Nautilus 2001 Annual Report Download - page 13

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spring. The majority of our Nautilus Sleep System customers order a complete sleep system, which includes both a mattress and a foundation.
Our foundations currently range in price from $199 for a twin to $399 for a California king.
CHAMPION NUTRITION
In May 2001, we entered into a financing agreement with Champion Nutrition ("Champion") and its primary shareholder. Champion is a
privately held manufacturer of nutritional supplements. We began selling Champion's product line through our direct sales channel in June
2001. We package these products as kits and sell them to our Bowflex customers as add-on items. Under the terms of the agreement, we have
an option to buy the stock of Champion for $6 million through October 2002.
COMMERCIAL/RETAIL BUSINESS SEGMENT
COMMERCIAL/RETAIL SALES AND MARKETING
We market and sell our Nautilus, Schwinn Fitness, StairMaster, Quinton and Trimline commercial fitness equipment through our sales force
and selected dealers to health clubs, government agencies, hotels, corporate fitness centers, colleges, universities and assisted living facilities.
Our commercial direct sales force is focused on strengthening the market position of our existing Nautilus, Schwinn Fitness, and StairMaster
commercial product lines, which we sell principally to health clubs, large hotels, assisted living facilities and the government. Additionally, as
we continue to broaden our product line with products like Nautilus Nitro commercial equipment, our direct sales force will target new market
segments and, if successful, broaden our customer base. Internationally, we market and sell our Nautilus, Schwinn Fitness, and StairMaster
commercial fitness products through a worldwide network of independent distributors and our foreign operations.
We also market a complete line of consumer fitness equipment, under the Nautilus, Schwinn Fitness, and StairMaster brands, through a dealer
network of more than 1,200 dealers, specialty retailers and specialty stores worldwide. As part of our acquisition of Schwinn Fitness, we have
added an experienced management team to oversee the sales and marketing operations of our retail products business.
In general, sales of commercial/retail fitness equipment and accessories are seasonal. Typically, sales are higher in the first and fourth quarters
with considerable weakness experienced in the second quarter. We believe the principle reason for this trend is the commercial and retail fitness
industry's preparation for the impact of New Year's fitness resolutions and seasonal weather patterns related to colder winter months.
COMMERCIAL EQUIPMENT
We currently offer the following Nautilus, Schwinn Fitness, and StairMaster equipment for the commercial market:
NAUTILUS SELECTORIZED EQUIPMENT. The Nautilus 2ST line of commercial strength equipment offers 27 high quality, technologically
advanced strength building machines, each of which is specially designed to focus on a particular strength building exercise, such as leg
presses, bench presses, super pullovers, hip abductors and adductors and leg curls. In addition, we offer a line of specially designed Nautilus
2ST equipment that we market principally to medical therapy and
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2002. EDGAR Online, Inc.