Nautilus 2010 Annual Report Download - page 9

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Table of Contents
Our products compete directly with those offered by a large number of companies that market consumer fitness equipment and fitness programs.
As the use of Internet websites for product sales by traditional retailers has increased, our competitors have become increasingly similar across
our direct and retail sales channels. Our principal competitors include: Fitness Quest , marketer of Total Fitness
®
-branded products; ICON
Health & Fitness, marketer of ProForm
®
-
and NordicTrack
®
-branded products; Johnson Health Tech, marketer of Horizon
®
-branded products;
Beach Body, marketer of the P90X
®
fitness program; and American Telecast, marketer of Total Gym
®
-branded products. Among our other
competitors are weight-loss companies, such as Jenny Craig and NutriSystems, which offer alternative solutions for a fit and healthy lifestyle.
EMPLOYEES
As of February 28, 2011, we had approximately 330 employees, substantially all of whom were full-time. None of our employees are subject to
collective bargaining agreements. We have not experienced a material interruption of our operations due to labor disputes.
INTELLECTUAL PROPERTY
Trademarks, patents and other forms of intellectual property are vital to the success of our business and are an essential factor in maintaining our
competitive position in the health and fitness industry.
Trademarks
We own many trademarks including Nautilus
®
, Bowflex
®
, PowerRod
®
, Revolution
®
, TreadClimber
®
, SelectTech
®
, Trimline
®
, Airdyne
®
,
Mobia
®
and Universal
®
. Nautilus is the exclusive licensee under the mark Schwinn
®
for fitness products. We believe that having distinctive
trademarks which are readily identifiable by consumers is an important factor in creating a market for our products, maintaining a strong
company identity and developing brand loyalty among our customers. In addition, we have licensed certain third-parties to use the Nautilus and
Schwinn tradenames on commercial fitness products, for which we receive royalty income and expanded consumer awareness of our brands.
Each federally registered trademark is renewable indefinitely if the trademark is still in use at the time of renewal. We are not aware of any
material claims of infringement or other challenges to our trademark rights in our major markets.
Patents
We own a broad array of patents and patent rights, both issued and pending, covering our fitness equipment. These patents cover a variety of
technologies, some of which are utilized in the following products: TreadClimber specialized cardio machines; variable stride ellipticals;
selectorized dumbbells; and recumbent exercise bikes. Nautilus is the exclusive licensee to patents that cover the Bowflex Revolution home
gyms. Patent protection for these technologies extends as far as 2020. Expiration of these and other patents could trigger the introduction of
similar products by our competitors. None of our material patents expire in 2011.
Building our intellectual property portfolio is an important factor in maintaining our competitive position in the health and fitness equipment
industry. We have followed a policy of filing applications for U.S. and non-U.S. patents on utility and design inventions that we deem valuable
to our business. We protect our proprietary rights vigorously and take prompt, reasonable actions to prevent counterfeit products and other
infringement on our intellectual property.
BACKLOG
Historically, our backlog has not been a significant factor in our business. Our customer order backlog as of December 31, 2010 and 2009 was
approximately $3.2 million and $2.7 million, respectively.
SIGNIFICANT CUSTOMERS
No individual customer accounted for 10 percent or more of our consolidated net sales in the past two fiscal years.
ENVIRONMENTAL AND OTHER REGULATORY MATTERS
7