Oakley's Growth Plans
Annual shareholders' meeting reveals senior executives plans for new products and increased advertising.
6/21/99

FOOTHILL RANCH, Calif.--(BUSINESS WIRE)--June 14, 1999--Oakley Inc. (NYSE:OO) held its annual meeting for shareholders on Friday, June 11, 1999 at its interplanetary headquarters, during which company executives shared plans for introducing new products and increasing advertising with the goal of accelerating the company's growth and profitability.

Speaking to an audience of approximately 300 shareholders, Oakley Founder and Chairman Jim Jannard led the meeting by detailing his vision for Oakley as a future billion-dollar brand. "Making the leap from the best sunglass company in the world to a world-class brand is a natural transition," said Jannard. "We've been thinking about it for years. A good jolt in the sunglass road in 1997 was all we needed to jump into action. We believe we have the assets required to pursue such a goal.

"First, we have distinctive product signature -- inventions wrapped in art. You can see it in everything we make. Recognizable, technical sculpture is what differentiates us from all of our competitors in every category we're in. Second, we possess the demonstrated ability to manufacture anything we envision, given a little time. Third, Oakley is a recognizable icon with an unblemished image. The Oakley `O' is becoming synonymous with innovation and world-class athletes. With these assets we will produce more and more wicked cool stuff, not just in sunglasses, but also in footwear, watches, clothing and accessories while carefully expanding our distribution to reach more consumers."

Jannard concluded, "Building on our history of communicating effectively with the influential `front-row' consumers in each market, we are prepared now to turn up the volume and reach deeper into the crowd, not stopping until Oakley is an acknowledged world brand."

Newly appointed Chief Executive Officer Bill Schmidt spoke about new brand communications strategies being formulated to increase consumer awareness of Oakley's diverse product offerings and patented technologies. "The Oakley brand is very strong around the world and the company's distinctive sculptural product styling has led the way. However, what makes Oakley products truly special are their superior, performance-enhancing technologies. Far too few consumers are aware of the company's patented XYZ Optic(R) that minimizes distortion for all angles of view in sunglasses with wrapped and raked lens configurations.

Schmidt continued, "To help get the message of Oakley's patented technologies and superior product to a broader consumer market, the company has initiated a search for an advertising agency and plans to make a selection over the next 6-8 weeks. We have an exciting brand, people at Oakley with a passion for the products and consumers who are very loyal and who expect cool, technical stuff. As we develop new products, we need to make sure we don't keep them a secret."

President Colin Baden highlighted the dramatic expansion of the company's product offering. "In contrast to the first six months of 1998, we have designed and developed several new and updated eyewear styles, introduced three times as many apparel styles, have two new shoe styles beginning to hit the footwear market and a deeper watch line.

"One of the most exciting new products scheduled to appear at retail later this month is Oakley's new OO(TM)(`Double O') line of sunglasses and prescription frames designed in collaboration with Michael Jordan. Nearly half of the orders for OO received so far are for the prescription styles in the line. This points to the tremendous opportunity Oakley has to penetrate a segment of the eyewear business that is much larger than the plano sunglass segment and from which the company currently generates only one percent of its sales. Our passion and our determination to reinvent each product segment we enter is stronger than ever."

Chief Operating Officer Link Newcomb addressed the company's financial performance. "In 1998 Oakley achieved a 20 percent increase in net sales to a record $232 million and a 23 percent increase in net income, driven by solid increases in our core eyewear business. Excluding footwear, earnings grew 32 percent on an 18 percent increase in sales. The company's international net sales expanded by 19 percent, accounting for 42 percent of total sales, and foreign offices generated a nearly 80 percent increase in operating income. Demonstrating the strength of the Oakley brand in world markets, our international sales have grown by over 20 percent in each of the past four quarters despite very challenging economic conditions in many key markets.

"At the same time, we made important investments in our footwear, watch, apparel and international operations to position us for future growth. Our second shoe will begin appearing in 25 Finish Line stores next week, gradually expanding to 75 Finish Line stores. Over the coming months, we expect to have our new shoes in 650 U.S. stores and 750 international stores. As a company, we have no greater priority than to generate positive returns on our footwear business and to remove the uncertainty related to that effort which is negatively effecting our stock price."