K2 Inc.
Address:
4900 South Eastern Avenue, Suite 200
Los Angeles, California 90040
U.S.A.
Telephone: (213) 724-2800
Fax: (213) 724-0470
Statistics:
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
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.
Company History:
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.
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.
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. Meanwhile, through its K2 division, the company had entered another fast-growing market to go along with its foray in the burgeoning market for 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.
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.
Further Reading:
"Anthony Industries," Sporting Goods Business, February 1995, p. 68.
Bamett, Chris, "Anthony Industries: Combining R&D with Luck," California Business, January 1992, p. 12.
Byrne, Harlon S., "Anthony Industries: Manufacturer of K-2 Skis Heads for New Peak," Barron's, April 19, 1993, p. 46.
Cole, Benjamin Mark, "Anthony Industries Plans Secondary Offering," Los Angeles Business Journal, May 22, 1995, p. 5.
"K2 Can Do," Forbes, January 22, 1990, p. 156.
Labate, John, "Anthony Industries," Fortune, November 28, 1994, p. 189.
Leibowitz, David S., "Small Can Be Beautiful," Financial World, December 23, 1986, p. 120.
------, "Three Cheers for Eclectics," Financial World, November 12, 1991, p. 100.
Lubove, Seth, "Astro Chicken to the Rescue," Forbes, January 22, 1996, p. 68.
McEvoy, Christopher, "Acquiring Minds," Sporting Goods Business, August 1995, p. 44.
------, "Anthony Adds Dana Design to Its Pack of Companies," Sporting Goods Business, March 1995, p. 28.
Mehlman, William, "Anthony Synthesizes Winner from Pools, Skis, Industrials," The Insider's Chronicle, June 12, 1989, p. 1.
Paris, Ellen, "A Conglomerate That Works," Forbes, November 28, 1988, p. 52.
"Who's Fishing for This Tackle Maker," Business Week, October 3, 1988, p. 120.
Source: International Directory of Company Histories, Vol. 16. St. James Press, 1997.
