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Guitar maker Fender files for initial public offering

March 08, 2012|By W.J. Hennigan
(Glenn Koenig / Los Angeles…)

Fender Musical Instruments Corp., the iconic company that has been making guitars in California since its inception in 1946, is seeking to raise $200 million in an initial public stock offering.

In a filing with the Securities and Exchange Commission on Thursday, Fender said it intends to use the money to help pay down $246.2 million in debt and to acquire other businesses.

Although its corporate headquarters are now in Scottsdale, Ariz., the company was founded in Fullerton and makes its American Standard Stratocaster and Telecaster guitars at a 3-acre manufacturing plant in Corona. The last step in Fender's quality-control process involves an experienced musician playing every note on a finished guitar before the instrument is sent to a dealer.

The California connection goes back to the company’s late founder, Clarence Leonidas Fender, who opened a Fullerton radio shop during the Depression and tinkered with amps and electric guitars on the side.

And the company makes most of its amplifiers and entry-level Fender-brand guitars in Ensenada.

Fender said in its SEC filing that it is the country's biggest seller of electric, acoustic and bass guitars. Prices run from a couple hundred dollars for a basic model to thousands of dollars for high-end custom versions.

In the filing the company said, “We believe that the musical instruments industry generally, and the fretted instruments market in particular, benefits from the continuing popularity of guitar-based music and bands, as well as the visibility of guitars in other areas of popular culture such as video games, television shows and movies.”

Fender guitars have long been identified with the California car and surf culture, and were played by bands such as the Surfaris and the Beach Boys. At Woodstock in 1969, when Jimi Hendrix broke into his haunting rendition of "The Star-Spangled Banner," it was a white Stratocaster at his fingertips.

Last year the company had a net income of $3.2 million, up from a loss of $17.3 million in 2010. Sales were up 13% to $700.6 million, from $617.8 million.

Fender said it now sells its products in 85 countries. The company hopes to expand its international footprint in emerging markets such as China and India.

The company plans to trade the shares on the Nasdaq exchange under the ticker symbol "FNDR." Fender did not disclose how many shares would be sold or estimate their price, nor did it say when the stock sale would take place.

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