Nautilus 2000 Annual Report Download - page 13

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We market our Nautilus commercial fitness equipment throughout the world, including the United States, Europe, Asia, the Middle-East, Latin
America and Africa. Within these markets, we target the following commercial customers, among others:
• Health clubs •
Corporate fitness centers
• Rehabilitation clinics •
Colleges and universities
• The military •
Governmental agencies
• Hospitals •
YMCA's and YWCA's
• Hotels and motels •
Professional sports teams
According to the Sporting Goods Manufacturers' Association, aggregate sales of fitness equipment to commercial purchasers in the United
States soared from $575million in 1998 to $700million in 1999, a 22% increase.
Mattresses
The United States mattress market is large and dominated by four major manufacturers whose primary focus is the conventional innerspring
mattress. According to the International Sleep Products Association, United States mattress and foundation sales totaled 38.2million units
shipped in 1999, representing a 4.4percent increase from 1998. Total dollar value of these wholesale shipments reached $4.3billion in 1999, an
8% increase from 1998. We believe this equates to over $7.6billion in retail sales. The International Sleep Products Association (ISPA)
estimates that innerspring mattresses accounted for approximately 90% of total domestic mattress sales in 1999. The ISPA also believes that
less than 7% of all mattress sales are made through direct marketing channels. According to the ISPA, the bedding industry has enjoyed years of
uninterrupted growth. In 1998, queen-sized mattresses became the largest selling segment. Both queen- and king-sized mattresses picked up
market share in 1999.
COMPETITION
Bowflex Home Fitness Equipment
The market for our Bowflex products is highly competitive. Our competitors frequently introduce new and/or improved products, often
accompanied by major advertising and promotional programs. We believe the principal competitive factors affecting this portion of our
business are price, quality, brand name recognition, product innovation and customer service.
We compete directly with a large number of companies that manufacture, market and distribute home fitness equipment, and with the many
health clubs that offer exercise and recreational facilities. We also compete indirectly with outdoor fitness, sporting goods and other
recreational products. Our principal direct competitors include ICON Health& Fitness,Inc. (through its Health Rider, NordicTrak, Image,
Proform, Weider and Weslo brands), Schwinn Fitness, Precor and Total Gym. In addition, some of our competitors have significantly greater
financial and marketing resources, which may give them and their products an advantage in the marketplace.
We believe our Bowflex line of home exercise equipment is competitive within the market for home fitness equipment based on product design,
quality and performance and that our direct marketing activities are effective in distinguishing our products from the competition.
Nautilus Commercial Fitness Equipment
The market for commercial fitness equipment is highly competitive. Our Nautilus products compete against the products of numerous other
commercial fitness equipment companies, including Life Fitness, Cybex and Precor. Many of our competitors have greater financial and
marketing
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2002. EDGAR Online, Inc.