Nautilus 2009 Annual Report Download - page 5

Table of Contents
PART I
Item 1. Business
OVERVIEW
Nautilus is a fitness products company headquartered in Vancouver, Washington. We are committed to providing innovative, quality solutions to
help people achieve a fit and healthy lifestyle. Our principal business activities include designing, developing, sourcing and marketing high-
quality cardiovascular and strength fitness products and related accessories for consumer home use, primarily in the United States and Canada.
Our products are sold under some of the most-recognized brand names in the fitness industry, including Nautilus , Bowflex , Universal
and
Schwinn Fitness.
We market our products through two business segments: Direct and Retail, each representing a distinct marketing distribution channel. Our
direct business offers products directly to consumers through direct advertising, catalogs and the Internet. Our retail business offers our products
through a network of independent retail companies located in the United States and Canada, as well as Internet-based merchants. Our
commercial business, formerly an operating segment and reported as a discontinued operation beginning in 2009, offered products to health
clubs, schools, hospitals and other organizations, which typically require fitness products specifically designed for higher usage.
Founded in 1986, Nautilus developed and introduced the Bowflex rod-
based home gym and, through the use of infomercials, became a leading
direct marketer of fitness equipment. The direct marketing model of selling directly to the consumer grew quickly, allowing the Company to
invest its earnings in a series of strategic acquisitions of well-recognized brands including: Nautilus in 1999; Schwinn Fitness in 2001;
StairMaster in 2002; and Universal in 2006. In the third quarter of 2009, the Company adopted a plan for the complete divestiture of its
commercial business, including the StairMaster trademark and StairMaster , Schwinn Fitness and Nautilus product lines sold in the
commercial sales channel. Nautilus plans to retain, however, ownership of the Schwinn and Nautilus trademarks, and its strong presence in
the consumer fitness equipment market through its direct and retail sales channels.
Our company was incorporated in the state of Washington in January 1993. Unless the context otherwise requires, “Nautilus”, “Company”,
“we”, “us” and “our” refer to Nautilus, Inc. and its subsidiaries. All references to 2009 and 2008 in this report refer to our fiscal years ended on
December 31, 2009 and 2008, respectively.
BUSINESS STRATEGY
We are focused on developing and marketing fitness equipment and related products to help people enjoy healthier lives. Our products are
targeted to meet the needs of a broad range of consumers, including fitness enthusiasts and individuals who are seeking the benefits of regular
exercise. We have diversified our business by expanding our portfolio of high-quality fitness equipment into multiple product lines, utilizing
well-recognized brands. More recently, our business strategy has focused exclusively on consumer products, markets and distribution channels,
which we believe will provide the greatest long-term value to our shareholders. Implementation of this strategy includes the sale of our fitness
apparel business in 2008 and the divestiture of our commercial fitness products business, which we began in late 2009 and expect to complete in
2010.
Product innovation is a vital part of our business. A unique or new product can often provide a significant competitive advantage, as consumers
are looking for ways to improve the effectiveness of their workouts. We continually evaluate new product concepts, generated by both internal
and external resources, and seek feedback from users on how to enhance our current product offerings.
Our strategies incorporate the specific characteristics of our direct and retail business segments. Our direct business segment focuses on (i) the
development of, or acquisition of rights to, unique products, and (ii) the
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