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Fitness Equipment

Fitness Equipment

INDUSTRIAL CODES

NAICS: 33-9920 Sporting Goods Manufacturing

SIC: 3949 Sporting and Athletic Goods Manufacturing

NAICS-Based Product Codes: 33-99207131, 33-99207141, and 33-99207198

PRODUCT OVERVIEW

Fitness equipment is a subset of the larger sporting goods sector. Fitness equipment includes items such as treadmills, free weights, weight machines, and elliptical trainers.

A treadmill is a device that consists of a moving belt on which a person walks or runs while remaining in one place. Treadmills were used as early as 1875 in the agricultural sector when animals were put on treadmills to help power butter churns or threshing machines. Cardiologist Robert Bruce and Wayne Quinton developed the first treadmill for medical use in 1952. Bruce later sold the design to Stairmaster, now known as Nautilus, who began to market the treadmill as a fitness device. Some of the earliest manufacturers include Tunturi, Aerobics, Inc., and Woodway. The earliest models consisted of a motor, belt, and a deck. In the 1980s and 1990s more advanced models included inclines, programmable workouts, and more durable decks. They could also transfer data from a PalmPilot.

Free weights such as dumbbells are not attached to any sort of machine. Dumbbells typically come in pairs and consist of a bar with weights attached to either end. Barbells, similar in construction to dumbbells, have adjustable weights. Because free weights are not attached to a machine, they require extra muscle exertion to stabilize each movement. As a result a weight trainer can gain greater muscle size and strength. However, it is more difficult to train specific muscles using free weights.

A weight-training machine uses a weighted pulley system to vary resistance. Some may offer a wide range of exercises while others may be designed to address a particular muscle group. A cable machine consists of a rectangular steel frame approximately 3 meters wide and 2 meters high, with a weight stack at each end. The cables that connect the handles to the weight stacks run through adjustable pulleys. A Smith machine consists of a barbell that sits on steel runners; the user may only move the weight up or down. A series of slots allow the barbell to be secured into place at any time, unlike a regular barbell. Other weight-training machines include butterfly machines, used for strengthening the chest muscles; lateral pull down machines, used for strengthening the muscles of the back, forearm, and the biceps; and leg presses, used for strengthening the leg muscles.

An elliptical trainer, also known as a cross trainer, is a stationary exercise machine used to simulate walking or running while remaining in place. Such devices first became popular in the 1990s, and are driven by leg power. The user also grips shoulder level handles and uses them in a push-pull motion to provide a secondary source of aerobic activity. The handles travel in a somewhat elliptical pattern, hence the name of the device. The basic features of elliptical machines include the drive system, the resistance system, and the stride length. Rear drives are considered superior to front end drives; the movement of their parts is much smoother. Inexpensive models have a resistance level that must be set manually and a preset stride length. Higher end models have automatic versions of these features.

Early Attitudes about Physical Fitness

Physical fitness was an important part of early civilizations. People gathered food, built shelter, and ensured the safety of the local village. While evidence of physical training exists in many ancient cultures, perhaps the Greeks have been the most influential to Western civilization. Herodicus (ca. 480 BC), a physician and athlete, strongly advocated proper diet and physical training. Hippocrates (460–377 BC), best known for his Oath of Medical Ethics, was regarded as the greatest physician of his day, advocating proper exercise and the importance of hygiene. Claudius Galenus or Galen (131–201 AD) was a physician whose writings on the anatomy were highly influential to Western cultures.

The concepts of proper diet and exercise remained highly influential throughout the eighteenth and nineteenth centuries. The first physical education classes began in schools in the nineteenth century. The first department of physical education at an American college was established at Amherst College in 1860. By 1950 there were over 400 colleges and universities in the United States offering a major course of study in the field of physical education.

In 1953 a controversial study was released called Muscular Fitness and Children. The study revealed that approximately 57 percent of children in the United States failed to achieve "minimum standards for health" compared to only 8.3 percent of European children. This study was released, it should be noted, as the United States was increasingly concerned about the rise of Communism and the Soviet Union. Young men needed to be fit for military combat, but young men of the United States, according to the study, appeared to be falling behind. In June 1956 President Eisenhower created the President's Council of Youth Fitness. President John F. Kennedy would later change the organization's name to the President's Council on Fitness to suggest that all Americans, not just young people, should be physically fit.

Modern Fitness

Some health clubs existed during the nineteenth century, although they were primarily private organizations. The Young Men's Christian Association (YMCA) was founded in 1844 in London, England. The first YMCA facility in the United States opened in Boston in 1851. The YMCA was, and still is, concerned with "the improvement of the spiritual, mental, social, and physical condition of young men." Eventually, this concern would expand to all people regardless of race, religion, or nationality. Early exercise classes included exercise drills, the precursor to aerobics. Members used wooden dumbbells and heavy medicine balls to maintain physical fitness. Swimming pools and bowling alleys were popular during the 1880s. Many sports that people currently play for fitness and recreation were invented at the YMCA: volleyball, racquetball, basketball, and football. In the twentieth century, the popularity of the YMCA waxed and waned through times of peace and times of war.

The fitness equipment market became popular in the 1950s and 1960s. In 1957 Universal Gym Equipment released the first multi-station, weight-training machine. The company, owned by Harold Zinkin, a former Mr. California, produced a machine with a bench, racked weights, and pulleys that allowed an athlete to perform a number of exercises safely. This machine is credited with introducing the concept of circuit weight training (moving from one exercise to another) to the fitness world. During the 1960s the growing computer and microprocessor industry helped Dr. Keene Dimick invent the first computerized stationary bike in 1968.

The 1970s saw a major fitness movement in the United States. Gas shortages prompted some people to take up bike riding; bike sales hit a decade high of 15 million bicycles in 1973. The sport of bodybuilding grew in popularity after the release of the documentary movie Pumping Iron in 1977, featuring Arnold Schwarzenegger. The first neighborhood gyms began to appear during this decade as well. Dr. Kenneth H. Cooper coined the term aerobics in a book of that title published in 1968. Jane Fonda and Richard Simmons helped bring this fitness activity into the mainstream in the 1980s. By one estimate, the number of aerobic participants in the United States grew from an estimated 6 million in 1978 to 22 million in 1987.

By the 1980s people weren't just exercising at the gym. Home gyms became more popular as people purchased exercise bikes and treadmills for home use. Jane Fonda's workout books and videos were influential in helping people to think about working out at home and not just at the gym.

The Next Wave of Equipment

Jerry Wilson created his Soloflex machine in 1978. Previous weight lifting machines from Nautilus or the Universal Gym were simply too heavy and cumbersome for home use. Wilson designed a system that used weight straps made from heavy-duty rubber, and was also small enough to fit into any home gym. Wilson advertised the Soloflex on infomercials and with a number of ads starring model Scott Madsen. The device became popular and 30,000 machines were sold in 1984. Tessema Dosho Shifferaw invented the Bowflex exercise machine in 1979. While the Soloflex used a series of rubber straps in its weight system, Bowflex used a power rod system that offered users increasing levels of weight resistance. Bowflex of America was formed in 1986. The company began a series of direct marketing campaigns that helped propel sales. The Stairmaster was another popular fitness machine on the market in the 1980s.

MARKET

According to the Sporting Goods Manufacturers Association (SGMA), manufacturers shipped $771 million in fitness equipment to the home market in 1988. The market grew quickly during the following decades. Manufacturer shipments totaled $990 million in 1990, $2.9 billion in 2000, and $3.5 billion in 2006. New products helped drive industry sales as the first elliptical machines and cross country machines arrived on the market during the 1990s. Elliptical machines became popular quickly because they put less stress on the joints than stair climbers. Meanwhile older types of fitness equipment saw dropping sales. According to the SGMA, consumers purchased 10.4 million stair climbers in 1989; by 1997 only 300,000 were sold. Stationary bike sales fell from 3.1 million to 900,000 over the same period. However, treadmills remained with sales increasing from 800,000 to 3.1 million during this period. Abdominal machines became a hot trend in the 1990s; numerous fitness experts and their celebrity endorsers appeared on infomercials talking about the importance of this body part. Abdominal exercise machines were the fastest-growing product category in 1996 with sales jumping 200 percent, from $75 million in 1995 to $225 million in 1996. In 2006 the total fitness equipment market was valued at $4.7 billion, 76 percent of which went to the home market and the remainder going to clubs and institutions.

Health club membership grew from 17.3 million in 1987 to 32.8 million in 2000, according to the International Health, Racquet and Sports Club Association. By January 2007 that number reached 42.7 million. Attendance increased as well; club members went to the gym an average of 72 days per year in 1987. This figure was up to 92 days in 2005. The number of members who attended the gym more than 100 days per year increased from 5.3 million to 17.6 million over this same time period.

Total exercise equipment sales were $4.7 billion in 2006, according to the SGMA, up from 3.7 billion in 2000. Treadmill sales steadily grew from 2000 to 2005 before declining in 2006 as can be seen in Figure 93. Home gyms and free weights gained steadily throughout this time period. Elliptical machines had steadily increasing sales from 2002 to 2005 as well and then sales jumped dramatically in 2006, more than tripling from $201 million in 2005 to $725 million the following year.

The global fitness equipment market was valued at approximately $7.5 billion in 2005, according to estimates from the sporting goods company Amer Sports. The North American commercial and consumer markets accounted for 35 percent of this total. ICON Fitness was the leading producer of fitness equipment worldwide with sales of $852 million in 2005, followed by Nautilus with sales of $617 million. Life Fitness was the third largest producer with sales of $593 million. Technogym and Precor rounded out the top five with sales of $333 million and $311 million, respectively.

KEY PRODUCERS/MANUFACTURERS

ICON Health & Fitness, Inc.

Scott Watterson and Gary Stevenson founded Weslo, Inc. in 1977. In the beginning their company imported kitchenware, tableware, and marble products. The company's entry into the health and fitness industry began with the manufacturing of trampolines. The company then expanded their business into treadmills, exercise bikes, rowing machines, and home gyms. The company leaders decided to focus solely on fitness equipment and sold off its Weslo business in 1988. Welso was then acquired by investment bank Bain Capital, who incorporated ICON Fitness in November of 1994 from several entities: Weslo, ProForm Fitness, Legend Products, Inc., and American Physical Therapy Inc.

ICON Fitness then acquired the HealthRider in 1996 and NordicTrack in 1999. In 2005 ICON produced nearly 4 million treadmills, incline trainers, elliptical machines, stationary bikes, home gyms, weight benches, yoga and Pilates equipment, and other fitness accessories. ICON has facilities located in China, Europe, Canada, and the United States. Its popular brands include ProForm, HealthRider, Reebok, Image, Weider, JumpKing, and NordicTrack. It employed nearly 5,000 people in 2006.

Nautilus Inc.

The company's origin began with the creation of Bow Flex of America Inc. in 1986 and found success with its Bowflex home workout machine which was patented in 1987. The company entered into a partnership with Schwinn Cycling and Fitness. Through this partnership the company released the Schwinn Bowflex. The partnership lasted until Schwinn declared bankruptcy in 1993. The company continued to refine its products and had success in the direct marketing industry. By the late 1990s they acquired the Nautilus, Stairmaster, and Schwinn exercise brands. The company manufactures and markets fitness equipment for commercial and home use under the Bowflex, Nautilus, Stairmaster, Schwinn, and Trimline brand names. Its Bowflex equipment is marketed to home users through television ads, the Internet, and direct marketing efforts. They have also moved into the fitness apparel market with its acquisition of Pearl Izumi. The company employs approximately 1,500 people.

Life Fitness

Keene Dimick, Ph.D., a chemist and inventor, developed the Lifecycle exercise bike, the first computerized fitness equipment. Ray Wilson and Augie Nieto purchased the rights to the device for $50,000, and introduced the Lifecycle 2000 exercise bike for commercial use. Life Fitness competes primarily in the premium segment with approximately 80 percent of its sales in the commercial market and the remaining 20 percent in the home market, and employs approximately 600 people.

Technogym

Technogym was founded in Seattle, Washington in 1996. The company manufactures products primarily for gyms and corporate wellness centers. It has equipment in 35,000 fitness centers and 20,000 homes worldwide.

Precor

Precor was founded in 1981 in Woodinville, Washington. Precor was sold to Finnish firm Amer Sports in 2002, which counts sporting goods brands Wilson and Salomon among its holdings. Precor receives two-thirds of its sales from the club/institutional segment. The company has 733 employees.

Cybex

This company was founded in 1947 and is based in Medway, Massachusetts. Cybex offers over 150 different models of equipment to the commercial and consumer markets. Cybex commercial products are sold to health clubs, hotels, pro sports teams, and other commercial users primarily through Cybex direct sales; consumer products are sold through specialty fitness dealers. Internationally Cybex products are sold through distributors in 87 countries across the globe and a direct sales force in the United Kingdom. The company has two manufacturing facilities and a workforce of 560 employees.

MATERIALS & SUPPLY CHAIN LOGISTICS

Fitness equipment is primarily made of aluminum, carbon steel, or some other metal alloy. Such metals are preferred because they are both light and durable. The manufacturing of an exercise bike, for example, begins with the construction of the bike frame from one of these metals. The frame is then powder coated and painted to create a durable, attractive finish. The structural elements require metal, plastic, or rubber and are manufactured by injection molding, roll wrapping, lay-up, or similar processes. The various parts are then attached: drive belts, wheels, cranks, pedal straps, handrails, and flywheels. Epoxy adhesives or metal brackets and bolts may be used for this step. Control panels with liquid crystal displays are also added. Decals indicating the name of the company or brand are then added.

The basic parts of a treadmill are the rollers, the belt, the deck, and the motor to turn the belt. The construction of the rollers is of particular importance for they effect wear on the bearings and belt. High-end equipment has more powerful motors and a more resilient track to provide better cushioning for the runner.

Free weights are made from iron, steel, or hard rubber. The bar is made from iron, kevlar, or a metal alloy that would ensure durability and the product's straightness. In high-end home gyms the materials used can be expensive: laser-cut stainless steel dumbbells, hand-made weight pulleys, and leather upholstered bench press seats. Yoga rooms might feature sandstone coverings, onyx decking, sea grass, radiant heating built into the floor, and expensive cabinetry.

Supply Chain Issues

The competitive fitness equipment market has prompted companies to make various improvements. Companies once used the Internet merely to address issues such as the shipping status or availability of its products. Companies now use the Internet to collaborate on new product designs, and to monitor customer opinions and market trends. Some companies have introduced policies to streamline production efforts and reduce waste, planning out new shipment routes to reduce costs, for example. Supply chain software helps manufacturers manage their inventories and orders more efficiently. Software installations have also smoothed out the overall production process. For example, Life Fitness had to continually run tests to ensure that their products were meeting quality standards. Software installed in July 2007 now alerts production managers through email, Blackberries, and similar devices only if a problem has been discovered.

DISTRIBUTION CHANNEL

Fitness equipment makers market their products through a number of methods, including direct marketing, sporting goods stores, specialty dealers, mail order, and online sites. As stated, the home market has become the largest sector for fitness equipment firms. Health clubs are the next largest category, many of which are independently owned. Because of this many health club owners are bypassing specialty dealers and making purchases and service agreements directly with the manufacturer. The hospitality industry is another market for fitness equipment makers. Many hotels began adding workout facilities in the 1990s as an added amenity for their customers. Gyms and saunas can be an expensive but ultimately lucrative business for hotels. Hotel revenue from health clubs grew 4.07 percent from 1999 to 2005, according to PKF Hospitality Research. Room revenue grew 1.42 percent and revenue from golf fell 1.27 percent over the same period.

There are an estimated 8,500 senior living centers and apartment complexes in the United States, which is a growing market for fitness firms. The medical community has repeatedly stated the importance of exercise in maintaining good health, particularly for seniors. A survey by Vital Health found that nearly two-thirds of those in senior living facilities used their wellness centers (centers that offer many health services in addition to fitness opportunities) at least three times a week.

Other popular markets include country clubs, academic institutions, and hospitals. Some businesses have entered into partnerships with nearby gyms or installed their own. The idea behind this is that an employee in good health will ultimately cut down on the health care expenses of the company. Some airports have also installed workout facilities.

Sales in Retail Channels

The home market has become the largest sector of the fitness equipment market. According to a July 2004 survey by the National Sporting Goods Association, department stores gained considerable market share in the industry between 1998 and 2003. Their share of treadmill sales, for example, increased from 38 percent to 54.1 percent during this period. Discount stores saw their share of unit sales drop from 13.7 percent to 7.3 percent. Specialty fitness stores lost market share as well, dropping from 6.3 percent to 6.2 percent. Sporting goods stores saw a modest drop in sales as well; their market share dropped from 15.1 percent to 15.0 percent over this period.

Department stores grabbed market share in the multi-purpose home gym market as its unit share increased from 15.6 percent to 24.0 percent from 1998 to 2003. Discount store unit sales dropped from 20.8 percent in 1998 to 7.3 percent over the same period. Specialty fitness stores increased from 4.2 percent to 5.2 percent. Sporting good stores saw their share jump from 15.6 percent in 1998 to 29.4 percent in 2003.

Department stores and sporting good stores saw similar market share gains in other sectors of the fitness equipment market. Sears seemed to have identified the fitness equipment trend early on, they were among the first retailers to stock elliptical trainers. They also marketed their fitness equipment well. Prominent displays featured the higher end equipment; these displays allowed customers to test the equipment as well. Customers were also comfortable making their first fitness equipment purchase in a familiar department store. Specialty retailing was still a developing industry in the 1990s. Shopping at a new specialty store (there were only 18 NordicTrack Fitness at Home stores open by the end of 1992) was intimidating to some customers.

Many fitness products aree sold through infomercials. Infomercials are commercials that might run as long as a regular television show and are devoted to promoting a particular product or service. Marketdata Enterprises, a research firm, estimated that they generated $2.6 billion in sales in 2004; just under half of the products sold (48%) were of the self-improvement category (fitness, diet books, etc.). The Bowflex is a major advertiser in this market. Other leading products have been the Air Climber, the Gazelle Free Style Elite, and the Slendertone Ab Belt. By one estimate one in 60 of these advertisements is believed to turn a profit. Other distribution channels have proven popular for fitness equipment makers. Mail order purchases represents approximately 10 percent of fitness equipment sales. Many manufacturers have online sites through which they sell their products. There are also third-party vendors that sell these products, often at a discount.

KEY USERS

Approximately 70 percent of health club members were between 18 and 54 years of age in 2005. Women outnumber men at health clubs. A 2005 estimate by the International Health, Racquet & Sports Club Association estimated that women represented 57 percent of health club memberships. A major reason for this division may be the growing popularity of women-only fitness clubs.

According to the National Sporting Goods Association (NSGA), millions of Americans participate in fitness programs. In May 2007 the NSGA released a list of the most popular fitness activities. They defined core participants as those who participated in the activity at least 50 times per year, or at least once per week. Data from 2000 also show the types of activities pursued by men and women. It shows that men and women seem to favor resistance training nearly equally. Other activities are favored by one sex over the other. Figure 95 presents some of the participation figures by gender studied by the NSGA in its 2001 study.

Fitness Equipment Purchases

According to a 2001 study by the National Sporting Goods Association 32 percent of fitness equipment purchases were made by those 35-44 years of age. Those 45-64 years of age made approximately 29 percent of purchases followed by those 25-34 years of age with 22 percent of purchases. People under 24 years of age made 8 percent of purchases. Seven percent of purchases were made by seniors. Women made 52 percent of the purchases. Men were more likely to purchase home gyms and weight sets. Women were more likely to purchase elliptical trainers. Households with incomes of at least $100,000 per year represent roughly 14 percent of U.S. households. They purchased 54.4 percent of elliptical trainers, 30.6 percent of treadmills, and 25.2 percent of multi-purpose home gyms in 2001.

ADJACENT MARKETS

There were 29,069 health clubs in the United States in 2006, according to the International Health, Racquet & Sports Club Association. This figure has risen steadily since 1998, when there were 13,000 clubs. Membership in 2006 was 41.3 million; another 23.6 million people visited health clubs as non-members, meaning they pay a fee to the club or institution for the use of their facilities. The Denver, Colorado, region had the greatest percent-age of its population belonging to a health club; a quarter of the population in that metro area (25.1%) belonged to some sort of workout facility. Columbus, Ohio, was a close second with 24.9 percent of its population belonging to a health club. The industry saw revenues of $17.6 billion in 2006. The health club market is fragmented. The leader based on revenues is 24 Hour Fitness, with revenues of $1.1 billion in 2005 and a 7.1 percent market share. One of the trends in the industry is to appeal to target markets. For example, some gyms such as Curves target women. Miracles Fitness and Club 50 are aimed at men and women over 50 years of age.

RESEARCH & DEVELOPMENT

As technology advances new features are added to fitness equipment. New equipment tracks weight lifting efforts and measures progress. New commercial treadmills offer hand and chest sensors to monitor heart rates more accurately. Some vary the incline automatically to simulate running in real world conditions. Some treadmills come with entertainment centers with liquid crystal displays. Newer treadmills include better shock absorbers and minimize noise from the treadmill motor and belt. Some equipment is aimed at seniors and their special needs. For examples, the Resistance Chair Exercise System from Fitter International Inc., is a home or light clinical exercise system designed for the mature adult market. The chair is designed for a variety of rehabilitation applications, from chest and shoulder mobility to balance and lower-body stabilization.

CURRENT TRENDS

New exercise machinery and equipment comes onto the market regularly although only a fraction of those new devices gain a staying power. Trends in the last decade have favored equipment and small machines that can be easily used in the home and reasonably easily moved for storage. Travelers, too, have encouraged a trend in the equipping of hospitality venues.

Hotel guests increasingly demand the same workout experiences on the road as they do at home. Hotels have responded. Hilton, Doubletree, and Embassy Suites hotels in North America added new equipment in 2006 and 2007. Hyatt spent $8 million on fitness equipment in 2006, and offers in-room yoga mats, on-call personal trainers, and workout videos as part of its Stay Fit program. W Hotels started selling Puma athletic gear; it offers guests Puma bikes, route maps, and iPods loaded with running guides.

TARGET MARKETS & SEGMENTATION

Baby Boomers are credited with helping to kick off the fitness movement of the 1970s. Exercising with equipment and weekly trips to the health club may have been initially perceived to be just for the wealthy. To be sure, a gym membership and workout equipment require a considerable expenditure, but in the twenty-first century fitness was increasingly seen as a necessary part of life, not just a luxury. As the nature of work has changed—shifting from an agricultural to a manufacturing economy and then from manufacturing to a service-oriented economy—more U.S. workers are employed in occupations that require little physical activity. Consequently, it has become necessary for many to schedule physical activity into their daily or weekly routines in order to maintain a level of activity sufficient to support health. Health clubs have responded to these changes by designing flexible membership programs and offering a wide range of fitness programs—a something for everyone philosophy.

RELATED ASSOCIATIONS & ORGANIZATIONS

50-Plus Fitness Association, http://www.50plus.org

Aerobics and Fitness Association of America, http://www.afaa.com

International Health, Racquet & Sports Club Association, http://www.ihrsa.org

National Association of Health and Fitness, http://www.physicalfitness.org

Sporting Goods Manufacturers Association, http://www.sgma.com

BIBLIOGRAPHY

"About the Industry." International Health, Racquet & Sports Club Association. Available from 〈http://cms.ihrsa.org/IHRSA/viewPage.cfm?pageId=149〉.

Adams, Mike. "U.S. Weight Loss Market Worth $46.3 Billion in 2004." Newstarget.com. 30 March 2005.

"Back Exercises: Machine Lateral Pull-Down." Full Fitness.net. Available from 〈http://www.fullfitness.net/routines/machine_lateral_pulldown.html〉.

Byrne, Paul J. Amer Sport Capital Markets Day. Precor USA. 17 May 2005. Available from 〈http://www.amersports.com/presentations/en_US/Amer_2005_report_cm_2_en.pdf〉.

"Core Participants: the Focus of SGMA's New Sports Participation Study." Sporting Goods Manufacturing Association. 2002. Available from 〈http://www.sgma.com〉.

"Health Club Member Attendance." International Health, Racquet & Sports Club Association. Available from 〈http://cms.ihrsa.org/IHRSA/viewPage.cfm?pageId=615〉.

Higgins, Michelle. "Hotels Tone Up Their Treadmills." New York Times. 26 November 2006.

Kratzman, Val Arthur. US Fitness Industry. Tekes National Technology Agency. Available from 〈http://www.tekes.fi/julkaisut/US_Fitness.pdf〉.

Macmillan, Douglas. "Home Gyms Muscle Up." Business Week Online. 4 December 2006.

Malloy, Courtney L., Ph.D. and Harold N. Urman, Ph.D., "Fitness and Recreation Services." Vital Research September 2005.

"Manufacturers Sales by Category Report—2007 Edition." Sporting Goods Manufacturing Association. Available from 〈http://www.sgma.com〉.

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