

PRINCIPAL COMPETITORS

Skis Rossignol S.A.; adidas AG; Quiksilver, Inc.

K2 Inc.

views updated May 14 2018

K2 Inc.

4900 South Eastern Avenue, Suite 200
Los Angeles, California 90040
U.S.A.
(213) 724-2800
Fax: (213) 724-0470

Public Company
Incorporated: 1959 as Anthony Pools, Inc.
Employees: 3,700 (est.)
Sales: $544.2 million (1995)
Stock Exchanges: New York
SICs: 3949 Sporting & Athletic Goods, Not Elsewhere Classified; 2329 Men/Boy’s Clothing, Not Elsewhere Classified; 6719 Holding Companies, Not Elsewhere Classified; 5091 Sporting & Recreational Goods

A thriving recreational and industrial products company, K2 Inc. owns a host of widely recognized recreational product brands, including K2, Olin, Exotech, ProFlex, Shakespeare, Hilton, Dana Design, and Stearns, and manufactures marine antennas, fiberglass utility poles, and residential insulative sheathing. For decades the company operated as Anthony Industries Inc., a company that began in the swimming pool business then diversified largely through acquisitions to become an industrial and recreational products conglomerate. During the mid-1990s, K2 Inc. derived approximately 65 percent of its sales and 60 percent of its pretax profits from recreational products, with its industrial products business accounting for the balance.

When Anthony Industries changed its name to K2 Inc. in mid-1996, the switch represented an acknowledgment by the company’s management of the importance of a business acquired 11 years earlier, ski manufacturer K2 Corporation. At the time of the name change, K2 was Anthony Industries’ largest division and its greatest contributor of sales, and it enjoyed brand name recognition that stretched around the globe. For these reasons alone, the name change seemed a fitting tribute to its strongest brand name, but the fact that Anthony Industries adopted the name of one of its acquired companies also represented a fitting tribute to the importance acquisitions had played in its history.

During the two decades leading up to the symbolic name change, Anthony Industries had assumed an aggressive, yet prudent, acquisitive stance, dedicating the years to purchasing small companies with strong brand names. The result was a flourishing, ever-growing recreational and industrial products manufacturer by the 1990s, its business underpinned by a host of brand names that were driving robust growth. The company, in the years leading up to the name change, had become a conglomerate, but Anthony Industries had not always been a diversified competitor, ensconced, as the K2 name suggested, in the market for winter recreational products. For years, Anthony Industries was a one-product company, wholly concentrated on the production and sale of what perhaps represented the antithesis of winter recreation. The historical roots of Anthony Industries stretch back to the post-World War II era and to Los Angeles, where the company first began business as a manufacturer and installer of swimming pools.

1940s Origins

In 1946, Phil Anthony invested his entrepreneurial dreams in his new company, opening a business propitiously founded when the U.S. economy was about to embark on its historic postwar rebirth. Discretionary income levels for many Americans rose to unprecedented heights following the conclusion of World War II, as a decade-long economic depression and four years of military conflagration gave way to an era of prosperity. For Anthony, the resurgence of the U.S. economy would mean a greater demand for the sole product his new company sold—swimming pools—something only those with ample savings could afford. Located in Los Angeles, Anthony Pools, Inc., as the company was incorporated in 1959, enjoyed success as a marketer and installer of in-ground swimming pools, eventually becoming the largest builder of swimming pools in its field. Anthony’s company would score its greatest success, however, under the stewardship of Bernard I. “Bif” Forester, who would lead the company toward diversification and engender the multifaceted conglomerate that thrived during the 1990s.

Forester joined Anthony Pools in 1966, when the company still operated exclusively as a pool contractor in Southern California. Three years after Forester’s arrival, Anthony Pools changed its name to Anthony Industries, Inc. Then, in 1973, Forester took charge, assuming control over a small company that had diversified once in 1969, acquiring mobile home manufacturer Explorer Motor Home Corp., but still relied overwhelmingly on one product: concrete in-ground swimming pools. Forester would waste little time in taking the company in several new directions, directing a diversification program that would have a lasting effect on Anthony Industries.

Diversification Begins in 1974

One year after assuming leadership over Anthony Industries, Forester completed two pivotal acquisitions, as would become his habit during the ensuing two decades. In 1974, Anthony Industries acquired Chicago-based Hilton Athletic Apparel, a maker of bowling shirts and jackets, among other apparel items, and also acquired a 50 percent interest in Simplex Industries, Inc. By 1978, Anthony Industries had acquired the remaining interest in Simplex Industries, thereby gaining full control over what would become an integral part of its industrial products business. In the years ahead, Anthony Industries’ Simplex division would manufacture a wide range of laminated, coated, and reinforced paperboard products, selling these products to the residential and manufactured housing industries, as well as to the container and industrial packaging industries.

Under Forester’s guiding hand, Anthony Industries developed into a company supported by two main business segments: recreational products and industrial products. The acquisition of Simplex had paved the way for the future growth of the company’s industrial side, while the addition of Hilton Athletic Apparel had marked the beginning of Forester’s program to develop further Anthony Industries’ recreational side. The company’s next acquisition fulfilled both objectives, diversifying the mix of recreational products and adding to the industrial products manufactured by Simplex. The acquisition, completed in 1980, brought the Shakespeare Company into the Anthony Industries fold, leading the Los Angeles-based swimming pool, athletic apparel, and industrial products company in four new directions. As part of the deal, Anthony Industries acquired Shakespeare Fishing Tackle, a well-known maker of fishing rods, reels, and tackle, and three businesses involved in industrial markets, Shakespeare Electronics & Fiberglass, Shakespeare Monofilament, which manufactured custom-blended extruded lines used in paper weaving and in products such as automobile tire cords, and Shakespeare Flexible Controls, which was sold in 1981.

The acquisition of Shakespeare represented a significant step in Anthony Industries’ bid to become a recreational and industrial powerhouse, opening doors to each market. Meanwhile, as the company slowly began to take on the characteristics that would identify it as a conglomerate in the 1990s, a company that would play a defining role in Anthony Industries’ future was enjoying booming business 1,000 miles to the north. There, on a small island near Seattle, Washington, K2 Corporation was revolutionizing the ski industry with its fiberglass skis and their hallmark red, white, and blue stripes. The company originated with the Kirschner Manufacturing Co., a small, family-owned business run by Otto Kirschner and his two sons, Don and William. Kirschner Manufacturing began operating at roughly the same time Phil Anthony started Anthony Pools, doing business during the postwar years as a designer and manufacturer of fiberglass animal splints, before broadening its business scope to include a line of “chew-proof” fiberglass dog cages.

The Kirschner family would record its greatest success, however, with another use for fiberglass when William Kirschner borrowed a pair of skis in the late 1950s to use as a pattern and then constructed his own pair of fiberglass skis. At the time of Kirschner’s home experiments, Howard Head and his all-black Head aluminum skis had revolutionized the sport of skiing, introducing the first major technological breakthrough to sweep through the ski industry since skiing had become a popular recreational activity. A short time after Head introduced his skis in 1950, aluminum skis sold out in retail shops across the country, quickly supplanting the wood skis that had been the only choice for decades, and made Head skis the preferred choice for legions of skiers. Kirschner and his fiberglass skis would change all that, however, giving birth to K2 Corporation and creating what would become Anthony Industries’ most valuable asset.

Company Perspectives

K2 is dedicated to the continuous improvement of all products and services to meet our customers’ needs, allowing us to prosper as a business and to provide an attractive return for our shareholders, the owners of our business. Improvement of products and services will be accomplished by focusing on the processes that make up our business and through the involvement of all employees to help with the improvement of these processes. We will strive to provide innovative and improved products and services to our customers by understanding their requirements and anticipating their future needs. We recognize that our people are our most valuable resource. We are committed to providing training and fostering a work environment of teamwork and shared values that will allow our objective of continuous improvement to be achieved. We will endeavor to be a good corporate citizen at all times by engaging in activities that have a positive social and economic impact on the communities in which we work and the world at large.

1967: The Founding of the “Other” K2

By 1964, Kirschner Manufacturing was ready to add fiberglass skis to its product line, producing 250 pairs of the revolutionary skis that year. The skis quickly sold out, and the following year 1,600 pairs were made, followed by 4,000 pairs in 1966, when William Kirschner decided the time was right to form his own company, along with his brother Don, to manufacture skis. In 1967, K2 Corporation was formed, named after the two Kirschner brothers and the world’s second highest mountain, Mount Godwin Austen (K2) in the Karakoram Range in Kashmir. At the time of K2 Corporation’s founding Head skis were still the most popular skis in the United States. But Kirschner’s colorful fiberglass skis eclipsed Head and all other domestic ski manufacturers by the late 1970s, propelled by strong marketing, the technological innovation the skis represented, and by affiliations with prominent ski celebrities, most notably, Jean-Claude Killy and Phil and Steve Mahre, the American twins who won the gold and silver medal, respectively, in the slalom event at the 1984 Winter Olympic Games.

As K2 Corporation grew from fledgling upstart to dominant champion, the company underwent several ownership changes, although its management remained essentially autonomous throughout the various shifts in ownership. The company’s initial success during the late 1960s came too quickly, creating a sprawling enterprise that Kirschner found difficult to manage. Consequently, he sold K2 Corporation to Cummins Engine Company in 1970, when the Indiana-based manufacturing company was in the midst of diversifying into banking, ranching, and leisure goods. Six years later, Kirschner and five other partners regained control of K2 Corporation and formed Sitca Corporation as a holding company for K2 Corporation. Several seasons of low snowfall in the early 1980s, however, drained K2 Corporation’s cash flow, forcing the company to seek an equity partner to ameliorate its financial difficulties. It was an opportunity Forester and Anthony Industries could not pass up.

1985 Acquisition of K2

Supported by an exceptionally strong brand image, K2 Corporation and the nearly $30 million the ski manufacturer generated in sales each year represented a perfect fit to Anthony Industries’ operations. In 1985, negotiations were concluded, and Anthony Industries acquired Sitca Corporation and its sole asset, K2 Corporation, for $3.3 million, five years after the Shakespeare acquisition was completed. During the years immediately following the purchase of K2 Corporation, Anthony Industries continued to acquire additional companies, including Stearns Manufacturing Co. in 1988, a manufacturer of flotation devices, and Olin Corp. in 1989, the country’s number two ski manufacturer behind K2 Corporation. The company’s greatest surge of growth would take place during the 1990s, however, when annual sales leaped from under $300 million to more than $500 million during the first half of the decade.

Growth in the 1990s

During the 1990s, Anthony Industries acquired several sporting goods manufacturers and diversified its existing businesses, particularly its K2 division, intent on broadening its product mix to take advantage of its existing distribution network comprising sporting goods chains and other retailers throughout the country. On the look for “companies that are the best of the class,” as one company official put it, Anthony Industries would add greatly to what already stood as a solid collection of brands and companies. At the beginning of the 1990s, the company’s Anthony Pools division, the progenitor of all that followed from its establishment in 1946, ranked as the largest builder of in-ground swimming pools in the United States; its Shakespeare Fishing Tackle group operated as a leading domestic producer and distributor of fishing rods, reels, and tackle; K2 ranked as the leading brand of alpine skis; and Hilton competed as the top U.S. brand of jackets, shirts, and other apparel for the advertising, specialty, and screen-print markets. Not to be forgotten among the array of the company’s recreational business was Anthony Industries’ industrial products segment, which contributed a mighty 68 percent of the company’s total annual profits. In all, the growing Anthony Industries empire was a solid, well-rounded enterprise, with sales spread across nine distinct product categories in the recreational segment and three distinct product groups in the industrial segment.

By 1995, nearly every Anthony Industries recreational brand was flourishing, with new brands being acquired at a consistent rate, such as the February 1995 purchase of Dana Design Ltd., a Bozeman, Montana-based maker of backpacks. The company’s in-line skates, after recording $10.5 million in sales for its inaugural year, generated $38.9 million in sales in 1995, an enormous 267 percent increase. K2 snowboards were strongly positioned in a market growing 30 percent annually, enabling the company to achieve a 125 percent annual growth rate in its snowboard business between 1992 and 1995, when K2 snowboards collected $26.1 million in sales. Shakespeare Fishing Tackle recorded encouraging growth during 1995 as well, posting a nearly 25 percent increase in sales to reach $85.3 million for the year.

Against the backdrop of strong growth, there were several important decisions made during the year that prepared Anthony Industries for the years ahead. In October 1995, Anthony Industries signed a letter of intent to sell the company’s Anthony Pools division, the original business established in 1946. Then, one month later, Forester announced his plans to retire as chief executive officer, a post he had occupied since 1973. Forester stayed on as chairman, but in January 1996 he passed the reins of command to Richard M. Rodstein, who would guide the company as president and chief executive officer as it entered the late 1990s. In March 1996, the sale of the Anthony Pools division was completed, with the founding business passed to the corporate hands of General Aquatics, Inc. With the Forester era brought to a close and the divestiture of Anthony Pools completed, Anthony Industries made a clean sweep of the vestiges of its past by adopting K2 Inc. as its new name in June 1996,50 years after the Anthony name had first emerged. As the company moved ahead toward the late 1990s and the beginning of the 21st century, a substantial portion of its growth was expected to come from new products and acquisitions. In 1995, the company derived roughly a quarter of its total sales from products introduced within the previous two years. Bearing this in mind, Rodstein explained the future course of the newly named K2 Inc., stating, “Our mission is simple: To have lots of new products in the closet.”

Principal Subsidiaries

Shakespeare Company; Sitca Corporation; K2 Corporation; SMCA, Inc.; Girvin Inc.; Dana Design Ltd.

Principal Operating Units

Active Apparel and Outdoor Group; Dana Design; Wilderness Experience; Garuda; Speed Zone Race Gear; Girvin/ProFlex; Hilton Active Apparel; K2; Shakespeare Electronics & Fiberglass; Shakespeare Fishing Tackle—Domestic; Shakespeare Fishing Tackle—International; Shakespeare Monofilament; Simplex Products; Stearns Active Water Sports Equipment.