Nautilus 2000 Annual Report Download - page 5

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Another significant component of our operations is our commercial and retail products segment, which encompasses products and operations
outside of our direct products segment. Our commercial and retail products segment includes Nautilus commercial and retail fitness equipment
and accessories, which we added in January1999 as part of our acquisition of Nautilus International,Inc. We anticipate further leveraging our
Nautilus brand name through expanded marketing of new Nautilus home gyms and a new line of Nautilus free weight home gym equipment
which we introduced in the summer of 2000, as well as any other Nautilus-branded home exercise products we may introduce in 2001. We
market and sell our Nautilus commercial fitness equipment domestically through a direct sales force and internationally through independent
sales representatives. We market our other Nautilus retail products domestically through non-exclusive independent sales representatives. We
believe we have effectively integrated the Nautilus commercial business into our operations and stabilized its financial performance, as
evidenced by its profitability during our first two years of ownership.
For a discussion of financial information about our two business segments, direct products and commercial and retail products, see Note2 of the
Notes to Consolidated Financial Statements.
Direct Focus was incorporated in California in 1986 and became a Washington corporation in 1993. Our principal executive offices are located
at 1400 NE 136 th Avenue, Vancouver, Washington 98684, and our telephone number is (360)694-7722. We maintain our corporate web site at
www.directfocusinc.com. None of the information on this web site or our other web sites is part of this Form10-K.
As used in this Form10-K, the terms "we," "our," "us," "Direct Focus" and "the Company" refer to Direct Focus,Inc. and its subsidiaries. The
names Bowflex, Nautilus, Bowflex Power-Pro, Motivator, Versatrainer, Power Rod, Direct Focus, Instant Comfort and Nautilus Sleep Systems
are registered trademarks of Direct Focus,Inc.
DIRECT MARKETING
We direct market our Bowflex home fitness equipment and Nautilus Sleep Systems principally through 30- and 60-second, or "spot," television
commercials, television infomercials, the Internet, response mailings and print media. To date, we have been highly successful with what we
refer to as a "two-step" marketing approach. In general, our two-step approach focuses first on spot commercials, which we air to generate
consumer interest in our products and requests for product information. The second step focuses on converting inquiries into sales, which we
accomplish through a combination of response mailings and outbound telemarketing. We supplement our two-step approach with infomercials,
which generally are designed to provide potential customers with sufficient product information to stimulate an immediate purchase.
Advertising
Spot Commercials and Infomercials. Spot television commercials are a key element of the marketing strategy for all of our direct marketed
consumer products. For direct marketed products that may require further explanation and demonstration, television infomercials are an
important additional marketing tool. We have developed a variety of spot commercials and infomercials for our Bowflex product line and
several commercials and marketing videos for our Nautilus Sleep Systems product line. We expect to use spot commercials and, where
appropriate, infomercials to market any consumer products that we determine are appropriate for direct marketing.
When we begin marketing a new product, we typically test and refine our marketing concepts and selling practices while advertising the product
in spot television commercials. Production costs for these commercials can range from $50,000 to $150,000. Based on market research and
viewer response to our spot commercials, we may produce additional spot commercials and, if appropriate for the product, an infomercial.
Production costs for infomercials can range from $150,000 to $500,000, depending on the
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2002. EDGAR Online, Inc.