O.C. Mountain Bike Maker to Sell Stock : Markets: GT Bicycles plans to offer about 4.7 million shares. It manufactures the cycle the U.S. Olympic team will ride in ’96 games.
Sixteen years after GT Bicycles Inc. began as a garage business and a labor of love, the popular mountain bike maker on Tuesday announced plans to offer nearly 4.7 million shares of stock to the public.
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For the record:
12:00 a.m. Aug. 18, 1995 For the Record
Los Angeles Times Friday August 18, 1995 Orange County Edition Business Part D Page 2 Financial Desk 2 inches; 36 words Type of Material: Correction
GT Bicycle Inc.--The names of the co-founders of GT Bicycles Inc. were transposed in a Wednesday story. Richard W. Long is chairman and chief executive of the Santa Ana bicycle maker. His former partner, co-founder Gary Turner, is no longer with the company.
The company projects a price of $12 to $14 per share. At $13 a share, the offering would raise $37.4 million after expenses to help the company expand operations and reduce debt, according to registration documents filed with the Securities and Exchange Commission.
Company officials, citing securities regulations, declined to comment on the move. But industry analyst Jay Townley said GT Bicycles has positioned itself to move into the top five bike makers and already has a firm hold on the youth market.
“They have an extremely strong position with young people,” said Townley, a Wisconsin industry consultant who also heads a trade group called the International Bicycle Assn. “They have a virtual lock on the Generation X market, and they’re attuned to the tastes of these young consumers.”
The company builds on that niche with aggressive marketing and a high profile, observers said. GT is the bike that members of the U.S. Olympic team will ride in the 1996 games, while a touring freestyle team displays the company’s triple triangle logo at exhibitions across the country. The company also has an on-site studio for filming product-related videos.
“They’re very focused on the market, more so than they are on what the competitors are doing or the politics of the industry,” said Steve Ready, a 20-year veteran of the industry who organizes the Interbike International Bicycle Expo in Anaheim. “And they’re the largest of our [900] exhibitors.”
GT Bicycles sells more than 100 bike models, including juvenile BMX bikes and 37 “All Terra” models that cater to the burgeoning mountain bike market. Townley estimates that 60% of bicycles sold nationwide are mountain bikes, the husky, off-road bikes that have wide knobby tires and gears designed for hill-climbing.
“GT is right at the forefront of the mountain bike market,” Townley said. “They are certainly one of the top brands.”
The company began quite literally in the garage workshop of co-founder Gary Turner. Turner, an automobile racing enthusiast, was cobbling together bike frames and selling them one-by-one to Richard Long, owner of an Anaheim bike shop. In 1979, the two decided to start a company to step up production.
In the following decade, the company expanded from making bikes mostly for youngsters into a all-ages line, with special emphasis on mountain bikes. For the first six months this year, the company reported net income of $1 million, up from the $325,000 for the same period in 1994. Sales in the first six months were $81.7 million, up from the $68.8 million the company reported for the same period a year earlier.
Biking in general has surged in popularity in the United States over the past decade. According to the most-recent industry reports, about 100 million Americans of all ages rode bicycles in 1993, up from the 72 million riders in 1983.
Bicycle sales accounted for 76% of the company’s net sales last year. The remainder came from the sale of bike parts and accessories.
Turner, 45, the company’s chairman and chief executive, bought out Long’s interest, Townley said.
Turner, who makes a $530,000 annual salary plus a $580,000 yearly bonus, owns an 18% stake in the company. He and other top executives won’t be selling shares in the offering, according to Bloomberg Business News.
The company said its offering will be made through Montgomery Securities, Smith Barney Inc. and William Blair & Co. The underwriters will have an option to buy up to 705,000 additional shares to cover any unanticipated demand. GT Bicycles said it plans to sell 3.15 million shares and stockholders will sell 1.5 million shares. The company will have 9.76 million shares outstanding after the securities sale.
Shares will trade on the Nasdaq National Market.
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GT Bicycles Inc. at a Glance
* Founded: 1979 by Gary Turner and Richard Long
* Headquarters: Santa Ana
* Employees: 350
* Product: Bicycles, including mountain and BMX models
* Sales: $81.7 million*
* Net income: $1 million*
* January-June, 1995
Source: Bloomberg Business News
Los Angeles Times
