Nautilus 2005 Annual Report Download - page 7

Table of Contents
Question: What do I wear?
Answer:
Nautilus Fitness Apparel: Our fitness apparel line is currently composed of high-performance apparel and footwear for cycling and
running activities. We believe we can leverage our existing fitness equipment brands to broaden our product offerings to consumers within the
market for performance apparel.
Question: What do I eat?
Answer:
In the nutrition market, we have a continued strategic relationship with Champion Nutrition as supplier of nutritional supplements that
are complementary with our fitness and healthy lifestyle product offerings and are marketed through our fitness equipment segment. We
anticipate greatly expanding this business in the coming years.
Answering these questions will lead consumers to the trusted name Nautilus to help them achieve a fit and healthy lifestyle.
Market Research
Our market research indicates that while we possess distinct competitive advantages, we have not fully capitalized on the many
opportunities available to us in the estimated $17.0 billion exercise equipment, performance apparel, and sports nutrition markets that we
compete in. We are a leader in selling strength products through the direct marketing channel, but our research showed that approximately 80%
of our target consumer market buys fitness products through the retail channel and 70% purchase cardio equipment. As a result, we continued
moving into the retail market in 2005 by making additional products available through more retailers.
Operating Principles:
In 2003, we conducted a thorough due diligence process, in which we interviewed our internal team, spoke with industry consultants, and
conducted the most comprehensive market research study in our history in order to help identify and realize our growth opportunities. We have
targeted several areas as significant opportunities for growth, including leveraging our research and development capabilities to launch new
products and repositioning our strength and cardiovascular products to better meet customer demand and shopping patterns. We also seek to
improve operating efficiencies and cash flow by streamlining operations and maximizing business synergies, such as brand development, sales
channels, marketing resources, and information resources.
Since the beginning of 2004, we have continued pursuing global category leadership by providing the tools and education necessary to
help people achieve a fit and healthy lifestyle. At the core of this mission is an internal initiative called FIT #1, which is the foundation of our
plan to create long-term stockholder value. FIT #1 stands for Financial rigor, Innovation, Trust and a drive to be #1 in the categories in which
we compete. These are the core strategic elements around which we will structure our activities, enabling us to refocus our efforts and continue
our growth. Financial rigor means we must ensure accurate and streamlined financial and forecasting processes. Innovation means we must
apply creative solutions to both research and development and business operations. Trust means we must ensure we are taking care of our
customers and stockholders and doing everything we can to serve them.
Focus on Innovation
We developed approximately 22 new products in 2005, and we continue to leverage our advanced research and development capabilities
and our strong brand names to expand our existing product lines and launch new innovative products. Innovation is an important part of our
strategy as we continue to emphasize the expansion and diversification of our product development capabilities in health and fitness products.
We develop new products either from internally generated ideas or by acquiring or licensing patented technology from outside inventors and
then enhancing the technology.
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