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Oakley's Founder Looks Like a Million--and Then Some

August 10, 1995|CHRIS WOODYARD | TIMES STAFF WRITER

IRVINE — In the world of expensive sunglasses, all eyes are fixed on Jim Jannard.

The modest 45-year-old is poised to emerge as one of Orange County's richest business leaders as his company, Oakley Inc., is expected to sell stock to the public for the first time today.

Jannard, founder and president of Irvine-based Oakley, plans to sell shares worth $138.7 million and will retain shares worth $532 million, based on the $23-a-share offering price set by the company's lead underwriter, Merrill Lynch & Co., late Wednesday.

Those kinds of figures catapult Jannard's wealth above that of such Orange County gentry as Irvine Ranch heiress Joan Irvine Smith, whose estimated net worth is $350 million, yet below that of Irvine Co. Chairman Donald Bren, whose personal fortune was pegged at $2 billion on Forbes magazine's list of the 400 wealthiest individuals in 1994.

The offering marks a coming of age for a company that has pioneered sports sunglasses as a status symbol and not merely a way to keep from squinting while driving into the sunset.

"The key with Oakley is they have been on the leading edge of the fast-growing segment, the sports segment," said Jack B. Chadsey, president of the 1,400-store Sunglass Hut chain, the largest seller of Oakley eye wear. "They will innovate long before they need to innovate."

The result has been a line of sunglasses with offbeat names such as M Frames, e Wires and Zeros. Priced from $40 to $225, they are selling so fast that the company has grown at more than a 25% pace during its last two fiscal years.

In the process, Jannard has become very rich. He owns 90% of Oakley, which had preliminary net earnings of $15.7 million in the first six months of this year, about 80% above net earnings a year ago. Sales climbed 37% to $82.3 million.

The company's prospectus shows that Jannard's salary last year was $380,670. He also received a bonus of $20.9 million to help defray corporate taxes for which Jannard was mostly liable as majority owner of a private corporation.

The public offering will total 10 million shares. The company will sell 3.3 million shares and use the expected net proceeds of more than $60 million to reduce debt and build a new corporate headquarters in Foothill Ranch.

Jannard and the company's other officers will sell the additional 6.7 million shares. After the sale, Jannard will still hold 23.1 million shares, or 65% of the company's stock.

Not bad for a guy who is so intent on remaining out of the limelight that his company refuses to make a copy of his photograph available.

"He doesn't like the spotlight. That's not his goal in life," Chadsey said.

Jannard started by making motorcycle grips in his garage in 1965. He later expanded into motorcycle goggles and branched into sunglasses in 1984.

The company has stuck entirely to the pricey fashion- and technology-driven segments of the market, which have also recorded the fastest growth. Sales of sunglasses retailing for more than $30 now represent about half of the $2.5-billion market for sunglasses.

Oakley has introduced new materials for lightweight lenses and special coatings, which the company has promoted through its playful slogan, "Thermonuclear protection."

(The company refers to its Irvine factory as its "interplanetary headquarters," and its shares will trade on the New York Stock Exchange under the symbol "OO," representing a pair of sunglasses.)

Oakley, which faces competitors such as Bausch & Lomb's Ray Ban brand, has attempted to adapt quickly to changing trends.

"The fashion segment of the sunglass business has been exceptionally strong," said Richard Enholm, a committee chairman of the Sunglass Assn. of America industry group. "Styles have changed dramatically as fashions have changed."

Oakley may have guessed correctly so far, but customers can be fickle about their shades.

John Dao, manager of Sunglass Gallery in Laguna Beach, describes Oakley products as "really hot" and "nice glasses," but says that rival sunglasses made by Arnet are "the hottest thing."

If fashion-conscious youth are driving the market, Jannard seems to have assembled the appropriate team.

Except for the 51-year-old vice president of operations, none of the other seven top executives of his company are older than Jannard. Peter Yee, director of design, is 27.

"The typical Oakley customer ranges from 14 to 40," Chadsey said. "They have traditionally had a younger customer."

Times staff writer Tom Petruno contributed to this report.

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Oakley Inc. at a Glance

* Founded: 1965

* Headquarters: Irvine

* Founder and president: Jim Jannard, who started the company in his garage and named it after his dog

* Products: Originated as a manufacturer of motocross motorcycle grips and expanded into motocross goggles with the Oakley name prominently displayed. Currently makes seven types of high-performance sunglasses and three lines of sport goggles.

* Employees: 600

* Distribution: Nationwide and in 60 foreign countries

* Top foreign markets: Australia, France, Canada, Japan and Britain

* 1994 sales: $124 million

* 1994 earnings: $8.3 million

Source: Oakley Inc. Researched by JANICE L. JONES / Los Angeles Times

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