Nautilus 2005 Annual Report Download - page 12

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Table of Contents
•
Europe/Middle East/Africa
In each of these regions, we have responsible sales people and third party warehouses to deliver our products in a timely and cost
effective manner. Communication amongst our business partners within each region is essential to our strategy so we may support our
products, develop innovative marketing activities, and achieve global brand recognition.
In our largest international markets, Canada, the United Kingdom, Germany, and Italy, we operate our own offices, which possess a team
of sales representatives that focus not only on selling to fitness clubs but also on selling to the government, hotel, and medical/paramedical
markets. In Canada, we also market directly to consumers.
We have alliances with distributors in most markets to sell commercial products from our Nautilus, Schwinn, and StairMaster brands. By
offering a complete line of strength and cardio products, we have greater ability to compete in the international marketplace where many
customers prefer to buy from one supplier that can offer the broadest array of products at a competitive price. By building our portfolio of
brand names, we have greater ability to compete in the international marketplace in which our main competitors have benefited for many years
from the ability to negotiate “package deals.” We believe our brand names have strong recognition in the international marketplace, which will
allow us to compete more effectively in the future.
Seasonality
•
Canada/South America
In general, domestic and international sales in our commercial, retail, and specialty retail fitness equipment channels are highly seasonal.
We believe that sales within these channels are considerably lower in the second quarter of the year compared to the other quarters. Our
strongest quarter for these channels is generally the fourth quarter, followed by the third and first quarters. We believe the principal reason for
this trend is the fitness industry’s preparation for the impact of New Year’s fitness resolutions and seasonal weather patterns that encourage
more fitness activity indoors.
FITNESS APPAREL SEGMENT
We created a new business segment, the fitness apparel segment, through the acquisition of DashAmerica, Inc. d/b/a Pearl Izumi USA
(“Pearl Izumi”) on July 7, 2005. The purchase price for Pearl Izumi was approximately $70.0 million including acquisition costs, net of cash
acquired, plus $5.3 million in assumed debt. Pearl Izumi is a provider of fitness apparel and footwear for cyclists, runners and fitness
enthusiasts. Our Pearl Izumi apparel products are sold through sporting good dealers, retailers, independent bike dealers and retail stores
operated by the Company.
Pearl Izumi is known among fitness enthusiasts for its quality, innovation, and technically superior sports apparel and footwear. With our
presence and leading fitness equipment brands in commercial, retail and specialty retail, we are positioned to expand those brands into fitness
apparel to complement the Pearl Izumi brand.
The fitness apparel segment produces and distributes specialized performance-driven sports apparel and footwear. These products are
primarily designed specifically for athletes, competitors and outdoor enthusiasts. We group our fitness apparel merchandise into five principal
categories:
•
Cycling apparel;
•
Running apparel;
•
Cycling footwear;
•
Running footwear; and
11
•
Active outdoor apparel.