Nautilus 2006 Annual Report Download - page 12

Table of Contents
U.S., we are responsible for purchasing and shipping raw materials to our manufacturers. Although this arrangement exposes us to additional
risks before products are manufactured, we believe that it increases our manufacturing flexibility and quality control.
Our quality control program is designed to ensure that our products meet the highest quality standards. A large portion of the quality
control process, which involves inspection, random product audits, and approvals of all key materials and finished products, occurs directly at
the manufacturer. The manufacturer either ships the products to our warehouse facilities in the U.S. or Germany, or ships directly to our
international distributors.
For domestic sales, we generally ship our products from our facility in Colorado. We primarily ship our products through UPS. For
European sales, products are shipped from our facility in Germany. For international distributor shipments, the products are either shipped
directly to our customers from the manufacturer or shipped from our facility in either Colorado or Germany.
BACKLOG
Historically backlog has not been a significant factor in the Company’s business.
COMPETITION
Fitness Equipment Business
The markets for all of our products are highly competitive. Our competitors vary by market and sales channel as discussed below. We
believe the combination of our well-recognized brand names along with our brand marketing awareness programs, innovative and high quality
products, multiple distribution channels, and dependable customer service will allow us to remain competitive in all of our current fitness
equipment markets.
Home Fitness Equipment: We primarily sell our Bowflex strength and cardiovascular fitness products in this market. We believe the
principal competitive factors affecting this portion of our business are innovation, quality, brand name recognition, product price, financing
options, and customer service. Our direct-marketed brands compete directly with a large number of companies that manufacture, market and
distribute home fitness equipment. Our principal direct competitors include ICON Health & Fitness and Fitness Quest .
Commercial Fitness Equipment: Our Nautilus, Schwinn Fitness, and StairMaster brands compete against products of other commercial
fitness equipment companies such as Life Fitness , Cybex , Precor , and TechnoGym . We believe the key competitive factors affecting this
portion of our business include brand relevance, product innovation, quality, durability, diversity of features, price, financing options, customer
service, and product service network.
Retail Fitness Equipment: Our Nautilus, Schwinn Fitness, StairMaster, and Bowflex brands compete against the products of the retail
fitness equipment companies such as Life Fitness , ICON Health & Fitness, Johnson Health Tech. , and Precor . We believe the key
competitive factors affecting this portion of our business include quality, durability, product innovation, diversity of features, price, financing
options, customer service, and product service network.
International Equipment Business
Our Nautilus, Schwinn Fitness, StairMaster, and Bowflex brands compete against the products of such companies as Life Fitness ,
Cybex , StarTrac , Precor , and TechnoGym . We believe the key competitive factors in the international markets include brand relevance,
price, customer and product service network, functionality and diversity of features, quality, product innovation, design, and brand name
recognition.
Fitness Apparel Business
Our principal competitors in the cycling apparel category consist of Sugoi , Cannondale , Castelli , and Descente . Within the cycling
footwear category, the competitors primarily consist of Sidi , Specialized , and
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