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| WIRE)--Sept. 11, 1995--"Each year about 300 children are killed and more than - Mini Motorcycle |
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Bike helmet sesame street
Bike helmet sesame street: Today's Investor features PTI Holding; the fastest growing bicycle helmet & accessory company in the U.S
NEW YORK--(BUSINESS WIRE)--Sept. 11, 1995--"Each year about 300 children are killed and more than 400,000 children go to hospital emergency rooms due to bicycle injuries. Children between 5 and 14 have the highest injury rate of all bicycle riders, and bicycle accidents are the leading cause of death in this age group. The greatest tragedy is that many of these injuries could be prevented if riders wore their helmets. In fact, young bicyclists can reduce the risk of head injury or death by up to 85% if they wear a helmet." Ann Brown, chairman U.S. Consumer Product Safety Commission June 5, 1995
The story of PTI Holding Inc. (NASDAQ:PTII 4 1/4) is that of a young, decisive management team led by two brothers: Meredith W. Birrittella, CEO, who founded the company, and Martin P. Birrittella, chairman. The company was profitable for the first nine months of fiscal year 1992. Then known as Aerial Assault, the company manufactured distinctive, high-performance athletic footwear and related apparel for basketball which were available through Athletic Express, Champs, Foot Locker and Footaction USA. In 1993, fashions changed ("grunge" became "in") and intense competition in the form of deep discounts from such giant competitors as Nike and Reebok took its toll on the company. Seeking a new direction, this management team picked a growth industry with far greater popularity and potential. They merged privately held Foam-O-Rama Inc., a designer, manufacturer and marketer of bicycle safety helmets, into a wholly owned subsidiary, Protective Technologies International Inc., in March 1994; hired Warren Schaeffer, formerly president of Foam-O-Rama, to become president of the company; changed the company's name to PTI Holding Inc. and never looked back. The name Aerial Assault has not been lost, by the way; it has been licensed to a major New England retailer. The company will also be using the name to introduce a full-line of in-line skating equipment.
Background Information
Bicycling is the third most popular sporting activity after exercise walking and swimming in this country, according to the 1994 U.S. Statistical Outlook; basketball ranked 8th. According to government statistics, there are over 55 million participants, including over 22 million between the ages of 7 and 17 years. A major factor in the growing popularity of this sport was the introduction of a new line of bicycles -- mountain bikes -- in the late 1980s. Today, more individuals are using their bikes to get to work and school. More bike paths are being built, by popular demand, in parks and on little used lands. In fact, another whole new industry has been created: mountain bike retreats in the wilderness. Wherever there are bikes, there has been a growing concern for their safe use.
Thirteen states; the District of Columbia; and 21 counties, cities and other localities have already enacted laws requiring children to wear helmets while riding a bicycle. This follows the growing trend for mandatory protective helmet use by motorcycle riders. Nearly all the states are expected to pass legislation making bicycle helmets mandatory in the near future.
Product Advantages
The open secrets of PTI's success are the low costs of its products and its innovative designs, proprietary features and standards -- all of PTI's products meet or exceed the standards of the American National Safety Institute (ANSI). PTII has ten distinctive helmet designs with each offered in a variety of patterns and colors. Some helmets are decorated with well known comic book characters, others with movie and TV cartoon characters. Its products range in price from $9.99 to $49.99 with its most popular products selling in the mid-teen dollar range, as opposed to the low $20s for across-the-board competitors. According to the company, its low-cost factor will enable it to expand its brand franchise into bicycle-related protective gear and accessories.
Private Brand Manufacturing
In addition to its own line of helmets, PTII manufactures helmets for other companies competing in the bicycle helmet market. In 1994, 8% of the company's revenues were from private brand manufacturing and more is expected for 1995 and 1996. PTI manufactures helmets for Magna Bicycle, the largest importer of bicycles in the world. The company also has an agreement to manufacture helmets for Sports Maska, which has the licensing rights to the Mighty Morphin Power Rangers; shipping has already begun. The company just announced its largest private brand agreement with Hasbro Toys Inc. to produce Playskool(TM) products.
Competition
Competition is always a factor in any industry but does not phase the management of PTI. According to the U.S. Consumer Product Safety Commission, there are an estimated two dozen bike helmet manufacturers. PTII has already replaced the 1994 industry leader, Bell Sports (BSPT 12-5/8), as the largest supplier of helmets to Toys 'R Us and Target Stores. According to 1994 estimates, Bell Sports, which sells products under the brand names Mongoose, Pro Class, Advent, Headwinds, Cycle Products and has license agreements with Fisher-Price Inc. and Sesame Street, had approximately 45-50% of the total market. Bell Sports recently announced shareholder approval to buy American Recreation, a manufacturer of bicycles and accessories and the second largest manufacturer of bicycle helmets after Bell, in a stock swap. The merger had been opposed by Bell's largest shareholder, CG Acquisition, a unit of the Zell/Chilmark Fund, which said, "Management is being overly compensated after poor performances at both companies." Considering only the cast of cartoon characters competing from both companies and not PTI's pricing or product advantages, PTI's Mighty Morphin Power Rangers, Spiderman and X-Men have the edge as evidenced by ongoing consumer demand. In addition, the company's contract with Hasbro to produce product lines for the enduring Playskool(TM) label definitely give it an added advantage.
The Future
If the past is any indication of the future, PTI Holding Inc. announced that its sales for the second quarter ended June 30, 1995 "were $3.1 million or 92% greater than sales of $1.6 million and earned $.10 per share versus $.04 per share for the same period last year." According to Meredith Birrittella, CEO, "This has been the best quarter in the Company's history....Our growth has been maintained as we continue to take market share away from our competitors in the bicycle helmet market." In the short term, PTI Holding Inc. believes its bicycle helmet business is "well positioned for accelerated gains" as a result of growing state legislation mandating bicycle helmet use to prevent head injuries. The company has already moved to a larger 50,000 square foot facility and increased production personnel 200% to accommodate expected sales increases as more states require helmets to be worn. Arrangements are being made to sell their products to independent bicycle dealers, the other large segment of the market besides mass merchandisers, through a low-cost distribution system. Plus, the company has already made plans to expand its bicycle accessories market beginning next spring. If you look at what PTII has accomplished already in the SELECTED HIGHLIGHTS, you will see the ground work being laid for the future. The company plans to finance its expanding bicycle helmet business from its working capital reserves and from cash flow. PTII believes its flexibility, service and plans for its growing vertically integrated market will "enable the company to expand its brand franchise into bicycle-related accessories such as bicycles, skateboards, roller blades, and protective gear" as it has already begun doing.
SELECTED HIGHLIGHTS
What has PTI Holding Inc. been doing since March 1, 1994?
7/28/94 Three Year Supply Agreement with Toy Biz Inc., which has
the licensing rights to such well-known Marvel comic Book
characters as Spiderman and X-Men, to manufacture, supply
and co-distribute helmets "bearing such characters to Toy
Biz Inc. for certain stores and to obtain a right to use
such characters on the company's helmets in sales in
other stores." Under this agreement, PTI is the
exclusive supplier for the first 125,000 helmets bearing
such characters sold by Toy Biz Inc. and Toy Biz has
guaranteed the purchase of at least 250,000 helmets from
July 1994 through July 1996.
8/25/94 First Order Shipped to Wal*Mart stores.
6/22/95 Hired Ross Vick & Associates, one of the premier sales
organizations in the country, to act as PTI's sales
representatives in 12 southern states and with such major
retailers as Wal*Mart, K-Mart and JC Penney.
6/28/95 Began Shipments of bicycle helmets featuring the Mighty
Morphin Power Rangers characters for Sports Maska Inc.,
a leading manufacturer of hockey equipment. PTII was
named "Vendor of the Year" in 1994 by Toys 'R Us.
7/11/95 First Bicycle Accessory Products (protective knee and
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