SRAM International Corp. plans to go public, according to papers it filed with the Securities and Exchange Commission.


The Chicago company plans to list an undisclosed number of shares on the New York Stock Exchange of Nasdaq, where their will trade under the ticker symbol “SRAM.”

 

Proceeds from the IPO will be used to capitalize the company after it buys out an investment group including Trilantic Capital Partners and certain affiliates and co-investors who recapitalized SRAM in 2009 by purchasing a $234.8 million equity interest in SRAM, according to the S1 registration statement filed Thursday.
 
The issue is being underwritten by J.P. Morgan, Bank of American/Merrill Lynch and Morgan Stanley.

SRAM is the worlds second largest maker of bicycle components, including SRAM, RockShox, Zipp, Avid and Truvativ. The S1 reveals that SRAM grew net sales from $283.8 million in 2006 to $524.2 million in 2010, representing a compound annual growth rate, or CAGR, of 16.6%. Over the same period, operating income increased from $23.7 million to $99.6 million, representing a CAGR of 43.2% and an increase in operating margin from 8.3% to 19.0%. Our net earnings also increased from $11.6 million in 2006 to $50.0 million in 2010, representing a CAGR of 44.1%.


For the year ended December 31, 2010, OEM and aftermarket sales represented 67% and 33%, respectively, of our total sales, as compared to 67% and 34% of our sales for the year ended December 31, 2009 and 74% and 26% of our sales for the year ended December 31, 2008. We attribute the growth of our aftermarket segment since 2008 to an increased internal focus and external marketing efforts, as well as general economic conditions, as discussed below. We expect the percentage of sales of our two segments in the foreseeable future to remain similar to 2010.


The S1 also reveals that SRAM has:



  • Generated over 50% of our 2010 model year (July 1 through June 30) net sales from products that were less than three years old.
    2,200 employees in nine countries, including more than 280 employees dedicated to product development.
  • An intellectual property portfolio of over 550 patents.
    Approximately 70 ongoing product development projects and to date.
  • Launched over 40 new products for our 2011 model year.
  • Become the second largest supplier of bicycle components in the world. The company estimates it has a 15% share of the approximately $3.5 billion of annual sales in the independent bicycle retailer market for bicycle components, as measured in component suppliers sales. The top supplier is Shimano.
    Has a senior management team with an average tenure with SRAM of approximately 18 years.

SRAM was originally founded in 1987 as SRAM Corporation, an Illinois corporation, to design, manufacture and market bicycle shifters. In 1995, after becoming a market leader in shifters, it began transforming into a full-line, mid to high-end component supplier. The company has grown through internal product development and a series of strategic acquisitions, including the acquisition of the bicycle division of Mannesman Sachs AG (1997), RockShox, Inc. (2002), the bicycle business of Avid, LLC (2004), Truvativ International Co., Ltd. (2004) and Compositech, Inc. (Zipp) (2007). Co-founder Stanley R. Day, Jr. serves as  president, CEO and chairman of the board.





































































































































































































































































































































































































































































Year ended December 31,


(in thousands, except per unit data)

    2006     2007     2008     2009     2010  
   

Statement of operations data:

           

Net sales

    $ 283,806      $ 356,025      $ 478,354      $ 399,581      $ 524,187   

Cost of sales

      206,235        247,013        310,725        239,448        312,954   
        

Gross profit

      77,571        109,012        167,629        160,133        211,233   

Operating expenses

           

General and administrative expense

      12,444        23,215        77,846        29,042        33,913   

Sales and marketing expense

      19,729        22,621        49,480        27,934        40,579   

Product development expense

      21,702        27,568        46,506        27,799        37,179   

Recapitalization costs(1)

      –        –        8,952        –        –   
        
     53,875        73,404        182,784        84,775        111,671   
        

Income (loss) from operations

      23,696        35,608        (15,155 )      75,358        99,562   

Other income (expense)

           

Interest expense, net

      (3,205 )      (2,736 )      (21,703 )      (36,245 )      (32,634 ) 

Foreign currency exchange gain (loss)

      (3,734 )      (3,993 )      4,072        (3,221 )      237   
        

Total other expense, net

      (6,939 )      (6,729 )      (17,631 )      (39,466 )      (32,397 ) 
        

Income (loss) before income taxes

      16,757        28,879        (32,786 )      35,892        67,165   

Income tax expense

      5,169        10,866        15,838        14

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