<PAGE>
 
===============================================================================
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
 
                                   FORM 10-K
 
                                 ANNUAL REPORT
 
    PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 FOR THE YEAR ENDED DECEMBER 31, 1995        COMMISSION FILE NO. 1-4290
 
                           ANTHONY INDUSTRIES, INC.
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

               DELAWARE                                      95-2077125
       (STATE OF INCORPORATION)                           (I.R.S. EMPLOYER
                                                         IDENTIFICATION NO.)
 
 
       4900 SOUTH EASTERN AVENUE                             
        LOS ANGELES, CALIFORNIA                                 90040  
 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                    (ZIP CODE) 
 
      REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (213) 724-2800
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

 
<TABLE>
<CAPTION>
                                                NAME OF EACH EXCHANGE ON
             TILE OF EACH CLASS                     WHICH REGISTERED
             ------------------                 ------------------------
<S>                                             <C>
       Common Stock, par value $1               New York Stock Exchange
                                                 Pacific Stock Exchange
Series A Preferred Stock Purchase Rights        New York Stock Exchange
                                                 Pacific Stock Exchange
</TABLE>
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                                     NONE
 
INDICATE BY AN "X" WHETHER THE REGISTRANT 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, AND HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE
PAST 90 DAYS. YES  X
                  ---
 
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO
THIS FORM 10-K. [_]
 
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK OF THE REGISTRANT HELD BY
NONAFFILIATES WAS APPROXIMATELY $324,025,000 AS OF MARCH 15, 1996.
 
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON STOCK AS OF MARCH 15, 1996.
 
      Common Stock, par value $1                  16,594,083 Shares
 
DOCUMENTS INCORPORATED BY REFERENCE
 
  Portions of the proxy statement for the Annual Meeting of Shareholders to
  be held May 2, 1996 are incorporated by reference in Part III.
 
===============================================================================
<PAGE>
 
                            FORM 10-K ANNUAL REPORT
 
                                    PART I
 
ITEM 1. BUSINESS:
 
GENERAL
 
  Anthony Industries, Inc. ("Anthony" or the "Company") is a leading designer,
manufacturer and marketer of brand name sporting goods and other recreational
products. The Company is also a major supplier of selected industrial
products. Anthony's sporting goods and other recreational products include
several brand name lines such as K2 and Olin alpine skis, K2 snowboards, K2
Exotech in-line skates, Shakespeare fishing rods and reels, Stearns personal
flotation devices, rainwear and wet suits, ProFlex full-suspension mountain
bikes and Dana Design and Wilderness Experience backpacks and Garuda tents.
The Company also produces and markets Hilton active apparel, K2 ski apparel,
Charles Bastion golf apparel and NASCAR licensed apparel. Anthony's industrial
products consist primarily of Shakespeare monofilament line used in weed
trimmers, in paper mills and as fishing line; Shakespeare fiberglass marine
antennas, light, transmission and distribution poles and Simplex coated and
laminated products. Founded in 1946, Anthony has grown to over $540 million in
annual sales through a combination of internal growth and strategic
acquisitions. For segment and geographic financial information see Note 12 of
Notes to Consolidated Financial Statements.
 
  In recent years, the Company has aggressively expanded into several of what
are recognized as the faster growing sporting goods markets in the United
States, including in-line skates, snowboards and full-suspension mountain
bikes. Management believes these newer products have benefited from the market
share positions of other Company products, several of which are now the #1
brands in their respective markets. For example, in the United States, K2 has
the #1 market position in alpine skis, and management believes that Stearns
has the #1 market position in personal flotation devices and Shakespeare's
Ugly Stik is the top selling line of fishing rods.
 
  In October 1995, the Company signed a letter of intent to sell the assets
and business of its swimming pool and motorized pool cover business (the
"Division"). As a result, the Company reclassified the Division as
discontinued operations, and prior years' operations were similarly
reclassified. A loss from discontinued operations of $4.9 million was recorded
which included an anticipated loss from disposal. On March 5, 1996, the
Company completed the sale of substantially all of the assets of the Division
to General Aquatics, Inc., a national pool builder and pool equipment
manufacturer (see Note 2 of Notes to Consolidated Financial Statements for
further discussion). The discussion which follows focuses on the continuing
operations of the Company.
 
  The Company's common stock was first offered to the public in 1959 and is
currently traded on the New York and Pacific Stock Exchanges (symbol: ANT). On
June 1, 1995, the Company completed a secondary public offering of 4.6 million
new shares of common stock of the Company, resulting in net proceeds of $67.2
million. For further information regarding the stock offering see Note 11 of
Notes to Consolidated Financial Statements.
 
                                       1
<PAGE>
 
SPORTING GOODS AND OTHER RECREATIONAL PRODUCTS
 
  Net sales of sporting goods and other recreational products were $349.4
million in 1995, $264.7 million in 1994 and $227.6 million in 1993. The
following table lists the Company's principal sporting goods and other
recreational products and the brand names under which they are sold.
 
<TABLE>
<CAPTION>
      PRODUCT                         BRAND NAME
      -------                         ----------
      <S>                             <C>
      Alpine Skis                     K2, Olin
      Cross-Country Skis              Madshus
      Snowboards                      K2
      In-Line Skates                  K2 Exotech
      Fishing Rods and Reels          Shakespeare, Ugly Stik
      Active Water Sports Products    Stearns
      Full-Suspension Mountain Bikes  ProFlex, Girvin
      Backpacks                       Dana Design, Wilderness Experience
      Tents                           Garuda
      Imprinted Active Apparel        Hilton, USA
      Golf Apparel                    Charles Bastion
      Licensed Apparel                NASCAR
      Ski Apparel                     K2
</TABLE>
 
  Alpine Skis. The Company sells its alpine skis under the names K2 and Olin
principally in the United States, Europe and Japan. K2 offers skis in a broad
range of styles for a variety of conditions and types of skiing at numerous
price points. While participation rates for alpine skiing have been relatively
flat during the past few years, the market shares of K2 and Olin skis have
increased due to their popularity among retail purchasers resulting from their
high quality, innovative features, attractive graphics, creative marketing and
their domestic production.
 
  K2 and Olin skis are manufactured by the Company in the United States and
Norway. They are sold to specialty retail shops and sporting goods chains in
the U.S. by independent sales representatives and in Europe and Japan through
independent and Company-owned distributors. K2 alpine skis are marketed to
skiers ranging from beginners to top racers using youthful and often
irreverent advertising. Olin skis are marketed toward more mature and affluent
purchasers. To assist in its marketing efforts, the Company sponsors amateur
and professional skiers including Phil and Steve Mahre and Glen Plake.
 
  Cross-Country Skis. The Company's cross-country skis, which are manufactured
in the Company's plant in Norway, are sold under the name Madshus by a
retailer/distributor which owns the rights to the Madshus name and resells the
skis principally in Europe.
 
  Snowboards. The Company introduced K2 snowboards and snowboard bindings in
1990. The Company began selling snowboard boots in 1993. While the snowboard
market is highly fragmented with over 200 competitors, Anthony is one of the
few snowboard companies which manufactures its own snowboards. Most of its
competitors source their products from other manufacturers. The Company
believes that its manufacturing capability will provide a competitive
advantage as the industry begins to consolidate. Like its alpine skis, K2
snowboards are of high quality, have attractive graphics and are creatively
marketed.
 
  The Company made an important innovation in its snowboard line in early 1995
when it introduced the Clicker, a revolutionary step-in binding system for
snowboards jointly developed with Shimano Inc. The Clicker is among the first
commercially available step-in binding systems for snowboards. The Clicker
will enable snowboarders to release and refasten the binding easily, which
among other things, will facilitate entering and exiting ski lifts.
 
                                       2
<PAGE>
 
  K2 snowboards are manufactured by the Company in the United States. They are
sold to specialty retail shops and sporting goods chains in the U.S. by
independent sales representatives and in Europe and Japan through independent
and Company-owned distributors. Like K2 skis, K2 snowboards are marketed using
youthful and irreverent advertising, and the Company sponsors professional and
amateur snowboarders.
 
  In-Line Skates. The Company introduced its K2 Exotech in-line skates in
1994. The in-line skate market has grown dramatically in recent years.
Anthony's in-line skates are priced at the mid to upper end of the industry.
K2 Exotech skates are attractive and of high quality and have innovative
features such as a soft mesh and leather upper designed for improved comfort
and a rigid plastic cuff for support. The Company's in-line skates also offer
high quality in-line skate components such as Hyper(TM) wheels and TwimCam(TM)
bearings, which are manufactured by others.
 
  K2 Exotech in-line skates are manufactured to Company specifications
primarily by vendors in Korea and China. They are sold to specialty retail
shops and sporting goods chains in the U.S. by independent sales
representatives and in Europe and Japan through independent and Company-owned
distributors.
 
  Fishing Rods and Reels. The Company sells fishing rods, reels and fishing
line in most of the world. The Company believes that Shakespeare's Ugly Stik
models have been the best selling fishing rods in the U.S. over the past 18
years. The success of these fishing rods has allowed the Company to establish
a strong position with retailers, thereby increasing sales of new rods, reels
and kits and combos. Shakespeare rods and reels are manufactured principally
in the People's Republic of China, although blanks for the Ugly Stik fishing
rod are made by the Company in the United States. Shakespeare products are
sold directly by the Company and through independent sales representatives to
mass merchants (two of which in the aggregate purchase more than one-half of
the Company's fishing rods and reels), specialty shops and chain stores.
 
  Active Water Sports Products. The Company sells Stearns flotation vests,
jackets and suits ("personal flotation devices"), cold water immersion
products, wet suits and rainwear in the United States and in certain foreign
countries. Stearns has recently introduced towables, which are inflatable
flotation products towed behind waterski boats. In the United States,
occupants of boats are required by law either to wear or have available
personal flotation devices meeting Coast Guard standards. Stearns personal
flotation devices are manufactured to such standards and are subject to
rigorous testing for certification by Underwriters Laboratories. Stearns
manufactures its personal flotation devices in the U.S. and its other products
are outsourced from Asian manufacturers. Stearns products are sold principally
through an in-house marketing staff and independent sales representatives to
mass merchandisers, specialty shops and chain stores and to the off-shore oil
industry, commercial fishermen and other commercial users.
 
  Full-Suspension Mountain Bikes. Girvin, which was acquired by the Company in
October 1993, designs and distributes high quality full-suspension mountain
bikes and components under the names ProFlex, Girvin and Flexstem in the
United States and internationally. The Company believes that full-suspension
bikes are a fast growing segment of the mountain bike market. Performance and
comfort are provided by these bikes which have shock absorbing elements for
both front and rear wheels, thereby improving climbing ability and decreasing
rider fatigue and off-road vibration. Girvin is a pioneer of full-suspension,
and the Company believes it is the largest wholesale distributor of these
bikes in the United States. Girvin manufactures certain components, including
front forks, at its facility in the United States. The bikes are assembled to
Girvin's specifications by a vendor in Taiwan and are distributed through an
in-house marketing staff and by independent sales representatives to
independent bicycle dealers in the U.S. and through distributors
internationally. To assist in its marketing efforts, Girvin co-sponsors the
BMW/ProFlex mountain bike team.
 
  Backpacks. Dana Design, which was acquired by the Company in February 1995,
manufactures and distributes high-end backpacks in the U.S. Dana Design
products are known for their comfort, high quality and innovative features,
such as custom fitting. Dana Design backpacks are manufactured by the Company
in the United States for sale by independent sales representatives to
specialty retailers in the United States. The Wilderness Experience backpacks
and other related apparel lines were acquired by the Company in December
 
                                       3
<PAGE>
 
1994, and offer products at more popular price points. The Company believes
that its manufacturing expertise, marketing capabilities and financial support
will benefit these businesses. Garuda was acquired by the Company in December
1995 and manufactures high-end tents in the United States for sale by
independent sales representatives to specialty retailers in the United States.
 
  Active Wear. The Company's Hilton business manufactures and distributes
jackets, shirts, fleece tops and other active wear under the Hilton and USA
brand names. These products are primarily sold in the United States to
advertising specialty customers, embroiderers and screen printers who in turn
sell imprinted items, including garments, to corporate buyers, among others.
Hilton and USA apparel are manufactured by the Company in the United States
and are sold through catalogs, by a direct sales force and by independent
sales representatives. The Company has recently introduced a line of Charles
Bastion golf shirts and a broad line of NASCAR licensed apparel.
 
  Ski Apparel. K2 ski apparel is manufactured to the Company's specifications
by various suppliers located in Europe and Asia. K2 apparel is principally
sold in Europe and through independent distributors for which the Company
receives royalty income, except in Germany where it is sold through a Company-
owned distributor.
 
INDUSTRIAL PRODUCTS
 
  Net sales of industrial products were $194.9 million in 1995, $170.3 million
in 1994 and $146.1 million in 1993. The Company's industrial products segment
historically has contributed to operations by providing a base of generally
consistent earnings and cash flow. The following table lists certain of the
Company's principal industrial products and the brand names under which they
are sold.
 
<TABLE>
<CAPTION>
      PRODUCT                                        BRAND NAME
      -------                                        ----------
      <S>                                            <C>
      Monofilament Line                              Shakespeare
      Fiberglass Utility and Decorative Light Poles  Shakespeare
      Marine Radio Antennas                          Shakespeare
      Coated and Laminated Paperboard Products       Thermo-ply, Studio Board
      Protective Building Wrap                       Barricade, R-Wrap
      Synthetic Commercial Building Coatings         Finestone
</TABLE>
 
  Monofilament Line. Nylon and polyester monofilament line is domestically
manufactured by the Company in a variety of diameters, tensile strengths and
softness. Monofilament is used in various applications including the
manufacture of woven mats for use by paper producers in the United States,
Europe and South America and for use as line in weed trimmers in the United
States. Monofilament produced for sale in Europe for woven mats is
manufactured primarily in the Company's U.K. facility. Fishing line is also
manufactured domestically and marketed by Shakespeare's fishing tackle
division to retailers and mass merchandisers.
 
  Fiberglass Utility and Decorative Light Poles. The Company produces
fiberglass products including utility and decorative light poles which are
manufactured and sold under the Shakespeare name in the United States
principally to utility companies and municipalities. The Company believes that
a large majority of major utility companies in the United States have approved
the use of fiberglass light and utility poles.
 
  Marine Radio Antennas. The Company manufactures in the United States
fiberglass radio antennas for marine, citizen band and military application
under the Shakespeare name. These products are sold primarily in the United
States. The Company also distributes marine radios and other marine
electronics under the Shakespeare name which are manufactured in Asia to the
Company's specifications. These antennas, radios and other marine electronics
are sold by an in-house sales department and independent sales representatives
to specialty marine dealers.
 
                                       4
<PAGE>
 
  Coated and Laminated Paperboard Products. Anthony's Simplex business
manufactures a wide range of coated and laminated paperboard products, which
include insulative sheathing marketed under the trademark Thermo-ply,
container components for fiber drums and flexible packaging paperboard
products. These products are manufactured in the United States and are sold to
a large number of customers in the domestic residential and manufactured
housing, container and industrial packaging industries, and in the case of
Thermo-ply, to the Japanese residential housing industry. The Company also
operates a paper recycling mill which produces chip paperboard primarily used
in the manufacture of Thermo-ply insulative sheathing and secondarily sold to
others in nonconstruction related markets. The Company has recently introduced
Studio Board which is used in set construction for the entertainment industry.
Studio Board is made from 85% recycled material and is also recyclable itself.
 
  Protective Building Wrap. The Company manufactures and sells protective
building wrap in the United States under the names R-Wrap and Barricade to the
domestic residential and manufactured housing industries. These products are
generally sold through distributors to home builders.
 
  Synthetic Commercial Building Coatings. The Company manufactures and sells
synthetic commercial building coatings in the United States under the name
Finestone to the commercial construction industry. These products are marketed
primarily to architects and builders.
 
COMPETITION
 
  The Company's competition varies among its business lines. The sporting
goods and recreational products markets are generally highly competitive, with
competition mainly centering on product innovation, performance and styling,
price, marketing and delivery. Competition in these products (other than
snowboards and active apparel) consists of a relatively small number of large
producers, some of whom have greater financial and other resources than the
Company. A large number of companies compete in snowboards and active apparel.
While the Company believes that its well-recognized brand names, established
distribution networks and reputation for developing and introducing innovative
products have been key factors in the successful introduction of its sporting
goods products, there are no significant technological or capital barriers to
entry into the markets for many sporting goods and recreational products.
These markets face competition from other leisure activities, and sales of
leisure products are affected by changes in consumer tastes, which are
difficult to predict.
 
  While the Company believes that in its industrial products segment it
competes based on product quality, service and delivery, the Company's
industrial products are, in most instances, subject to price competition,
ranging from moderate in marine antennas and monofilament line to intense for
commodity-type products such as paperboard container components. Insulative
sheathing products compete with substitute products. Fiberglass utility and
light poles compete with products made of other materials, such as wood and
aluminum. Certain industrial competitors have greater financial and other
resources than the Company.
 
FOREIGN SOURCING AND RAW MATERIALS
 
  The Company has not experienced any substantial difficulty in obtaining raw
materials, parts or finished goods inventory for its sporting goods and other
recreational products businesses. Certain components and finished products,
however, are manufactured or assembled abroad and therefore could be subject
to interruption as a result of local unrest, currency exchange fluctuations,
increased tariffs, trade difficulties and other factors. A major portion of
the Company's fishing rods, including its Ugly Stik models, and reels and
certain in-line skate components are currently manufactured in the People's
Republic of China which trades with the United States under a Most Favored
Nation ("MFN") trade status. While the Company believes that alternative
sources for these products produced in China could be found, maintaining its
existing costs of such products will depend on China's continuing to be
treated under MFN tariff rates, which the United States from time to time has
threatened to rescind. In 1996, the United States has again threatened trade
sanctions against certain products made in China, including fishing rods,
although no such trade sanctions have been imposed to date.
 
 
                                       5
<PAGE>
 
  The Company has not experienced any substantial difficulty in obtaining raw
materials for its industrial products segment, although recycled corrugated
scrap paper, a raw material used in the production of the Company's insulative
sheathing, has become more expensive, a trend which the Company believes may
continue. This increasing cost has had and could continue to have significant
impact on the profitability of the insulative sheathing line. While the
Company has been able to raise its insulative sheathing prices to offset the
increasing cost of this raw material, no assurances can be given of the
Company's continued ability to do so. The Company is currently expanding its
recycling capabilities to lessen its reliance on recycled corrugated scrap
paper.
 
SEASONALITY AND CYCLICALITY; BACKLOG
 
  Sales of the Company's sporting goods are generally highly seasonal and in
many instances are dependent on weather conditions. The Company's industrial
products are mildly seasonal. This seasonality causes the Company's financial
results to vary from quarter to quarter, and the Company's sales are usually
weakest in the first quarter. In addition, the nature of the Company's ski and
snowboard businesses requires it to make relatively large investments in
inventory in anticipation of these products' selling season, which runs from
July through December, and relatively large investments in receivables during
and shortly after such season. The rapid delivery requirements of the
Company's customers for its sporting goods products and active apparel also
result in investment in significant amounts of inventory. The Company believes
that another factor in its level of inventory investment is the shift by
certain of its sporting goods customers from substantial purchases of pre-
season inventories to deferral of deliveries until the products' retail
seasons.
 
  Sales of sporting goods depend to a large extent on general economic
conditions including the amount of discretionary income available for leisure
activities. Sales of the Company's industrial products are dependent to
varying degrees upon economic conditions in the domestic housing, container
and paper industries.
 
  As a result of the nature of many of the Company's businesses, backlog is
generally not significant, and management believes it is not an important
indicator of future sales.
 
CUSTOMERS
 
  The Company believes that its customer relationships are excellent, and no
one customer of the Company accounted for ten percent or more of its
consolidated annual net sales in 1994 or 1995. The loss, however, of one of
the Company's two largest customers of its sporting goods products could have
a significant impact on the Company's results of operations.
 
RESEARCH AND DEVELOPMENT
 
  Consistent with the Company's business strategy of continuing to develop
innovative brand name products and improving the quality, cost and delivery of
products, the Company maintains decentralized research and development
departments at several of its manufacturing centers which are engaged in
product development and the search for new applications and manufacturing
processes. Expenditures for research and development activities totaled
approximately $7.1 million in 1995, $6.3 million in 1994 and $4.3 million in
1993 and were expensed as a part of general and administrative expenses in the
year incurred.
 
EMPLOYEES
 
  The Company had approximately 4,600 and 3,900 employees at December 31, 1995
and 1994, respectively. The Company believes that its relations with employees
generally have been good.
 
PATENTS AND INTELLECTUAL PROPERTY RIGHTS
 
  While product innovation is a highly important factor in the Company's
sporting goods and other recreational products segment and many of the
Company's innovations have been patented, the Company does not believe that
the loss of any one patent would have a material adverse effect on it. Certain
of its brand names, such as K2, K2 Exotech, Olin, Shakespeare, Ugly Stik,
Stearns, Girvin, ProFlex, Hilton, Dana Design and Wilderness Experience are
believed by the Company to be well recognized by consumers and therefore
important in the sales of these products. Registered and other trademarks and
tradenames of Company products are italicized in this Form 10-K.
 
                                       6
<PAGE>
 
ITEM 2. PROPERTIES
 
  The table below provides information with respect to the principal production
and distribution facilities utilized by the Company for continuing operations
as of December 31, 1995.
 
<TABLE>
<CAPTION>
                                             OWNED FACILITIES  LEASED FACILITIES
                                             ----------------- -----------------
                                 TYPE OF      NO. OF   SQUARE   NO. OF   SQUARE
          LOCATION               FACILITY    LOCATIONS FOOTAGE LOCATIONS FOOTAGE
          --------               --------    --------- ------- --------- -------
<S>                           <C>            <C>       <C>     <C>       <C>
SPORTING GOODS AND OTHER
 RECREATIONAL PRODUCTS
  Alabama.................... Production          2    156,000
  Illinois................... Distribution                          1     76,000
  Minnesota.................. Distribution
                              and production      1    290,000
  Rhode Island............... Distribution
                              and production                        1     50,000
  South Carolina............. Distribution
                              and production      2    140,000
  Washington................. Distribution
                              and production      1    160,000      1     37,000
  Foreign.................... Distribution
                              and production      3    101,000      6    147,000
                                                ---    -------    ---    -------
                                                  9    847,000      9    310,000
                                                ===    =======    ===    =======
INDUSTRIAL PRODUCTS
  Florida.................... Production          1     73,000
  Michigan................... Production          2    278,000
  South Carolina............. Production          2    484,000
                                                ---    -------
                                                  5    835,000
                                                ===    =======
</TABLE>
 
  The corporate headquarters of the Company is located in 15,000 square feet of
leased office space in Los Angeles, California. The terms of the Company's
leases range from one to eight years, and many are renewable for additional
periods. The termination of any lease expiring during 1996 or 1997 would not
have a material adverse effect on the Company's continuing operations.
 
  The Company believes that, in general, its plants and equipment are
adequately maintained, in good operating condition and are adequate for the
Company's present needs. The Company regularly upgrades and modernizes its
facilities and equipment and expands its facilities to meet production and
distribution requirements.
 
ITEM 3. LEGAL PROCEEDINGS
 
  Certain of the Company's products are used in relatively high risk
recreational settings and from time to time the Company is named as a defendant
in lawsuits asserting product liability claims relating to its sporting goods
products. To date none of these lawsuits has had a material effect on the
Company, and the Company does not believe that any lawsuit now pending could
reasonably be expected to have such an effect. The Company maintains product
liability, general liability and excess liability insurance coverages. No
assurances can be given that such insurance will continue to be available at an
acceptable cost to the Company or that such coverage will be sufficient to
cover one or more large claims, or that the insurers will not successfully
disclaim coverage as to a pending or future claim.
 
  On December 5, 1995, two of the directors of the Company, Robert T. Anthony
and Abraham L. Gray, Mr. Anthony's mother, acting as stockholders of the
Company filed a complaint in the California Superior Court
 
                                       7
<PAGE>
 
for Los Angeles County (No. BC 140251) entitled Marilyn Anthony, Robert T.
Anthony and Abraham L. Gray vs. John B. Simon, Hugh V. Hunter, Anthony
Industries, Inc. and Does 1 through 100. The complaint purports to be a
derivative complaint brought on behalf of the Company and arises out of the
negotiation and approval of a retirement agreement in November 1995 between the
Company and B.I. Forester, then the Company's Chairman of the Board and Chief
Executive Officer. Under the agreement, Mr. Forester stepped down as Chief
Executive Officer two years prior to the expiration of his employment contract,
allowing for an orderly and timely management succession, and agreed to
continue as the Company's Chairman of the Board and provide consulting services
to the Company. To avert a deadlock on the Board, without the necessity of Mr.
Forester voting on his own retirement agreement, the retirement agreement was
approved by the Executive Committee, with Mr. Forester abstaining. The two
members of the Executive Committee, in addition to Mr. Forester, are Messrs.
Hunter and Simon. At a meeting of the full Board of Directors held the same
day, the full Board, including Mr. Forester, voted to approve the actions of
the Executive Committee, by vote of five to four. Those in favor were Messrs.
Forester, Hunter, Offermans, Rodstein and Simon. Those opposed were Messrs.
Anthony, Goldberg, Gray and Weiner. The complaint seeks recovery of damages
from the two defendant directors of not less than $10 million allegedly
suffered by the Company as a result of the Executive Committee's approval of
the Forester retirement agreement. The complaint alleges that the agreement is
unfair to the Company and that the defendants breached their duties of loyalty;
acted in bad faith; engaged in intentional misconduct; and engaged in a knowing
violation of law in approving the agreement. In the opinion of management of
the Company, the allegations of the complaint are without merit.
 
  The Company is among several potentially responsible parties named in an
Environmental Protection Agency matter involving discharge of hazardous
materials at an old waste site in South Carolina. This action seeks primarily
cleanup costs. The ultimate outcome of this matter cannot be predicted with
certainty; however, to the extent to which not previously reserved against by
the Company, management does not believe this matter will have a material
adverse effect on the Company.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
  Not applicable.
 
EXECUTIVE OFFICERS OF THE COMPANY
 
<TABLE>
<CAPTION>
        NAME                     POSITION                            AGE
        ----                     --------                            ---
 <C>                   <S>                                           <C>
                     
 Richard M. Rodstein   President and Chief Executive Officer          41
 Robert E. Doyle       Senior Vice President; President of 
                          Simplex Products                            49
 John J. Rangel        Senior Vice President--Finance                 42
 Tony H. Chow          Vice President and Director of Taxes           48
 David G. Cook         Vice President; President of Stearns           58
 Timothy C. Cronin     Vice President and Executive Vice President
                         of Hilton                                    45
 Woodrow P. Greene     Vice President--Quality and Process 
                         Improvement and President of Shakespeare 
                         Electronics and Fiberglass                   51
 David H. Herzberg     Vice President; President of Shakespeare
                         Monofilament                                 53
 Marilyn E. Lane       Vice President and Treasurer                   64
 Franklin D. Leibow    Vice President; President of Hilton
                         Active Apparel                               46
 Henry Miller          Vice President                                 37
 Susan E. McConnell    Secretary                                      52
</TABLE>
 
  Mr. Rodstein has been President of the Company for more than the past five
years and Chief Executive Officer since January 1, 1996.
 
  Mr. Doyle has been a Senior Vice President of the Company and president of
Simplex Products for more than the past five years.
 
 
                                       8
<PAGE>

  Mr. Rangel, a CPA, has been Senior Vice President--Finance of the Company for
more than the past five years.
 
  Mr. Chow has been a Vice President of the Company for more than the past five
years.
 
  Mr. Cook has been a Vice President of the Company and president of Stearns
for more than the past five years.
 
  Mr. Cronin has been a Vice President of the Company since January 1, 1996 and
Executive Vice President of Hilton from October 1992 to December 1995. From
February to October 1992 Mr. Cronin was a design and sourcing executive with
Odyssey International Ltd., and for more than one year previous to that he was
a vice president of Wilson Sporting Goods Company.
 
  Mr. Greene has been Vice President--Quality and Process Improvement of the
Company since January 1, 1993, president of Shakespeare Electronics and
Fiberglass since June 22, 1995 and Director of Quality and Process Improvement
of the Company from May 1991 to December 1992. For more than one year previous
to that, Mr. Greene was employed by QualPro, Inc., a quality and process
improvement consulting firm.
 
  Mr. Herzberg has been a Vice President of the Company and president of
Shakespeare Monofilament for more than the past five years.
 
  Mrs. Lane has been a Vice President and Treasurer for more than the past five
years.
 
  Mr. Leibow has been a Vice President of the Company since January 1, 1993 and
president of Hilton Active Apparel since October, 1989.
 
  Mr. Miller has been a Vice President of the Company since January 1, 1996 and
Director of Business Development from June 1992 to December 1995. For more than
five years previous to that Mr. Miller was a vice president of Omega
Corporation.
 
  Mrs. McConnell, a California attorney, has been Secretary of the Company and
administrative assistant to the Chief Executive Officer for more than the past
five years.
 
  Officers of the Company are elected for one year terms by the directors at
their first meeting after the annual meeting of shareholders and hold office
until their successors are elected and qualified.
 
 
                                       9
<PAGE>
 
                                    PART II
 
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
 
PRINCIPAL MARKETS
 
  The Company's Common Stock is listed on the New York Stock Exchange and the
Pacific Stock Exchange under the symbol "ANT." At March 15, 1996 there were
1,839 holders of record of Common Stock of the Company.
 
COMMON STOCK PRICES
 
  The following table sets forth, for the quarters indicated, the reported high
and low sales prices of the Common Stock, as reported by the New York Stock
Exchange during the Company's two most recent fiscal years:
 
<TABLE>
<CAPTION>
                                          STOCK PRICES               DIVIDENDS PER SHARE
                                  ----------------------------    ------------------------
                                   HIGH      LOW        CLOSE        CASH         STOCK
                                  ------    ------    --------    ----------    ----------
   <S>                            <C>    <C>    <C>      <C>        <C>
   1995
     Fourth...................... 23 1/4    16 7/8    23          $      .11
     Third....................... 20 5/8    18 1/8    18 15/16           .11
     Second...................... 18 1/2    15 1/4    18 1/2             .11
     First....................... 16 7/8    15 1/8    16 1/4             .11
   1994
     Fourth...................... 17 3/8    16        16          $      .11          5%
     Third....................... 16 7/8    14 3/8    16 1/4            .105
     Second...................... 15 1/8    13 7/8    14 1/2            .105
     First....................... 17 1/2    14        15 1/8            .105
</TABLE>
 
--------
Prices and per share figures have been adjusted for stock dividends, where
applicable.
 
DIVIDENDS
 
  The Company has paid a cash dividend on the Common Stock since 1978. The
timing, amounts and form of dividends depends on, among other things, the
Company's results of operations, financial condition, cash requirements and
other factors deemed relevant by the Board of Directors. The Company is subject
to credit agreements which limit its ability to pay cash dividends. As of
December 31, 1995, retained earnings were free of such restrictions. See Note 5
of Notes to Consolidated Financial Statements for further description of the
Company's credit facilities.
 
Trust Agent, Registrar and Dividend Disbursing Agent for Common Stock;
 
Harris Trust Company of California
601 South Figueroa Street, Suite 4900
Los Angeles, California 90017
 
                                       10
<PAGE>
 
ITEM 6. SELECTED FINANCIAL DATA
 
<TABLE>
<CAPTION>
                                        YEAR ENDED DECEMBER 31,
                              ------------------------------------------------
                                1995    1994(A)   1993(A)   1992(A)   1991(A)
                              --------  --------  --------  --------  --------
                              (IN THOUSANDS EXCEPT FOR PER SHARE FIGURES)
<S>                           <C>       <C>       <C>       <C>       <C>
INCOME STATEMENT DATA:
  Net Sales.................. $544,268  $434,995  $373,712  $341,545  $309,086
  Cost of products sold......  400,840   319,021   276,759   249,707   227,171
                              --------  --------  --------  --------  --------
  Gross profit...............  143,428   115,974    96,953    91,838    81,915
  Selling expenses...........   61,256    49,575    41,519    40,802    34,410
  General and administrative
   expenses..................   45,086    38,713    31,759    28,428    27,709
                              --------  --------  --------  --------  --------
  Operating income...........   37,086    27,686    23,675    22,608    19,796
  Interest expense...........    9,916     7,481     5,759     6,687     6,813
  Other income, net..........   (1,449)   (1,239)     (903)     (872)   (1,159)
                              --------  --------  --------  --------  --------
  Income before provision for
   income taxes..............   28,619    21,444    18,819    16,793    14,142
  Provision for income taxes.    8,820     7,690     6,455     5,730     5,230
                              --------  --------  --------  --------  --------
  Income from continuing
   operations................   19,799    13,754    12,364    11,063     8,912
  Discontinued operations,
   net of taxes..............   (4,920)     (721)   (1,243)   (2,542)   (2,307)
                              --------  --------  --------  --------  --------
  Net Income................. $ 14,879  $ 13,033  $ 11,121  $  8,521  $  6,605
                              ========  ========  ========  ========  ========
  Per share:
   Continuing operations..... $   1.37  $   1.15  $   1.05  $    .95  $    .77
   Discontinued operations...     (.34)     (.06)     (.11)     (.22)     (.20)
                              --------  --------  --------  --------  --------
   Net income................ $   1.03  $   1.09  $    .94  $    .73  $    .57
                              ========  ========  ========  ========  ========
  Weighted average shares
   outstanding...............   14,498    11,919    11,798    11,635    11,577
BALANCE SHEET DATA:
  Total current assets....... $300,455  $226,474  $181,790  $163,729  $146,642
  Total assets...............  384,423   301,536   254,093   232,507   216,312
  Total current liabilities..  120,533    79,724    66,790    69,402    81,859
  Long-term debt, net of
   current portion...........   75,071   109,921    87,271    68,525    43,451
  Shareholders' equity.......  175,816    98,996    88,656    83,598    80,663
</TABLE>
--------
(a) Information has been restated to reflect the sale of the Division (for
    further information see Note 2 of Notes to Consolidated Financial
    Statements).
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
       OF OPERATIONS
 
  The Company maintains its books using a 52/53-week year ending on the last
Sunday of December. The years ending December 31, 1995, 1994 and 1993 consisted
of 53, 52 and 52 weeks, respectively. The Company believes that the impact on
the financial statements of the additional week on 1995 was not significant.
 
  In October 1995, the Company signed a letter of intent to sell the assets and
business of its swimming pool and motorized pool cover business (the
"Division"). As a result, the Company reclassified the Division as discontinued
operations, and prior years' operations were similarly reclassified. A loss
from discontinued operations of $4.9 million was recorded which included an
anticipated loss from disposal. On March 5, 1996, the Company completed the
sale of substantially all of the assets of the Division to General Aquatics,
Inc., a national pool builder and pool equipment manufacturer (see Note 2 of
Notes to Consolidated Financial Statements). The discussion which follows
focuses on the continuing operations of the Company.
 
 
                                       11
<PAGE>
 
REVIEW OF OPERATIONS: COMPARISON OF 1995 TO 1994
 
  Net sales from continuing operations increased 25.1% to $544.3 million in
1995 compared to $435.0 in 1994. Net income from continuing operations rose
44.0% to a record $19.8 million from $13.8 million in 1994. Earnings per share
from continuing operations, reflecting the completion on June 1, 1995 of the
Company's public offering of 4.6 million shares, advanced to $1.37 per share in
1995, as compared with $1.15 per share in 1994. Net income for 1995 was $14.9
million, or $1.03 per share.
 
  Net Sales. In the sporting goods and other recreational products group, net
sales increased 32.0% to $349.4 million in 1995 compared to $264.7 million in
1994. The increase in sales was widespread and was led by the rapid growth of
K2 Exotech in-line skates in both the international and domestic markets,
increased demand worldwide for K2 snowboards and step-in bindings and strong
shipments of Shakespeare's new Ugly Stik Lite fishing rod, together with other
new reels and kits and combos. New models of Stearns wetsuits, towables and
flotation vests also contributed significantly to the overall sales growth.
Sales of ProFlex full-suspension mountain bikes increased more than 75% due to
market demand for the new frame design in the U.S. and Europe and expansion of
its domestic dealer and international distributor base. Hilton's new active
apparel styles, the growth of its Charles Bastion golf shirt line and the
inclusion of the Dana Design business, which was acquired in early 1995, also
contributed to the sales growth for the year.
 
  In the industrial products group, net sales advanced 14.4% to $194.9 million
in 1995 compared to $170.3 million in 1994. The increase in sales was fairly
broad based. Half of the sales improvement was attributable to the Simplex
products business, which produces coated and laminated paperboard products,
protective building wrap and synthetic commercial building coatings. The
business benefited from record sales of Thermo-ply insulative sheathing,
continued market penetration of Finestone commercial coatings, expanded sales
of new laminated paper products and from price increases which partially
reduced the impact of some significant cost increases. Improved market
penetration of fiberglass light, electric transmission and distribution poles
and paperweaving monofilament line in the worldwide markets, generated the
majority of the sales gains in the Shakespeare electronics and fiberglass
business and the Shakespeare monofilament business, respectively, which are the
other two businesses of the industrial products group.
 
  Gross profit. Gross profit rose 23.7% to $143.4 million, or 26.3% of net
sales, in 1995 as compared to $116.0 million, or 26.7% of net sales in 1994.
The decline of gross profit as a percentage of net sales was primarily
attributable to the cost of increasing the production capacity of the rapidly
growing line of Shakespeare fiberglass light, distribution and transmission
poles and from certain raw material cost increases. The gross profit was
adversely affected by the dramatic increase in the cost of recycled corrugated
scrap paper, which was subsequently offset by corresponding price increases in
the latter part of the year. Higher sales of lower margin international
shipments, introductory price point flotation vests and active apparel was
offset by the profit impact of greater skate, snowboard and mountain bike
sales.
 
  Costs and Expenses. Selling expenses increased 23.6% to $61.3 million in 1995
compared to $49.6 million in 1994. However, as a percentage of net sales
selling expenses were consistent from year to year. The dollar increase was
primarily due to new product growth of in-line skates, snowboards, full-
suspension mountain bikes and fiberglass light poles and the inclusion of the
recently acquired backpack businesses.
 
  General and administrative expenses increased 16.5% to $45.1 million in 1995
compared to $38.7 million in 1994, although as a percentage of net sales they
were comparable to the prior year. The increase is attributable to spending on
new product development, continued investment in the infrastructure of various
divisions to support the growth of the Company and the inclusion of the 1995
acquisitions of Dana Design and Wilderness Experience, partially reduced by
lower ESOP-related expenses.
 
  Operating Income. Operating income improved by 34.0% to $37.1 million, or
6.8% of net sales in 1995 compared to $27.7 million or 6.4% of net sales in
1994. The percentage increase was due to lower selling, general and
administrative expenses as a percentage of net sales, which was partially
offset by the reduction in gross profit margin percentage.
 
 
                                       12
<PAGE>
 
  Interest Expense. Interest expense rose $2.4 million in 1995 compared to
1994. Higher average borrowings of $13.9 million, net of proceeds from the
Company's secondary public offering, was incurred to support the growth of
several product lines and accounted for $1.1 million of additional interest
while $1.3 million reflected higher rates.
 
  Other income. Other income of $1.4 million includes certain royalty, interest
and other miscellaneous income, of which $1.2 million is reported as a
component of segment operating profit.
 
  Income taxes. The effective income tax rate for 1995 has been reduced as a
result of a favorable $0.3 million foreign tax settlement and reduction of the
valuation reserve to reflect the impact of foreign net operating losses
realized.
 
  Segment information. Total segment operating profit (before interest,
corporate expenses and taxes) increased 32.8% to $44.9 million in 1995 compared
to $33.8 million in 1994. The sporting goods and other recreational products
group, reported operating profit of $26.9 million in 1995, up 57.3% from $17.1
million in 1994. Gains from higher sales of snowboards and in-line skates
fueled the increase. The continued strength of sales of new rods, reels and
kits and combos along with higher sales from Stearns also provided earnings
gains. Partially offsetting these gains were lower profitability of the active
apparel business. Mountain bike sales contributed to the profit increase as the
company's sales growth exceeded the growth of its expenses. The industrial
products group's segment operating profit increased 7.8% to $18.0 million in
1995 from $16.7 million in 1994. The increase was attributable to the increased
volume and cost efficiencies of the Shakespeare Monofilament and Simplex
businesses. For additional segment information see Note 12 of Notes to
Consolidated Financial Statements.
 
REVIEW OF OPERATIONS: COMPARISON OF 1994 TO 1993
 
  Net sales from continuing operations increased 16.4% to $435.0 million in
1994 compared to $373.7 million in 1993. Net income from continuing operations
increased 11.3% to $13.8 million, or $1.15 per share, in 1994 compared to $12.4
million, or $1.05 per share, in 1993.
 
  Net Sales. In the sporting goods and other recreational products group, net
sales increased 16.3% to $264.7 million in 1994 compared to $227.6 million in
1993. Approximately one-half of the improvement was attributable to the
Company's successful introduction of K2 Exotech in-line skates, increased
demand worldwide for K2 snowboards and inclusion for the full year of the
rapidly growing ProFlex mountain bike business acquired in October 1993. Growth
was also achieved from product extensions such as the introduction of 54 styles
of Hilton and USA active apparel for the advertising specialty market and new
models of Stearns raingear, wetsuits and water ski vests, all introduced since
January 1, 1993, along with several new models of fishing rods, reels, and kit
and combo series. Partially offsetting these gains were lower sales of skis to
the economically depressed European and Japanese markets.
 
  In the industrial products group, net sales increased 16.6% to $170.3 million
in 1994 compared to $146.1 million in 1993. Over one-half of the improvement
was attributable to the Simplex products business, which produces coated and
laminated paperboard products, protective building wrap and synthetic
commercial building coatings. This business benefited from increased
penetration of Finestone commercial coatings, expanded models of building wrap
and improved housing starts and shipments into the Japanese market which drove
sales of insulative sheathing to a record level. Improved market penetration,
particularly of fiberglass light poles and paperweaving monofilament line in
the United Kingdom, generated the majority of the sales gains in the
Shakespeare fiberglass business and the Shakespeare monofilament business,
respectively, which are the other two businesses of the industrial products
group.
 
  Gross Profit. Gross profit increased 19.6% to $116.0 million, or 26.7% of net
sales in 1994 compared to $97.0 million, or 25.9% of net sales, in 1993. This
improvement in gross profit margin resulted from an improved sales mix and
gains in efficiency from ongoing applications of Anthony's improvement process
program, particularly at the Stearns, Hilton, Shakespeare Monofilament and
Simplex businesses. Overall gross profit in dollars also improved despite the
costs of the cap ski conversion. Margin and gross profit were unfavorably
impacted by the dramatic increase in the cost of recycled corrugated scrap
paper.
 
                                       13
<PAGE>
 
  Costs and Expenses. Selling expenses increased 19.5% to $49.6 million in
1994 compared to $41.5 million in 1993, although as a percentage of net sales
they were comparable to the prior year. The increase resulted primarily from
inclusion of the mountain bike business for a full year and increased spending
in support of new products in the in-line skate, mountain bike, snowboard and
apparel businesses.
 
  General and administrative expenses increased 21.7% to $38.7 million in 1994
compared to $31.8 million in 1993. The increase reflects the inclusion of the
mountain bike business for a full year, significant research and development
expenditures primarily at the K2 business, investments in systems and
personnel primarily at the Hilton business and the continuation of other
expenditures to support the growth of the Company.
 
  Operating Income. Operating income increased by 16.9% to $27.7 million in
1994, or 6.4% of net sales, compared to $23.7 million, or 6.3% of net sales,
in 1993. The percentage increase is due to the higher gross profit margin
partially offset by higher general and administrative expenses.
 
  Interest Expense. Interest expense increased by $1.7 million in 1994. Higher
domestic interest rates accounted for $0.5 million of the increase, and $17.4
million higher level of average borrowings, incurred to acquire the mountain
bike business and support the growth of several product lines, accounted for
the remainder.
 
  Other Income. Other income of $1.2 million includes certain royalty,
interest and other miscellaneous income, $0.9 million of which is reported as
a component of segment operating profit.
 
  Income Taxes. Income tax expense included a $0.6 million reclassification of
state tax previously recorded as selling and general and administrative
expenses.
 
  Segment Information. Total segment operating profit (before interest,
corporate expenses and taxes) increased 20.7% to $33.8 million in 1994
compared to $28.0 million in 1993. In the sporting goods product group,
operating profit rose 22.1% to $17.1 million in 1994 compared to $14.0 million
in 1993. The group benefited from the Company's introduction of several new
fishing rods, reels, and kit and combo series in the United States and from
lower manufacturing costs abroad. Sales-related earnings gains also
contributed to the group's improvements, particularly from K2 snowboards and
the successful introduction of certain Stearns and Hilton products. Partially
offsetting these profit gains were the costs of the cap ski conversion and the
impact of declining sales in the European and Japanese ski markets. In the
industrial products group, operating profits increased 19.3% to $16.7 million
in 1994 compared to $14.0 million in 1993. The improvement was mainly due to
sales-related earnings and efficiency gains at Shakespeare Monofilament and
Simplex. For additional information regarding the segment information, see
Note 12 of Notes to Consolidated Financial Statements.
 
LIQUIDITY AND SOURCES OF CAPITAL
 
  The Company's continuing operations used $36.3 million of cash during 1995,
whereas 1994 continuing operating activities used cash of $15.0 million. The
increased use of cash for the current period was mainly due to financing
higher levels of accounts receivable and inventories arising from the growth
in sales of in-line skates, snowboards, raingear, wetsuits, fishing rods and
reels and full-suspension mountain bikes and, to a lesser extent, from the
recent acquisitions of Dana Design and Wilderness Experience. The Company
believes that another factor in its increased level of inventory investment is
the shift by certain of its sporting goods customers from substantial
purchases of pre-season inventories to deferral of deliveries until the near
arrival of the retail season. The disposition of the Division did not have a
significant impact on the liquidity and cash flows of the Company in 1995,
1994 or 1993.
 
  Net cash used for investment activities increased to $19.7 million in 1995
from $8.7 million in 1994. The increase in cash used in 1995 is attributable
to expenditures to increase manufacturing capacity and improve manufacturing
efficiencies, principally in the industrial products group, and the purchases
of the Dana Design and Wilderness Experience businesses. No material
commitments for capital expenditures existed at yearend.
 
  The Company's principal long-term borrowing facility is an $85 million
Credit Line ("Credit Line") which becomes due on June 28, 1997. At December
31, 1995, $35.5 million was outstanding under this line. Under the
 
                                      14
<PAGE>
 
Credit Line, the Company is subject to an agreement which, among other things,
restricts amounts available for payment of cash dividends by the Company. As
of December 31, 1995, retained earnings were free of such restrictions. The
Company also has $40 million of 8.39% unsecured senior notes due through 2004,
payable in nine equal principal payments beginning in 1996. The notes are
subject to agreements which are generally less restrictive than the Credit
Line. The Company has entered into interest rate swap agreements to manage its
exposure on the $40 million 8.39% notes payable. For further information
regarding the Company's interest rate swap agreements, see Note 5 of Notes to
Consolidated Financial Statements. Additionally, the Company had several
foreign and domestic short-term lines of credit available totaling $73.3
million, of which $50.2 million is outstanding at December 31, 1995.
 
  On June 1, 1995, the Company completed a secondary public offering of 4.6
million shares of its common stock, resulting in net proceeds of $67.2
million. For further information regarding the stock offering see Note 11 of
Notes to Consolidated Financial Statements.
 
  The Company anticipates its cash needs in 1996 will be provided from
operations and from borrowings under its Credit Line and Short-term Facility
and other existing credit lines.
 
ENVIRONMENTAL MATTERS
 
  The Company is among several potentially responsible parties named in an
Environmental Protection Agency matter involving discharge of hazardous
materials at an old waste site in South Carolina. This action seeks primarily
cleanup costs. The ultimate outcome of this matter cannot be predicted with
certainty; however, to the extent to which not previously reserved against by
the Company, management does not believe this matter will have a material
adverse effect on the Company.
 
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
 
  The Company plans to adopt Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," in 1996. SFAS No. 121 requires that
impaired assets or assets to be disposed of be accounted for at the lower of
the carrying amount or fair value of the assets less costs of disposal. The
adoption of the new standard is not expected to have a material effect on the
Company's financial statements.
 
  In October 1995, SFAS No. 123, "Accounting for Stock-Based Compensation,"
was issued. Companies will have the option of recognizing compensation expense
for virtually all stock-based compensation arrangements based upon the fair
value of the option at the grant date, or alternatively, continuing to
recognize compensation expense based on the excess of the quoted market price
over the option price on the measurement date in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees."
This statement is required to be adopted in 1996. The Company has not yet
adopted SFAS No. 123 and has not yet determined the impact it may have on
future financial statement disclosures.
 
IMPACT OF INFLATION AND CHANGING PRICES
 
  The inflation rate, as measured by the Consumer Price Index, has been
relatively low in the last few years, and therefore pricing decisions by the
Company have largely been influenced by competitive market conditions. During
1995, however, the cost of recycled corrugated scrap paper dramatically
increased, particularly in the first half of the year, resulting in price
increases of Thermo-ply insulative sheathing. The Company uses the LIFO method
of inventory pricing for 45% of its inventories, which results in the most
recent costs of LIFO-priced inventory being reflected in the income statement.
Current costs of the Company's remaining inventories, priced on a FIFO basis,
are also reflected in part in the income statement because of the relatively
high turnover of these inventories.
 
  Depreciation expense is based on the historical cost to the Company of its
fixed assets and therefore is considerably less than it would be if it were
based on current replacement cost. While buildings, machinery and equipment
acquired in prior years will ultimately have to be replaced at significantly
higher prices, it is expected that this will be a gradual process over many
years.
 
                                      15
<PAGE>
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
                       STATEMENTS OF CONSOLIDATED INCOME
 
<TABLE>
<CAPTION>
                                          YEARS ENDED DECEMBER 31
                                ----------------------------------------------
                                     1995            1994            1993
                                --------------  --------------  --------------
                                (IN THOUSANDS EXCEPT FOR PER SHARE FIGURES)
<S>                             <C>             <C>             <C>
Net Sales...................... $      544,268  $      434,995  $      373,712
Cost of products sold..........        400,840         319,021         276,759
                                --------------  --------------  --------------
  Gross profit.................        143,428         115,974          96,953
Selling expenses...............         61,256          49,575          41,519
General and administrative
 expenses......................         45,086          38,713          31,759
                                --------------  --------------  --------------
  Operating income.............         37,086          27,686          23,675
Interest expense...............          9,916           7,481           5,759
Other income, net..............         (1,449)         (1,239)           (903)
                                --------------  --------------  --------------
  Income before provision for
   income taxes................         28,619          21,444          18,819
Provision for income taxes.....          8,820           7,690           6,455
                                --------------  --------------  --------------
  Income from continuing
   operations..................         19,799          13,754          12,364
Discontinued operations........
  Loss from operations, net of
   taxes.......................           (664)           (721)         (1,243)
  Loss on disposal, net of
   taxes.......................         (4,256)
                                --------------  --------------  --------------
                                        (4,920)           (721)         (1,243)
                                --------------  --------------  --------------
  Net Income................... $       14,879  $       13,033  $       11,121
                                ==============  ==============  ==============
Per share......................
  Continuing operations........ $         1.37  $         1.15  $         1.05
  Discontinued operations......           (.34)           (.06)           (.11)
                                --------------  --------------  --------------
  Net Income................... $         1.03  $         1.09  $          .94
                                ==============  ==============  ==============
</TABLE>
 
 
                See notes to consolidated financial statements.
 
                                       16
<PAGE>
 
                            ANTHONY INDUSTRIES, INC.
 
                          CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                               DECEMBER 31
                                                            ------------------
                                                              1995      1994
                                                            --------  --------
                                                               (DOLLARS IN
                                                            THOUSANDS, EXCEPT
                                                              FOR PER SHARE
                                                                FIGURES)
<S>                                                         <C>       <C>
ASSETS
CURRENT ASSETS
  Cash and cash equivalents................................ $  7,357  $  7,700
  Accounts receivable less allowances of $8,235 in 1995 and
   $7,422 in 1994..........................................  140,202   109,133
  Inventories, net.........................................  140,679    97,936
  Deferred taxes...........................................    6,683     7,928
  Prepaid expenses and other current assets................    5,534     3,777
                                                            --------  --------
    Total current assets...................................  300,455   226,474
PROPERTY, PLANT AND EQUIPMENT
  Land and land improvements...............................    1,704     1,426
  Buildings and leasehold improvements.....................   28,963    26,161
  Machinery and equipment..................................  103,434    91,294
  Construction in progress.................................    5,605     3,851
                                                            --------  --------
                                                             139,706   122,732
  Less allowance for depreciation and amortization.........   82,599    73,640
                                                            --------  --------
                                                              57,107    49,092
OTHER ASSETS
  Intangibles, principally goodwill, net...................   14,108    12,197
  Net assets of discontinued operations....................    8,650    10,207
  Other....................................................    4,103     3,566
                                                            --------  --------
    Total Assets........................................... $384,423  $301,536
                                                            ========  ========
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
  Bank loans............................................... $ 50,219  $ 18,341
  Accounts payable.........................................   27,985    25,828
  Accrued payroll and related..............................   21,443    18,192
  Other accruals...........................................   16,031    14,445
  Current portion of long-term debt........................    4,855     2,918
                                                            --------  --------
    Total current liabilities..............................  120,533    79,724
Long-Term Debt.............................................   75,071   109,921
Deferred Taxes.............................................   13,003    12,895
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
  Preferred Stock, $1 par value, authorized 12,500,000
   shares, none issued
  Common Stock, $1 par value, authorized 40,000,000 shares,
   issued shares--17,064,065 in 1995 and 12,322,851 in
   1994....................................................   17,064    12,323
  Additional paid-in capital...............................  130,995    66,973
  Retained earnings........................................   37,121    28,994
  Employee Stock Ownership Plan and stock option loans.....   (4,778)   (3,937)
  Treasury shares at cost, 481,059 shares in 1995 and 1994.   (4,189)   (4,189)
  Cumulative translation adjustments.......................     (397)   (1,168)
                                                            --------  --------
    Total Shareholders' Equity.............................  175,816    98,996
                                                            --------  --------
    Total Liabilities and Shareholders' Equity............. $384,423  $301,536
                                                            ========  ========
</TABLE>
 
                See notes to consolidated financial statements.
 
                                       17
<PAGE>
 
                            ANTHONY INDUSTRIES, INC.
 
                 STATEMENT OF CONSOLIDATED SHAREHOLDERS' EQUITY
 
<TABLE>
<CAPTION>
                                       FOR THE THREE YEARS ENDED DECEMBER 31, 1995
                         --------------------------------------------------------------------------
                                                      EMPLOYEE-STOCK
                                 ADDITIONAL           OWNERSHIP PLAN TREASURY  CUMULATIVE
                         COMMON   PAID-IN   RETAINED    AND STOCK     SHARES   TRANSLATION
                          STOCK   CAPITAL   EARNINGS   OPTION LOANS  AT COST   ADJUSTMENTS  TOTAL
                         ------- ---------- --------  -------------- --------  ----------- --------
                                       (IN THOUSANDS EXCEPT FOR PER SHARE FIGURES)
<S>                      <C>     <C>        <C>       <C>            <C>       <C>         <C>
BALANCE AT JANUARY 1,
 1993                    $11,051  $ 47,977  $33,112      $(3,152)    $(3,993)    $(1,397)  $ 83,598
 Net income for the year
  1993..................                     11,121                                          11,121
 Exercise of stock
  options...............      97       828                  (296)                               629
 Cash dividends, $.405
  per share.............                     (4,733)                                         (4,733)
 Stock dividends, 5%
  plus cash in lieu of
  fractional shares.....     533     8,058   (8,605)                                            (14)
 Translation
  adjustments...........                                                          (2,032)    (2,032)
 Employee Stock
  Ownership Plan,
  amortization and
  partial loan
  repayment.............                                      87                                 87
                         -------  --------  -------      -------     -------     -------   --------
BALANCE AT DECEMBER 31,
 1993                     11,681    56,863   30,895       (3,361)     (3,993)     (3,429)    88,656
 Net income for the year
  1994..................                     13,033                                          13,033
 Exercise of stock
  options...............      78       764                  (575)                               267
 Cash dividends, $.425
  per share.............                     (5,010)                                         (5,010)
 Stock dividends, 5%
  plus cash in lieu of
  fractional shares.....     562     9,348   (9,924)                                            (14)
 Translation
  adjustments...........                                                           2,261      2,261
 Repurchase of shares
  and stock option loan
  repayments............       2        (2)                  303        (196)                   107
 Employee Stock
  Ownership Plan,
  amortization and
  partial loan
  repayment.............                                    (304)                              (304)
                         -------  --------  -------      -------     -------     -------   --------
BALANCE AT DECEMBER 31,
 1994                     12,323    66,973   28,994       (3,937)     (4,189)     (1,168)    98,996
 Net income for the year
  1995..................                     14,879                                          14,879
 Exercise of stock
  options...............     141     1,388                (1,274)                               255
 Cash dividends, $.44
  per share.............                     (6,752)                                         (6,752)
 Translation
  adjustments...........                                                             771        771
 Stock option loan
  repayments............                                     336                                336
 Stock offering
  proceeds..............   4,600    62,634                                                   67,234
 Employee Stock
  Ownership Plan,
  amortization and
  partial loan
  repayment.............                                      97                                 97
                         -------  --------  -------      -------     -------     -------   --------
BALANCE AT DECEMBER 31,
 1995                    $17,064  $130,995  $37,121      $(4,778)    $(4,189)    $  (397)  $175,816
                         =======  ========  =======      =======     =======     =======   ========
</TABLE>
 
                See notes to consolidated financial statements.
 
                                       18
<PAGE>
 
                            ANTHONY INDUSTRIES, INC.
 
                     STATEMENTS OF CONSOLIDATED CASH FLOWS
 
<TABLE>
<CAPTION>
                                                   YEARS ENDED DECEMBER 31,
                                                   ---------------------------
                                                     1995      1994     1993
                                                   --------  --------  -------
                                                    (DOLLARS IN THOUSANDS)
<S>                                                <C>       <C>       <C>
OPERATING ACTIVITIES
 Income from continuing operations................ $ 19,799  $ 13,754  $12,364
 Adjustments to reconcile net income to net cash
  provided by (used in) operating activities:
  Depreciation and amortization of property, plant
   and equipment..................................    9,510     7,298    7,772
  Amortization of intangibles.....................      722       614      558
  Deferred taxes..................................    1,323       (17)     218
  Changes in operating assets and liabilities:
   Accounts receivable............................  (30,569)  (20,759)  (9,953)
   Inventories....................................  (41,433)  (19,274)  (4,252)
   Prepaid expenses and the current assets........   (1,610)   (1,275)     918
   Accounts payable...............................    1,446     1,918    2,236
   Payrolls and other accruals....................    4,554     2,770    2,245
                                                   --------  --------  -------
 Net cash provided by (used in) operating
  activities......................................  (36,258)  (14,971)  12,106
INVESTING ACTIVITIES
 Property, plant and equipment expenditures.......  (17,292)  (11,273)  (8,537)
 Disposals of property, plant and equipment.......      101     1,468      159
 Purchases of businesses, net of cash acquired....   (2,159)              (932)
 Other items, net.................................     (364)    1,059   (2,657)
                                                   --------  --------  -------
 Net cash used in investing activities............  (19,714)   (8,746) (11,967)
FINANCING ACTIVITIES
 Borrowings under long-term debt..................             22,582   21,500
 Payments of long-term debt.......................  (33,623)   (3,738)  (6,534)
 Net increase (decrease) in short-term bank loans.   31,878    12,053   (5,004)
 Exercise of stock options........................      255       267      629
 Dividends paid...................................   (6,752)   (5,010)  (4,733)
 Net proceeds from stock offering.................   67,234
                                                   --------  --------  -------
 Net cash provided by financing activities........   58,992    26,154    5,858
                                                   --------  --------  -------
Net increase in cash and cash equivalents from
 continuing operations............................    3,020     2,437    5,997
DISCONTINUED OPERATIONS
 Loss from discontinued operations................   (4,920)     (721)  (1,243)
 Adjustments to reconcile loss to net cash used in
  discontinued operations:
  Depreciation and amortization...................      612       722      753
  Capital expenditures............................     (575)     (347)    (178)
  Other items, net................................    1,520      (251)  (1,592)
                                                   --------  --------  -------
Cash used in discontinued operations..............   (3,363)     (597)  (2,260)
                                                   --------  --------  -------
Net increase (decrease) in cash and cash
 equivalents......................................     (343)    1,840    3,737
Cash and cash equivalents at beginning of year....    7,700     5,860    2,123
                                                   --------  --------  -------
Cash and cash equivalents at end of year.......... $  7,357  $  7,700  $ 5,860
                                                   ========  ========  =======
</TABLE>
 
                See notes to consolidated financial statements.
 
                                       19
<PAGE>
 
                           ANTHONY INDUSTRIES, INC.
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
                               DECEMBER 31, 1995
 
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Principles of Consolidation
 
  The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries, Shakespeare Company, K-2 Corporation,
Stearns Manufacturing Company, Girvin Inc. and Dana Design, Ltd. All
significant intercompany accounts and transactions have been eliminated.
 
 Fiscal Periods
 
  The Company maintains its books using a 52/53 week year ending on the last
Sunday of December. For purposes of the consolidated financial statements, the
yearend is stated as December 31. The year ending December 31, 1995 consisted
of 53 weeks. Each of the years ended in 1994 and 1993 consisted of 52 weeks.
 
 Estimates Used
 
  The preparation of financial statements in conformity with Generally
Accepted Accounting Principles ("GAAP") requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements. Actual amounts could differ from those estimates.
 
 Foreign Currency Translation
 
  The functional currency for most foreign operations is the local currency.
Foreign currency financial statements are converted into United States dollars
by translating balance sheet accounts at the current exchange rate at yearend
and income statement items at the average exchange rate for the year, with the
resulting translation adjustment made to a separate component of shareholders'
equity. Transaction gains or losses, other than those related to items deemed
to be of a long-term nature, are included in net income in the period in which
they occur.
 
 Cash Equivalents
 
  Short-term investments (including any debt securities) that are part of the
Company's cash management portfolio are classified as cash equivalents and are
carried at amortized costs. These investments are highly liquid, are of
limited credit risk and have original maturities of three months or less. The
carrying amount of cash equivalents approximates market.
 
 Accounts Receivable and Allowances
 
  Accounts receivable are the result of the Company's worldwide sales
activities. Although the Company's credit risk is spread across a large number
of customers within a wide geographic area, periodic concentrations within a
specific industry occur due to the seasonality of its businesses. As of
December 31, 1995, the Company's receivables from the ski, skate and snowboard
industries amounted to 50% of total receivables. The Company performs periodic
credit evaluations to manage its credit risk. Allowances consist primarily of
allowance for bad debts, but also include reserves for volume-related
discounts of $2,937,000 and $3,018,000 as of December 31, 1995 and 1994,
respectively.
 
 Inventories
 
  Inventories are stated at the lower of cost or market. Cost is determined on
the LIFO method with respect to approximately 45% and 43% of total inventories
at December 31, 1995 and 1994, respectively. Cost was determined on the FIFO
method for all other inventories.
 
                                      20
<PAGE>
 
                           ANTHONY INDUSTRIES, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
 
 Property, Plant and Equipment
 
  Property, plant and equipment is recorded at cost. Depreciation is provided
on the straight-line method based upon the estimated useful lives of the
assets. Repairs and maintenance of $7,270,000, $6,020,000 and $5,438,000 in
1995, 1994 and 1993, respectively, were expensed as incurred.
 
 Intangibles
 
  Goodwill arising from acquisitions is amortized on a straight-line basis
over a period up to 40 years. Other intangibles are amortized on a straight-
line basis over 3 to 15 years. Accumulated amortization of intangibles as of
December 31, 1995 and 1994 amounted to $3,481,000 and $2,843,000,
respectively. The Company periodically reviews intangibles for impairment of
value.
 
 Advertising Costs
 
  Advertising costs are expensed as incurred. Advertising costs for the years
ended December 31, 1995, 1994 and 1993 amounted to $13,006,000, $10,177,000
and $8,507,000, respectively.
 
 Research and Development
 
  Research and development costs are charged to expense as incurred. Research
and development costs for the years ended December 31, 1995, 1994 and 1993
amounted to $7,132,000, $6,255,000 and $4,271,000, respectively.
 
 Income Taxes
 
  Income taxes are provided for based upon Statement of Financial Accounting
Standards ("SFAS") No. 109, "Accounting for Income Taxes," which requires that
income taxes be provided for using the liability method.
 
 Per Share Data
 
  Earnings and cash dividends per share data have been retroactively adjusted
for stock dividends. Earnings per share were determined by dividing net income
by the average outstanding shares, including common stock equivalents and ESOP
shares, using the treasury stock method. Common stock equivalents include
stock options. Primary earnings per share approximate earnings per share on a
fully diluted basis.
 
 Newly Issued Accounting Standards
 
  The Company plans to adopt SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" in 1996. SFAS
No. 121 requires that impaired assets or assets to be disposed of be accounted
for at the lower of the carrying amount or fair value of the assets less costs
of disposal. The adoption of the new standard is not expected to have a
material effect on the Company's financial statements.
 
  In October 1995, SFAS No. 123, "Accounting for Stock-Based Compensation,"
was issued. Companies will have the option of recognizing compensation expense
for virtually all stock-based compensation arrangements based upon the fair
value of the option at the grant date, or alternatively, continuing to
recognize compensation expense based on the excess of the quoted market price
over the option price on the measurement date in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees."
This statement is required to be adopted in 1996. The Company has not yet
adopted SFAS No. 123 and has not yet determined the impact it may have on
future financial statement disclosures.
 
                                      21
<PAGE>
 
                           ANTHONY INDUSTRIES, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
NOTE 2--DISCONTINUED OPERATIONS
 
  In October 1995, the Company signed a letter of intent to sell the assets
and business of its swimming pool and motorized pool cover business
("Division") to General Aquatics, Inc. ("GAI"). As a result of the sale, the
Division has been shown in the accompanying financial statements as a
discontinued operation. The Company completed the sale on March 5, 1996.
Consideration included a 5.6% subordinated note with a face value of
approximately $6.2 million and approximately 9% of the outstanding common
stock of GAI, a privately owned company. In addition, the Company received
warrants to purchase additional shares upon the occurrence of certain
conditions. The exercise of the warrants may be funded through the surrender
of the unpaid portion of the note. The note is due at the end of five years.
Additionally, GAI has agreed to assume certain liabilities of the Division. As
required under GAAP the note receivable was discounted to reflect a market
rate and the common stock was valued at an estimated fair market value.
 
  The estimated loss on disposal of the discontinued operations, net of tax
benefit of $3,218,000, includes a provision for anticipated operating losses
of $1,300,000 prior to disposal. The tax benefit is more than the benefit
computed using statutory tax rates due to the realization of the benefit of
deductions treated as permanent differences in prior years. Net assets of
discontinued operations have been segregated in the accompanying Consolidated
Balance Sheets and consist primarily of accounts receivable, inventories,
fixed assets and goodwill offset by accounts payable, accrued payroll and
related items and other accruals (excluding a reserve for estimated losses on
disposal and anticipated operating losses prior to disposal). Net sales of
$65,349,000, $67,449,000 and $57,928,000 in the years ended December 31, 1995,
1994 and 1993, respectively, were excluded from consolidated net sales in the
accompanying Consolidated Statements of Income.
 
NOTE 3--ACQUISITION OF BUSINESSES
 
  On October 14, 1993, the Company purchased certain assets of Ocean State
International, Inc. ("Girvin"). Girvin is a manufacturer and distributor of
ProFlex full-suspension mountain bikes and Girvin accessories for sale in the
United States and Europe. On February 4, 1995, the Company purchased Dana
Design Ltd., a small manufacturer and distributor of high-end backpacks for
sale primarily in the United States. During the year, the Company purchased
the assets of two additional small businesses.
 
NOTE 4--INVENTORIES
 
  Inventories consisted of the following at December 31:
 
<TABLE>
<CAPTION>
                                                                1995     1994
                                                              -------- --------
                                                                 (THOUSANDS)
<S>                                                           <C>      <C>
Finished goods............................................... $ 97,193 $ 61,987
Work in process..............................................    9,700    8,788
Raw materials................................................   38,668   32,216
                                                              -------- --------
Total inventories at lower of FIFO cost or market
 (approximates current cost).................................  145,561  102,991
Less LIFO valuation reserve..................................    4,882    5,055
                                                              -------- --------
                                                              $140,679 $ 97,936
                                                              ======== ========
</TABLE>
 
NOTE 5--BORROWINGS AND OTHER FINANCIAL INSTRUMENTS
 
  The Company has a $40 million 364-day unsecured revolving credit line, all
of which was outstanding at December 31, 1995, with the same lenders and
providing for substantially the same covenants, interest rate options and
commitment fees as under the $85 million credit line discussed below. The
Company also has foreign and domestic short-term lines of credit, totaling
$33.3 million, of which $10.2 million was outstanding at December 31, 1995.
The foreign subsidiaries' lines of credit generally have no termination dates
but are reviewed
 
                                      22
<PAGE>
 
                           ANTHONY INDUSTRIES, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
NOTE 5--BORROWINGS AND OTHER FINANCIAL INSTRUMENTS--(CONTINUED)
 
annually for renewal and are denominated in the subsidiaries' local
currencies. At December 31, 1995, interest rates on short-term lines of credit
ranged from 6.1% to 11.2%. The weighted average interest rates on short-term
lines of credit as of December 31, 1995 and 1994 were 6.8% and 6.5%,
respectively.
 
  The principal components of long-term debt at December 31 were:
 
<TABLE>
<CAPTION>
                                                                1995     1994
                                                               ------- --------
                                                                 (THOUSANDS)
<S>                                                            <C>     <C>
Notes payable due in nine equal annual principal instalments
 beginning in 1996 through 2004 with semi-annual interest
 payable at 8.39%............................................  $40,000 $ 40,000
$85 million three-year bank revolving credit line due June
 28, 1997, quarterly interest payments due at LIBOR plus 3/4%
 and a commitment fee of 3/8% on the unused portion of the
 line through June 1997......................................   35,500   68,000
Note payable due in monthly instalments through February 2001
 with interest payable monthly at LIBOR plus 1 1/2% (7.47% at
 December 31, 1995)..........................................    4,325    4,703
Other debt...................................................      101      136
                                                               ------- --------
                                                                79,926  112,839
Less--amounts due within one year............................    4,855    2,918
                                                               ------- --------
                                                               $75,071 $109,921
                                                               ======= ========
</TABLE>
 
  The principal amount of long-term debt maturing in each of the five years
following 1995 is:
 
<TABLE>
<CAPTION>
                                              (THOUSANDS)
                                              -----------
            <S>                               <C>
            1996.............................   $ 4,855
            1997.............................    40,383
            1998.............................     4,916
            1999.............................     4,950
            2000.............................     4,987
</TABLE>
 
  Interest paid on short- and long-term debt for the years ended December 31,
1995, 1994 and 1993 was $9.9 million, $7.5 million and $5.8 million,
respectively.
 
  Under the $85 million revolving credit line, up to $15 million is available
for either standby letters of credit or for borrowings. The credit line is
subject to an agreement which, among other things, restricts amounts available
for payment of cash dividends by the Company. As of December 31, 1995,
retained earnings were free of such restrictions. Interest rates on the
revolving line at December 31, 1995 ranged from 6.5% to 8.5%.
 
  The Company had $15.3 million of letters of credit outstanding as of
December 31, 1995.
 
  The Company has entered into interest rate swap agreements to manage its
interest rate exposure on the $40 million 8.39% notes payable. During 1993,
the Company converted the fixed rate to a variable rate by entering into an
interest rate swap with a maturity in 1996. The Company subsequently entered
into an offsetting swap effectively returning the debt to a fixed rate which
also matures in 1996. The remaining gain of $9,000 arising from these
transactions is being recognized over the remaining life of the interest rate
swap agreements. In 1994 the Company also entered into an interest rate swap
agreement effectively converting the interest rate
 
                                      23
<PAGE>
 
                           ANTHONY INDUSTRIES, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
NOTE 5--BORROWINGS AND OTHER FINANCIAL INSTRUMENTS--(CONTINUED)
 
exposure on the $4.3 million bank loan described above to a fixed rate of
6.97%. The interest rate swap agreement matures at the time the related loan
matures. The Company is exposed to credit loss in the event of nonperformance
by the banks, who are parties to these agreements. However, in view of the
substantial size and financial strength of these banks, the Company believes
that non-performance is remote.
 
  The carrying amounts for the short-term lines of credit and the long-term
bank revolving credit line approximates their fair value since floating
interest rates are charged, which approximate market rates. The fair value of
the $40 million 8.39% notes payable, based on quoted market price, is $39.9
million as compared to a carrying amount of $40.0 million, and the fair value
of the $4.3 million note payable equals the carrying amount.
 
  The Company, including its foreign subsidiaries, enters into forward
exchange contracts to hedge certain anticipated and firm sales and purchase
commitments which are denominated in U.S. or foreign currencies. The purpose
of the foreign currency hedging activities is to reduce the Company's risk to
fluctuating exchange rates. At December 31, 1995, the Company had foreign
exchange contracts with maturities of generally less than one year in the
aggregate amount of $12.4 million, and with net unrealized losses of $44,993.
The unrealized losses will be recognized in earnings when realized and when
the underlying transaction occurs. At December 31, 1995, the Company had no
deferred realized gains or losses from forward exchange contracts.
 
NOTE 6--INCOME TAXES
 
  Pretax income from continuing operations for the years ended December 31 was
taxed under the following jurisdictions:
 
<TABLE>
<CAPTION>
                                                          1995    1994    1993
                                                         ------- ------- -------
                                                               (THOUSANDS)
<S>                                                      <C>     <C>     <C>
Domestic................................................ $22,174 $16,353 $15,489
Foreign.................................................   6,445   5,091   3,330
                                                         ------- ------- -------
                                                         $28,619 $21,444 $18,819
                                                         ======= ======= =======
</TABLE>
 
  Components of the income tax provision applicable to continuing operations
for the three years ended December 31 are:
 
<TABLE>
<CAPTION>
                                    1995             1994             1993
                              ---------------- ---------------- -----------------
                              CURRENT DEFERRED CURRENT DEFERRED CURRENT  DEFERRED
                              ------- -------- ------- -------- -------  --------
                                                 (THOUSANDS)
<S>                           <C>     <C>      <C>     <C>      <C>      <C>
Federal...................... $7,625   $(405)  $5,835   $(755)  $5,685    $(710)
State........................  1,310     (40)   1,915     (85)   1,085      (30)
Foreign......................    310      20      505     275       (5)     430
                              ------   -----   ------   -----   ------    -----
                              $9,245   $(425)  $8,255   $(565)  $6,765    $(310)
                              ======   =====   ======   =====   ======    =====
</TABLE>
 
                                      24
<PAGE>
 
                           ANTHONY INDUSTRIES, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
NOTE 6--INCOME TAXES--(CONTINUED)
 
  The principal elements accounting for the difference between the statutory
federal income tax rate and the effective tax rates for the three years ended
December 31 are:
 
<TABLE>
<CAPTION>
                                                               1995  1994  1993
                                                               ----  ----  ----
                                                                 (PERCENT)
<S>                                                            <C>   <C>   <C>
Statutory federal income tax rate............................. 35.0  35.0  35.0
State income tax effect.......................................  2.9   5.6   3.6
Tax effect of foreign earnings................................ (6.8) (4.8) (4.0)
Other......................................................... (0.2)  0.1  (0.3)
                                                               ----  ----  ----
                                                               30.9  35.9  34.3
                                                               ====  ====  ====
</TABLE>
 
  No provision for United States income taxes has been made on undistributed
earnings of foreign subsidiaries, since these earnings are considered to be
permanently reinvested. At December 31, 1995, the foreign subsidiaries had
unused operating loss carryforwards of approximately $4.6 million of which
approximately $1.6 million expires in 2000 and the remainder carry forward
indefinitely. Since the use of these operating loss carryforwards is limited
to future taxable earnings of the related foreign subsidiaries, a valuation
reserve has been recognized to offset the deferred tax assets arising from
such carryforwards. As a result of realizing the benefit of certain foreign
operating loss carryforwards, the valuation reserve, which is included in the
tax effect of foreign earnings above, was reduced by $1.4 million and $.5
million, in 1995 and 1993, respectively, and none in 1994.
 
  Deferred tax assets and liabilities are comprised of the following at
December 31:
 
<TABLE>
<CAPTION>
                                                                  1995    1994
                                                                 ------- -------
                                                                   (THOUSANDS)
<S>                                                              <C>     <C>
Deferred tax liabilities:
Depreciation and amortization of property, plant and equipment.  $ 6,323 $ 7,031
Trademark amortization.........................................      246     207
Other..........................................................    7,869   6,680
                                                                 ------- -------
  Deferred tax liabilities.....................................   14,438  13,918
Deferred tax assets:
Insurance accruals.............................................    2,006   1,967
Tax effect of foreign loss carryforwards.......................    1,863   3,222
Bad debt reserve...............................................      879   1,021
Other..........................................................    5,233   5,963
                                                                 ------- -------
                                                                   9,981  12,173
Valuation reserve..............................................    1,863   3,222
                                                                 ------- -------
  Current deferred tax assets..................................    8,118   8,951
                                                                 ------- -------
Deferred tax liabilities, net..................................  $ 6,320 $ 4,967
                                                                 ======= =======
</TABLE>
 
  Income taxes paid, net of refunds, in the years ended December 31, 1995,
1994 and 1993 were $6.8 million, $6.7 million and $5.3 million, respectively.
 
                                      25
<PAGE>
 
                           ANTHONY INDUSTRIES, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
NOTE 7--COMMITMENTS AND CONTINGENCIES
 
  Future minimum payments under noncancelable operating leases as of December
31, 1995, are as follows (in thousands):
 
<TABLE>
         <S>                                                <C>
         1996.............................................. $2,021
         1997..............................................  2,026
         1998..............................................  1,785
         1999..............................................  1,162
         2000..............................................    565
         Thereafter........................................    500
                                                            ------
                                                            $8,059
                                                            ======
</TABLE>
 
  Leases are primarily for rental of facilities, and about one-half of these
contain rights to extend the terms from one to ten years.
 
  Net rental expense, including those rents payable under noncancelable leases
and month-to-month tenancies, amounted to $3,105,000, $2,969,000 and
$2,767,000 for the years ended December 31 1995, 1994 and 1993, respectively.
 
  The Company is subject to various legal actions and proceedings in the
normal course of business. While the ultimate outcome of these matters cannot
be predicted with certainty, and to the extent not previously provided,
management does not believe these matters will have a material adverse effect
on the Company's financial statements.
 
  The Company is among several potentially responsible parties named in a
cleanup of a chemical waste disposal site in South Carolina under the
Comprehensive Environmental Response, Compensation and Liability Act. The
ultimate outcome of this matter cannot be predicted with certainty, however,
to the extent to which not previously provided, management does not believe
this matter will have a material adverse effect on the Company's financial
statements.
 
NOTE 8--PENSION PLANS AND OTHER BENEFIT PLANS
 
  The Company sponsors several trusteed noncontributory defined benefit
pension plans covering most of its employees. Benefits are generally based on
years of service and the employee's highest compensation for five consecutive
years during the years of credited service. Contributions are intended to
provide for benefits attributable to service to date and service expected to
be provided in the future. The Company funds these plans in accordance with
the Employee Retirement Income Security Act of 1974.
 
  The Company also sponsors defined contribution pension plans covering
certain domestic employees who are not covered by a defined benefit pension
plan. Contributions by the Company for the defined contribution plans are
determined as a percent of the amounts contributed by the respective
employees.
 
                                      26
<PAGE>
 
                           ANTHONY INDUSTRIES, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
NOTE 8--PENSION PLANS AND OTHER BENEFIT PLANS--(CONTINUED)
 
  The following table sets forth the defined benefit plans' funded status and
amounts recognized in the Company's consolidated balance sheets at
December 31:
 
<TABLE>
<CAPTION>
                                     1995                        1994
                          --------------------------- ---------------------------
                          ASSETS EXCEED  ACCUMULATED  ASSETS EXCEED  ACCUMULATED
                           ACCUMULATED    BENEFITS     ACCUMULATED    BENEFITS
                            BENEFITS    EXCEED ASSETS   BENEFITS    EXCEED ASSETS
                          ------------- ------------- ------------- -------------
                                                (THOUSANDS)
<S>                       <C>           <C>           <C>           <C>
Actuarial present value
 of benefit obligations:
  Accumulated benefit
   obligation, including
   vested benefits of
   $35,870 in 1995 and
   $26,202 in 1994......    $(33,505)      $(3,298)     $(26,510)      $(2,347)
                            ========       =======      ========       =======
Projected benefit
 obligation for service
 rendered to date.......    $(42,140)      $(3,298)     $(32,631)      $(2,347)
Plan assets at fair
 value, primarily
 publicly traded stocks,
 bonds, and other fixed
 income securities......      41,067                      35,018
                            --------       -------      --------       -------
Plan assets in excess of
 (or less than) the
 projected benefit
 obligation.............      (1,073)       (3,298)        2,387        (2,347)
Unrecognized net loss...       3,050           869         1,145            93
Unrecognized prior
 service cost...........         415           328           (73)          385
Unrecognized net
 transition (asset)
 obligation at January
 1, 1987, net of
 amortization...........      (1,430)          523        (1,706)          589
Adjustment required to
 recognize minimum
 liability..............                    (1,720)                     (1,067)
                            --------       -------      --------       -------
Prepaid pension cost
 (pension liability)
 recognized in the
 consolidated balance
 sheets.................    $    962       $(3,298)     $  1,753       $(2,347)
                            ========       =======      ========       =======
</TABLE>
 
  The weighted average discount rates and rates of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligation were 7.25% and 4.4%, respectively, at December
31, 1995 and 8.25% and 4.6%, respectively, at December 31, 1994. The expected
long-term rates of return on plan assets were 9% for each of the three years
ended December 31, 1995. As a result of reducing the weighted average discount
rate from 8.25% to 7.25%, the accumulated benefit obligation and the projected
benefit obligation increased by $4.1 million and $5.8 million, respectively.
 
  Net pension cost consisted of the following at December 31:
 
<TABLE>
<CAPTION>
                                                      1995     1994     1993
                                                     -------  -------  -------
                                                           (THOUSANDS)
<S>                                                  <C>      <C>      <C>
Service cost-benefits earned during the period...... $ 1,312  $ 1,495  $ 1,108
Interest cost on the projected benefit obligation...   3,018    2,829    2,607
Actual (gains) loss on plan assets..................  (7,369)     360   (2,798)
Net amortization and deferral.......................   4,162   (3,802)    (525)
                                                     -------  -------  -------
Total net periodic pension cost of funded defined
 benefit plans......................................   1,123      882      392
Defined contribution plans..........................     465      435      517
                                                     -------  -------  -------
Total pension plan cost............................. $ 1,588  $ 1,317  $   909
                                                     =======  =======  =======
</TABLE>
 
  In November 1992, the FASB issued Statement No. 112, "Employers' Accounting
for Postemployment Benefits," that requires accrual accounting for
postemployment benefits instead of recognizing an expense for those benefits
when paid. The Company has complied with the new rules beginning in 1994. The
adoption of the new standard has not had a material effect on the Company's
financial statements.
 
                                      27
<PAGE>
 
                           ANTHONY INDUSTRIES, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
NOTE 9--QUARTERLY OPERATING DATA (UNAUDITED)
 
  The following unaudited quarterly results included below have been restated
from those originally reported to reflect the results of continuing
operations, except for the final net income per share column.
 
<TABLE>
<CAPTION>
                                           CONTINUING OPERATIONS
                                      -------------------------------
                                       NET   GROSS   NET   NET INCOME NET INCOME
                                      SALES  PROFIT INCOME PER SHARE  PER SHARE
                                      ------ ------ ------ ---------- ----------
                                      (IN MILLIONS EXCEPT FOR PER SHARE FIGURES)
<S>                                   <C>    <C>    <C>    <C>        <C>
1995
First quarter........................ $138.0 $ 34.3 $ 3.6    $0.30      $0.17
Second quarter.......................  135.9   36.2   5.4     0.41       0.48
Third quarter........................  134.7   36.3   6.0     0.36       0.40
Fourth quarter.......................  135.7   36.6   4.8     0.29      (0.01)
                                      ------ ------ -----    -----      -----
                                      $544.3 $143.4 $19.8    $1.37      $1.03
                                      ====== ====== =====    =====      =====
1994
First quarter........................ $102.1 $ 25.2 $ 1.6    $0.13      $0.04
Second quarter.......................  107.5   30.3   4.1     0.35       0.42
Third quarter........................  104.6   28.9   3.9     0.33       0.38
Fourth quarter.......................  120.8   31.6   4.2     0.35       0.25
                                      ------ ------ -----    -----      -----
                                      $435.0 $116.0 $13.8    $1.15      $1.09
                                      ====== ====== =====    =====      =====
</TABLE>
 
NOTE 10--STOCK OPTIONS
 
  Under the Company's 1994 and 1988 Incentive Stock Option Plans ("1994 and
1988 Plans", respectively), options may be granted to eligible directors and
key employees of the Company and its subsidiaries at not less than 100% of the
market value of the shares on the dates of grant. No further options may be
granted under the 1988 Plan.
 
  The 1994 Plan permits the granting of options for terms not to exceed ten
years from date of grant. The options are exercisable on such terms as may be
established by the Compensation Committee of the Board of Directors at the
dates of grant.
 
  The Company is authorized, at the discretion of the Compensation Committee,
to provide loans to key employees in connection with the exercise of stock
options under both the 1994 Plan and the 1988 Plan. The loans are
collateralized by the underlying shares of stock issued and bear interest at
the applicable rates published by the IRS. At December 31, 1995 and 1994,
there was a total of $3,378,000 and $2,440,000, respectively, of loans and
accrued interest outstanding which are due on various dates through December
2000. The loan amounts have been deducted from shareholders' equity.
 
                                      28
<PAGE>
 
                           ANTHONY INDUSTRIES, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
NOTE 10--STOCK OPTIONS--(CONTINUED)
 
  Further information regarding the 1994 and 1988 Plan is shown below:
 
<TABLE>
<CAPTION>
                                                  1994 PLAN        1988 PLAN
                                               ---------------- ---------------
<S>                                            <C>              <C>
Status at December 31, 1995
  Number of shares subject to option..........          322,500         232,256
  Exercise price per share.................... $15.00 to $23.00 $5.66 to $14.52
  Number of shares exercisable................           26,960         178,182
  Available for grant.........................          718,600
                                               ---------------- ---------------
Status at December 31, 1994
  Number of shares subject to options.........          182,800         399,935
  Exercise price per share.................... $15.00 to $17.25 $5.66 to $14.52
  Number of shares exercisable................                          184,071
  Available for grant.........................          867,200
                                               ---------------- ---------------
 
  Information regarding the number of shares subject to options which were
exercised during the three years ended December 31, 1995 is shown below:
 
<CAPTION>
  YEAR                                              SHARES      PRICE PER SHARE
  ----                                         ---------------- ---------------
<S>                                            <C>              <C>
  1995........................................          141,215 $5.66 to $17.25
  1994........................................           83,774 $5.66 to $14.52
  1993........................................          107,240 $5.66 to $ 8.77
                                               ---------------- ---------------
</TABLE>
 
  During 1995, options for 182,500 shares were granted at $16.38 to $23.00 per
share, and options for 69,264 shares at $11.75 to $17.25 per share were
canceled or expired. At December 31, 1995, 1,273,356 shares of common stock
were reserved for issuance under the Plans.
 
NOTE 11--SHAREHOLDERS' EQUITY
 
 Preferred Stock
 
  Shares are issuable in one or more series, and the Board of Directors has
authority to fix the terms and conditions of each series.
 
 Stock Offering
 
  On June 1, 1995, the Company completed a secondary public offering of 4.6
million new shares of its common stock. The net proceeds of $67.2 million were
used to reduce amounts outstanding under the $85 million credit facility.
 
Employee Stock Ownership Plan
 
  The Company has an Employee Stock Ownership Plan ("ESOP") which covers
substantially all of its domestic non-union employees with at least one year
of service. As of December 31, 1995, the trust was indebted to the Company in
the aggregate amount of $861,000 in connection with stock purchases made from
1982 through 1984 of which 228,255 shares with an aggregate market value of
$5,250,000 as of December 31, 1995 remained unallocated to participants. These
loans are repayable over the next seven to nine years with interest at prime
plus 1/2%, not to exceed 18% and the unallocated shares will be released to
participants proportionately
 
                                      29
<PAGE>
 
                           ANTHONY INDUSTRIES, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
NOTE 11--SHAREHOLDERS' EQUITY--(CONTINUED)
 
as these loans are repaid. Of the total dividends received by the ESOP on its
investment in the Company's common stock, dividends on unallocated shares in
the amount of $169,000 and $157,000 in 1995 and 1994, respectively, were used
to service these loans. Additionally, the trust was indebted to the Company in
the amount of $400,000, at December 31, 1995 and 1994 in connection with
distributions made to terminees. The balance outstanding was repaid subsequent
to the 1995 year end.
 
  Shareholders' equity has been reduced by the amounts of the loans and any
payments made by the Company on behalf of the trust. The payments, which at
December 31, 1995 totaled $139,000, are being amortized to expense over the
lives of the loan.
 
  The amount of the Company's annual contribution to the ESOP is at the
discretion of the Company's Board of Directors. For the three years 1995, 1994
and 1993 contributions were limited to amounts in excess of annual dividends,
net of debt service, of the ESOP necessary to fund obligations arising in each
of those years to retired and terminated employees. These amounts were
$13,000, $1,016,000 and $1,260,000, respectively. ESOP expense, including
amortization of the foregoing payments, was $264,000, $1,014,000 and
$1,012,000 in 1995, 1994 and 1993, respectively. Allocated shares as of
December 31, 1995 totaled 2,036,347.
 
 Preferred Stock Rights
 
  Rights are outstanding which entitle the holder of each share of Common
Stock of the Company to buy one one-hundredth of a share of Series A preferred
stock at an exercise price of $51.712 per one one-hundredth of a share,
subject to adjustment. The rights are not separately tradable or exercisable
until a party either acquires, or makes a tender offer that would result in
ownership of, at least 20% of the Company's common shares. If a person becomes
the owner of at least 20% of the Company's outstanding common shares (an
"Acquiring Person"), each holder of a right other than such Acquiring Person
and its affiliates is entitled, upon payment of the then current exercise
price per right (the "Exercise Price"), to receive shares of Common Stock (or
Common Stock equivalents) having a market value of twice the Exercise Price.
If the Company subsequently engages in certain mergers, business combinations
or asset sales with the Acquiring Person, each holder of a right other than
the Acquiring Person and its affiliates is thereafter entitled, upon payment
of the Exercise Price, to receive stock of the Acquiring Person having a
market value of twice the Exercise Price. At any time after any party becomes
an Acquiring Person, the Board of Directors may exchange the rights (except
those held by the Acquiring Person) at an exchange ratio of one common share
per right. Prior to a person becoming an Acquiring Person, the rights may be
redeemed at a redemption price of one cent per right, subject to adjustment.
The rights are subject to amendment by the Board.
 
                                      30
<PAGE>
 
                           ANTHONY INDUSTRIES, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 
NOTE 12--SEGMENT DATA
 
  The Company and its subsidiaries are organized into sporting goods and other
recreational products and industrial products segments. The sporting goods and
other recreational products segment is composed of the following lines of
business: manufacture and sale of skis and snowboards; sale of in-line skates;
manufacture and sale of athletic jackets, imprintable shirts, golf shirts, and
bowling shirts; manufacture and sale of personal flotation devices, towables
and rainwear; manufacture and sale of full-suspension mountain bikes and
accessories; manufacture and sale of rods, reels and other fishing tackle
items; and manufacture and sale of backpacks and tents. The industrial
products segment consists of the manufacture and sale of extruded monofilament
used by the paperweaving industry and for cutting line, fishing line and
sewing thread; fiberglass marine antennas, communication and navigation
equipment, light poles and transmission and distribution poles; and laminated
and coated paperboard products.
 
  The following segment data is presented for continuing operations for the
three years ended December 31, 1995. "Identifiable Assets" are as of
December 31.
<TABLE>
<CAPTION>
                                            NET SALES TO
                                       UNAFFILIATED CUSTOMERS  PRETAX INCOME
                                       ----------------------- ----------------
                                        1995    1994    1993   1995  1994  1993
                                       ------- ------- ------- ----  ----  ----
                                               (MILLIONS OF DOLLARS)
<S>                                    <C>     <C>     <C>     <C>   <C>   <C>
Sporting goods and other recreational
 products............................    349.4   264.7   227.6 26.9  17.1  14.0
Industrial products..................    194.9   170.3   146.1 18.0  16.7  14.0
                                       ------- ------- ------- ----  ----  ----
Net sales and operating profits......    544.3   435.0   373.7 44.9  33.8  28.0
                                       ======= ======= =======
Corporate
  Interest and other income..................................   0.3   0.4   0.9
  Interest expense...........................................  (9.9) (7.5) (5.8)
  General expense............................................  (6.7) (5.3) (4.3)
                                                               ----  ----  ----
Pretax income................................................  28.6  21.4  18.8
                                                               ====  ====  ====
</TABLE>
 
<TABLE>
<CAPTION>
                            IDENTIFIABLE       CAPITAL
                               ASSETS        EXPENDITURES   DEPRECIATION   AMORTIZATION
                          ----------------- -------------- -------------- --------------
                          1995  1994  1993  1995 1994 1993 1995 1994 1993 1995 1994 1993
                          ----- ----- ----- ---- ---- ---- ---- ---- ---- ---- ---- ----
                                              (MILLIONS OF DOLLARS)
<S>                       <C>   <C>   <C>   <C>  <C>  <C>  <C>  <C>  <C>  <C>  <C>  <C>
Sporting goods and other
 recreational products..  269.9 203.6 163.4  7.7  6.7 5.8  4.9  3.0  3.3  0.6  0.5  0.5
Industrial products.....   91.3  74.8  66.3  9.6  4.6 2.7  4.5  4.2  4.4
                          ----- ----- ----- ---- ---- ---  ---  ---  ---  ---  ---  ---
  Total segment data....  361.2 278.4 229.7 17.3 11.3 8.5  9.4  7.2  7.7  0.6  0.5  0.5
Corporate...............   14.5  12.9  14.1                0.1  0.1  0.1  0.1  0.1  0.1
                          ----- ----- ----- ---- ---- ---  ---  ---  ---  ---  ---  ---
                          375.7 291.3 243.8 17.3 11.3 8.5  9.5  7.3  7.8  0.7  0.6  0.6
                          ===== ===== ===== ==== ==== ===  ===  ===  ===  ===  ===  ===
</TABLE>
 
<TABLE>
<CAPTION>
                                                                                   TOTAL SEGMENT
                            UNITED STATES       FOREIGN       ELIMINATIONS             DATA
                          ----------------- --------------- -------------------  -----------------
                          1995  1994  1993  1995  1994 1993 1995   1994   1993   1995  1994  1993
                          ----- ----- ----- ----- ---- ---- -----  -----  -----  ----- ----- -----
                                                  (MILLIONS OF DOLLARS)
<S>                       <C>   <C>   <C>   <C>   <C>  <C>  <C>    <C>    <C>    <C>   <C>   <C>
Net Sales...............  444.8 354.0 305.2 122.0 99.8 87.1 (22.5) (18.8) (18.6) 544.3 435.0 373.7
Less-intergeographic
 sales..................    7.1   8.5   7.3  15.4 10.3 11.3 (22.5) (18.8) (18.6)
                          ----- ----- ----- ----- ---- ---- -----  -----  -----  ----- ----- -----
Net sales to
 unaffiliated customers.  437.7 345.5 297.9 106.6 89.5 75.8                      544.3 435.0 373.7
                          ----- ----- ----- ----- ---- ----                      ----- ----- -----
Operating profit........   37.9  27.2  23.6   7.0  6.6  4.4                       44.9  33.8  28.0
                          ----- ----- ----- ----- ---- ----                      ----- ----- -----
Identifiable assets.....  294.4 228.4 195.3  66.8 50.0 34.4                      361.2 278.4 229.7
                          ----- ----- ----- ----- ---- ----                      ----- ----- -----
Capital expenditures....   12.4   9.4   7.1   4.9  1.9  1.4                       17.3  11.3   8.5
                          ----- ----- ----- ----- ---- ----                      ----- ----- -----
Depreciation............    7.4   6.0   6.5   2.0  1.2  1.2                        9.4   7.2   7.7
                          ----- ----- ----- ----- ---- ----                      ----- ----- -----
Amortization............    0.6   0.5   0.5                                        0.6   0.5   0.5
                          ===== ===== =====                                      ===== ===== =====
</TABLE>
 
                                      31
<PAGE>

                           ANTHONY INDUSTRIES, INC.
 
                        REPORT OF INDEPENDENT AUDITORS
 
To the Board of Directors and Shareholders
Anthony Industries, Inc.
 
  We have audited the accompanying consolidated balance sheets of Anthony
Industries, Inc. and subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of income, shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
 
  In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Anthony
Industries, Inc. and subsidiaries at December 31, 1995 and 1994, and the
consolidated results of their operation and their cash flows for each of the
three years in the period ended December 31, 1995 in conformity with generally
accepted accounting principles.
 
                                          ERNST & YOUNG LLP
 
Los Angeles, California
February 16, 1996,
except for the first paragraph of Note 2,
as to which the date is March 5, 1996
 
                                      32
<PAGE>
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTANTS ON
       ACCOUNTING AND FINANCIAL DISCLOSURE
 
  Not applicable.
 
                                   PART III
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
ITEM 11. EXECUTIVE COMPENSATION
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
  Except as noted in the following paragraph the information called for by
Items 10, 11, 12 and 13 have been omitted because on or before April 29, 1996,
Registrant will file with the Commission pursuant to Regulation 14A a
definitive proxy statement. The information called for by these items set
forth in that proxy statement is incorporated herein by reference.
 
  The information called for by Item 10 with respect to executive officers of
the Registrant appears following Item 4 under Part I of this Report.
 
                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
 
  The following documents are filed as part of this report.
 
  (a-1) Financial Statements (for the three years ended December 31, 1995
        unless otherwise stated):
 
<TABLE>
<CAPTION>
                                                                     PAGE REFERENCE 
                                                                       FORM 10-K    
                                                                     -------------- 
        <S>                                                          <C>             
      Statements of consolidated income............................       16
      Consolidated balance sheets at December 31, 1995 and 1994....       17
      Statements of consolidated shareholders' equity..............       18
      Statements of consolidated cash flows........................       19
      Notes to consolidated financial statements...................      20-31
      Report of Independent Auditors...............................       32
 
  (a-2) Consolidated financial statement schedule
 
      II-Valuation and qualifying accounts.........................      F-1
</TABLE>
 
  All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes.
 
  (a-3) Exhibits
 
     (3)(a)(i)  Restated Certificate of Incorporation dated May 4, 1989,
                filed as Exhibit (3)(a) to Form 10-K for the year ended
                December 31, 1989 and incorporated herein by reference.
 
        (a)(ii) Certificate of Amendment of Restated Certificate of
                Incorporation dated May 31, 1995.
 
        (b)     By-Laws of Anthony Industries, Inc., as amended, filed as Item
                7(c), Exhibit 3.1 to Form 8-K dated November 20, 1995 and
                incorporated herein by reference.
 
 
                                      33
<PAGE>
 
     (4) (a) Rights Agreement dated August 10, 1989 between the Company and
             Harris Trust Company, filed as Item 6, Exhibit (a) to Form 10-Q
             for the quarter ended September 30, 1989 and incorporated
             herein by reference.
 
(10) Material contracts
 
  (a) Credit Agreement dated as of June 28, 1993 among Anthony Industries,
      Inc., the Banks party thereto and Bank of America National Trust and
      Savings Association, as agent filed as Item 6,Exhibit (a)(10)(i) to
      Form 10-Q for the quarter ended June 30, 1993 and incorporated herein
      by reference.
 
    (1) First Amendment to the Credit Agreement dated as of June 28, 1993
        between Anthony Industries, Inc., the Banks, and Bank of America
        National Trust and Savings Association as a Bank and as Agent for
        the banks filed as Item 6, Exhibit (a)10(i) to Form 10-Q for the
        quarter ended June 30, 1994 and incorporated herein by reference.
 
    (2) Second Amendment to Credit Agreement, dated April 21, 1995, filed
        as Item 6(a), Exhibit 10.01 to Form 10-Q for the quarter ended
        March 31, 1995 and incorporated herein by reference.
 
    (3) Third Amendment to Credit Agreement, dated April 27, 1995, filed as
        Item 6(a), Exhibit 10.02 to Form 10-Q for the quarter ended March
        31, 1995 and incorporated herein by reference.
 
  (b) Note Agreement Re: $40,000,000 8.39% Senior Notes due November 20, 2004
      dated as of October 15, 1992, filed as Exhibit (10)(b) to Form 10-K for
      the year ended December 31, 1992 and incorporated herein by reference.
 
  (c) Credit Agreement (364-Day Facility), dated April 27, 1995, filed as
      Exhibit 10.03 to Form 10-Q for the quarter ended March 31, 1995 and
      incorporated herein by reference.
 
  (d) Executive compensation plans and arrangements
 
    (1) (i) Retirement agreement dated November 20, 1995 between the Company
            and B. I. Forester.
 
       (ii) Trust for Anthony Industries, Inc. Supplemental Employee
            Retirement Plan for the Benefit of B. I. Forester between the
            Company and Wells Fargo Bank N.A., as Trustee, dated November
            20, 1995.
 
    (2) (i) Special Supplemental Benefit Agreement between the Company and
            Bernard I. Forester dated December 9, 1986, filed as Exhibit
            (10)(g) to Form 10-K for the year endedDecember 31, 1986 and
            incorporated herein by reference.
 
       (ii) Amendment dated July 27, 1990 to Special Supplemental Benefit
            Agreement between the Company and Bernard I. Forester dated
            December 9, 1986, filed as Exhibit (10)(f)(2) to Form 10-K for
            the year ended December 31, 1990 and incorporated herein by
            reference.
 
    (3) 1988 Incentive Stock Option Plan, filed as Exhibit A to the Proxy
        Statement for the Annual Meeting of Shareholders held on May 5,
        1988 and incorporated herein by reference.
 
    (4) Anthony Industries, Inc. Non-Employee Directors' Benefit Plan
        effective May 1, 1992, filed as Item 6, Exhibit (a)(28) of Form 10-
        Q for the quarter ended March 31, 1992 and incorporated herein by
        reference.
 
    (5) Anthony Industries, Inc. Corporate Officers' Medical Expense
        Reimbursement Plan, as amended through October 22, 1993, effective
        August 15, 1974, filed as Exhibit (10)(c)(5) to Form 10-K for the
        year ended December 31, 1993 and incorporated herein by reference.
 
    (6) Anthony Industries, Inc. Directors' Medical Expense Reimbursement
        Plan, as amended through October 22, 1993, effective January 1,
        1993 and incorporated herein by reference.
 
    (7) Anthony Industries, Inc. Executive Officers' Incentive Compensation
        Plan adopted August 5, 1993 filed as Item 6, Exhibit (a)10(ii) to
        Form 10-Q for the quarter ended June 30, 1993 and incorporated
        herein by reference.
 
    (8) 1994 Incentive Stock Option Plan, filed as Exhibit A to the Proxy
        Statement for the Annual Meeting of Shareholders held on May 5,
        1994 and incorporated herein by reference.
 
                                      34
<PAGE>
 
  (e)(1) Asset Purchase Agreement dated February 16, 1996 among General
         Aquatics, Inc., KDI Sylvan Pools, Inc., as Buyer, and Anthony
         Industries, Inc., as Seller, filed as Item 7 Exhibit 99(A) to Form 8-K
         filed March 21, 1996 and incorporated herein by reference.
 
     (2) 5.61% Subordinated Note Due March 4, 2001, filed as Item 7 Exhibit
         99(B) to Form 8-K filed March 21, 1996 and incorporated herein by
         reference.
 
     (3) General Aquatics, Inc. Warrant to Purchase Common Stock, filed as
         Item 7 Exhibit 99(C) to Form 8-K filed March 21, 1996 and incorporated
         herein by reference.
 
(11) Computation of earnings per share for three years ended December 31,
     1995.
 
(21) Subsidiaries
 
(23) Consent of Independent Auditors
 
(27) Financial Data Schedule
 
  (a) 1995 Financial Data Schedule.
 
  (b) 1994 Restated Financial Data Schedule.
 
 (B) REPORTS ON FORM 8-K FILED IN THE FOURTH QUARTER OF 1995:
 
     Form 8-K dated November 20, 1995
 
     Item 5. Bylaws of the Company, as Amended.
 
                                      35
<PAGE>
 
                                  SIGNATURES
 
  Pursuant to the requirements of Section 13 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.
 
                                          ANTHONY INDUSTRIES, INC.
                                                (Registrant)
 
                                          By   /s/  Richard M. Rodstein
                                          _____________________________________
                                                   (Richard M. Rodstein)
                                                    President and Chief
                                                     Executive Officer
 
                                          Date        March 27, 1996
                                          _____________________________________
 
  Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
 
<TABLE>
<CAPTION>
             SIGNATURE                           TITLE                    DATE
             ---------                           -----                    ----
<S>                                  <C>                           <C>
     /s/ Richard M. Rodstein         Director, President and         March 27, 1996
____________________________________ Chief Executive Officer
       (Richard M. Rodstein)         (Principal Executive
                                     Officer)*

         /s/ John J. Rangel          Senior Vice President--         March 27, 1996
____________________________________ Finance (Principal Financial
          (John J. Rangel)           and Accounting Officer)

         /s/ B. I. Forester          Director, Chairman of the       March 27, 1996
____________________________________ Board*
          (B. I. Forester)

        /s/ Hugh V. Hunter           Director*                       March 27, 1996
____________________________________
          (Hugh V. Hunter)

      /s/ John H. Offermans          Director*                       March 27, 1996
____________________________________
        (John H. Offermans)

        /s/ John B. Simon            Director*                       March 27, 1996
____________________________________
          (John B. Simon)
</TABLE>
 
*A majority of the directors of the registrant
 
                                      36
<PAGE>
 
                           ANTHONY INDUSTRIES, INC.
 
                SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
 
                                  (THOUSANDS)
 
<TABLE>
<CAPTION>
                                          ADDITIONS         DEDUCTIONS
                                    --------------------- --------------
                                               CHARGED       AMOUNTS
                                    CHARGED    TO OTHER      CHARGED
                         BALANCE AT TO COSTS   ACCOUNTS     TO RESERVE    BALANCE
                         BEGINNING    AND     (PRIMARILY      NET OF      AT END
      DESCRIPTION        OF PERIOD  EXPENSES GROSS SALES) REINSTATEMENTS OF PERIOD
      -----------        ---------- -------- ------------ -------------- ---------
<S>                      <C>        <C>      <C>          <C>            <C>
Year ended December 31,
 1995
  Allowance for doubtful
   items................   $4,404    $2,093                   $1,199      $5,298
  Other (primarily sales
   discounts)...........    3,018               $4,194         4,275       2,937
                           ------    ------     ------        ------      ------
                           $7,422    $2,093     $4,194        $5,474      $8,235
                           ======    ======     ======        ======      ======
Year ended December 31,
 1994(a)
  Allowance for doubtful
   items................   $3,677    $1,509                   $  782      $4,404
  Other (primarily sales
   discounts)...........    2,712                5,430         5,124       3,018
                           ------    ------     ------        ------      ------
                           $6,389    $1,509     $5,430        $5,906      $7,422
                           ======    ======     ======        ======      ======
Year ended December 31,
 1993(a)
  Allowance for doubtful
   items................   $2,879    $1,760                   $  962      $3,677
  Other (primarily sales
   discounts)...........    2,618                4,563         4,469       2,712
                           ------    ------     ------        ------      ------
                           $5,497    $1,760     $4,563        $5,431      $6,389
                           ======    ======     ======        ======      ======
</TABLE>
--------
(a) Information has been restated to reflect the sale of the Division (for
    further information see Note 2 of Notes to Consolidated Financial
    Statements).
 
                                      F-1