What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-05-06 compared with 2020-11-10 · 159 added, 259 removed, 416 unchanged (50% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

October 2, January 3

April 2, January 1,

Current assets:

Cash and cash equivalents $ 291,471 $ 245,764

Accounts receivable (net of allowances of $ 837 and $ 810 at October 2, 2020 and January 3, 2020, respectively)

Accounts receivable (net of allowances of $ 803 and $ 663 at April 2, 2021 and January 1, 2021, respectively)

137,022 121,194

16 unchanged sentences

Total current liabilities 198,034 165,389

Line of credit — 68,000

Long-term debt, less current portion 374,933 377,088

2 unchanged sentences

Commitments and contingencies (Refer to Note 9 - Commitments and Contingencies )

Redeemable non-controlling interest — 15,719

Stockholders’ equity

Preferred stock, $ 0.001 par value — 10,000 authorized and no shares issued or outstanding as of October 2, 2020 and January 3, 2020

Preferred stock, $ 0.001 par value — 10,000 authorized and no shares issued or outstanding as of April 2, 2021 and January 1, 2021

Common stock, $ 0.001 par value — 90,000 authorized;

42,601 shares issued and 41,712 outstanding as of October 2, 2020;

42,854 shares issued and 41,964 outstanding as of April 2, 2021;

42,692 shares issued and 41,802 outstanding as of January 1, 2021

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Treasury stock, at cost;

890 common shares as of October 2, 2020 and January 3, 2020

890 common shares as of April 2, 2021 and January 1, 2021

( 13,754 ) ( 13,754 )

Accumulated other comprehensive (loss) income ( 32 ) 150

Accumulated other comprehensive income 2,689 1,068

Retained earnings 432,967 394,981

Total stockholders’ equity 762,291 719,171

Total liabilities, redeemable non-controlling interest and stockholders’ equity $ 1,260,526 $ 609,316

Total liabilities and stockholders’ equity $ 1,357,098 $ 1,286,561

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(in thousands, except per share data)

For the three months ended For the nine months ended

October 2, September 27, October 2, September 27,

2020 2019 2020 2019

For the three months ended

April 2, April 3,

Sales $ 281,136 $ 184,361

8 unchanged sentences

Income from operations 45,856 11,567

Other expense, net:

Interest and other expense, net:

Interest expense 2,904 1,847

Other (income) expense ( 189 ) ( 37 ) ( 57 ) 532

Other expense, net 2,102 711 6,973 3,114

Other expense 959 62

Interest and other expense, net 3,863 1,909

Income before income taxes 41,993 9,658

13 unchanged sentences

(in thousands)

For the three months ended For the nine months ended

October 2, September 27, October 2, September 27,

2020 2019 2020 2019

For the three months ended

April 2, April 3,

Net income $ 37,986 $ 8,738

Other comprehensive (loss) income

Other comprehensive income (loss)

Interest rate swap, net of tax effects 2,145 —

Foreign currency translation adjustments, net of tax effects ( 524 ) ( 940 )

Other comprehensive (loss) income ( 165 ) ( 352 ) ( 182 ) ( 197 )

Other comprehensive income (loss) 1,621 ( 940 )

Comprehensive income 39,607 7,798

5 unchanged sentences

(in thousands)

Common Stock Treasury Additional paid-in capital Accumulated other comprehensive (loss) income Retained earnings Total stockholders' equity Redeemable non-controlling interest

Common Stock Treasury Additional paid-in capital Accumulated other comprehensive income (loss) Retained earnings Total stockholders' equity Redeemable non-controlling interest

Shares Amount Shares Amount

Balance - December 28, 2018 38,881 $ 38 890 $ ( 13,754 ) $ 116,019 $ ( 784 ) $ 219,686 $ 321,205 $ 14,282

Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding 180 — — — ( 1,229 ) — — ( 1,229 ) —

Stock-based compensation expense — — — — 1,729 — — 1,729 —

Other comprehensive (loss) income — — — — — ( 159 ) — ( 159 ) —

Adoption of new accounting standard, net of taxes — — — — — — ( 228 ) ( 228 ) —

Net income — — — — — — 18,103 18,103 299

Balance - March 29, 2019 39,061 $ 38 890 $ ( 13,754 ) $ 116,519 $ ( 943 ) $ 237,561 $ 339,421 $ 14,581

Balance - January 3, 2020 39,448 $ 39 890 $ ( 13,754 ) $ 123,274 $ 150 $ 312,491 $ 422,200 $ 15,719

Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding 45 — — — ( 2,047 ) — — ( 2,047 ) —

1 unchanged sentence

Stock-based compensation expense — — — — 1,921 — — 1,921 —

Other comprehensive (loss) income — — — — — 314 — 314 —

Net income — — — — — 22,921 22,921 441

Balance - June 28, 2019 39,274 $ 38 890 $ ( 13,754 ) $ 123,043 $ ( 629 ) $ 260,482 $ 369,180 $ 15,022

Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding 140 — — — ( 3,300 ) — — ( 3,300 ) —

Stock-based compensation expense — — — — 1,605 — — 1,605 —

Other comprehensive (loss) income — — — — — ( 352 ) — ( 352 ) —

Other comprehensive loss — — — — — ( 940 ) — ( 940 ) —

Net income — — — — — — 8,250 8,250 488

Balance - September 27, 2019 39,414 $ 38 890 $ ( 13,754 ) $ 121,348 $ ( 981 ) $ 289,969 $ 396,620 $ 15,711

Balance - April 3, 2020 39,493 $ 39 890 $ ( 13,754 ) $ 123,470 $ ( 790 ) $ 320,741 $ 429,706 $ 16,207

The accompanying notes are an integral part of these consolidated statements.

2 unchanged sentences

(in thousands)

Common Stock Treasury Additional paid-in capital Accumulated other comprehensive (loss) income Retained earnings Total stockholders' equity Redeemable non-controlling interest

Common Stock Treasury Additional paid-in capital Accumulated other comprehensive income Retained earnings Total stockholders' equity Redeemable non-controlling interest

Shares Amount Shares Amount

1 unchanged sentence

Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding 162 — — — 598 — — 598 —

Stock awards issued for business acquisition — — — — 322 — — 322

Stock-based compensation expense — — — — 2,915 — — 2,915 —

Other comprehensive (loss) income — — — — — ( 940 ) — ( 940 ) —

Other comprehensive income — — — — — 1,621 — 1,621 —

Net income — — — — — — 37,986 37,986 —

Balance - April 2, 2021 42,854 $ 42 890 $ ( 13,754 ) $ 340,347 $ 2,689 $ 432,967 $ 762,291 $ —

Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding 74 — — — ( 2,301 ) — — ( 2,301 ) —

Issuance of common stock, net 2,760 2 — — 198,234 — — 198,236 —

Adjustment to the fair value of non-controlling interest — — — — — — ( 8,184 ) ( 8,184 ) 8,184

Stock-based compensation expense — — — — 2,076 — — 2,076 —

Other comprehensive (loss) income — — — — — 923 — 923 —

Net income — — — — — 12,608 12,608 584

Balance - July 3, 2020 42,327 $ 41 890 $ ( 13,754 ) $ 321,479 $ 133 $ 325,165 $ 633,064 $ 24,975

Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding 138 1 — — ( 254 ) — — ( 253 ) —

Redeemable non-controlling interest 136 — — — 11,169 — — 11,169 ( 24,975 )

Stock-based compensation expense — — — — 2,092 — — 2,092 —

Other comprehensive (loss) income — — — — — ( 165 ) — ( 165 ) —

Net income — — — — — — 38,020 38,020 —

Balance - October 2, 2020 42,601 $ 42 890 $ ( 13,754 ) $ 334,486 $ ( 32 ) $ 363,185 $ 683,927 $ —

The accompanying notes are an integral part of these consolidated statements.

2 unchanged sentences

(in thousands)

For the nine months ended

October 2, 2020 September 27, 2019

For the three months ended

April 2, 2021 April 3, 2020

OPERATING ACTIVITIES:

Net income $ 37,986 $ 8,738

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization 10,069 5,829

2 unchanged sentences

Amortization of loan fees 411 389

Loss on extinguishment of debt — 516

Changes in operating assets and liabilities, net of effects of acquisition of business:

Changes in operating assets and liabilities, net of acquisition of business:

Accounts receivable ( 16,536 ) 14,391

4 unchanged sentences

Accrued expenses and other liabilities 2,912 ( 3,191 )

Net cash provided by operating activities 99,801 30,924

Net cash provided by (used in) operating activities 66,028 ( 33,485 )

INVESTING ACTIVITIES:

1 unchanged sentence

Acquisition of businesses, net of cash acquired — ( 329,209 )

Acquisition of other assets ( 250 ) —

Net cash used in investing activities ( 16,885 ) ( 342,050 )

5 unchanged sentences

Installment on purchase of non-controlling interest ( 1,850 ) —

Proceeds from sale of common stock, net 198,236 —

Repurchases from stock compensation program, net ( 4,602 ) ( 6,793 )

Net cash provided by financing activities 510,019 5,841

Proceeds (repurchases) from stock compensation program, net 598 ( 2,047 )

Net cash (used in) provided by financing activities ( 3,752 ) 408,332

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 316 ( 351 )

5 unchanged sentences

(in thousands)

For the nine months ended

For the three months ended

SUPPLEMENTAL CASH FLOW INFORMATION:

October 2, 2020 September 27, 2019

April 2, 2021 April 3, 2020

Cash paid during the period for:

3 unchanged sentences

Non-cash operating activities:

Refinancing of the Second Amended and Restated Credit Facility $ — $ 88,875

Right-of-use assets obtained in exchange for lease obligations $ 1,160 $ 4,336

Acquisition of business in exchange for equity $ — $ 7,167

Non-cash investing activities:

Capital expenditures included in accounts payable $ 3,633 $ 3,805

Acquisition of non-controlling interest in exchange for equity and installment payments $ 21,975 $ —

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.

Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the fiscal year ended January 3, 2020 included in the Company’s Annual Report on Form 10-K, as filed with the SEC on March 3, 2020.

Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the fiscal year ended January 1, 2021 included in the Company’s Annual Report on Form 10-K, as filed with the SEC on February 25, 2021.

In management’s opinion, the unaudited interim condensed consolidated financial statements reflect all adjustments, which are of a normal and recurring nature, that are necessary for a fair presentation of financial results for the interim periods presented.

Operating results for any quarter are not necessarily indicative of the results for the full fiscal year.

The Company operates on a 52-53 week fiscal calendar.

For 2020 and 2019, the Company's fiscal year will end or has ended on January 1, 2021 and January 3, 2020, respectively.

The twelve month periods ended January 1, 2021 and January 3, 2020, will include or have included 52 and 53 weeks, respectively.

The three and nine month periods ended October 2, 2020 and September 27, 2019 each included 13 weeks and 39 weeks, respectively.

Fiscal Year Calendar - The Company operates on a 52-53 week fiscal year calendar.

For 2021 and 2020, the Company's fiscal year will end or has ended on December 31, 2021 and January 1, 2021, respectively.

The twelve month periods ended December 31, 2021 and January 1, 2021, will include or have included 52 weeks.

The three month periods ended April 2, 2021 and April 3, 2020 each included 13 weeks.

Principles of Consolidation - These condensed consolidated financial statements include the Company and its subsidiaries.

All intercompany transactions and balances have been eliminated in consolidation.

Summary of Significant Accounting Policies - There have been no changes to our significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended January 3, 2020, as filed with the SEC on March 3, 2020 that have had a material impact on our condensed consolidated financial statements and related notes.

Summary of Significant Accounting Policies - There have been no changes to our significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended January 1, 2021, as filed with the SEC on February 25, 2021 that have had a material impact on our condensed consolidated financial statements and related notes.

Revenue Recognition - Revenues are generated from the sale of performance-defining products and systems to customers worldwide.

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For larger OEMs, the Company may also enter into master agreements.

Revenues exclude sales tax.

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share amounts)

Provisions for discounts, rebates, sales incentives, returns, and other adjustments are generally provided for in the period the related sales are recorded, based on management’s assessment of historical trends and projection of future results.

2 unchanged sentences

Measuring the material rights requires judgments including forecasts of future sales and product mix.

At January 3, 2020, the balance of deferred revenue related to pricing provisions was $ 172 which was recognized as revenue during the nine months ended October 2, 2020.

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share amounts)

Segments - The Company has determined that it has a single operating and reportable segment;

The Company considers an operating segment to be a component of the Company for which separate financial information is available, that is evaluated regularly by the Company’s chief operating decision maker in deciding how to allocate resources and in assessing performance.

manufacturing, sale and service of performance-defining products.

The Company considers operating segments to be components of the Company in which separate financial information is available that is evaluated regularly by the Company’s chief operating decision maker in deciding how to allocate resources and in assessing performance.

The chief operating decision maker for the Company is the Chief Executive Officer.

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Certain Significant Risks and Uncertainties - The Company is subject to those risks common in manufacturing-driven markets, including, but not limited to, competitive forces, dependence on key personnel, customer demand for its products, the successful protection of its proprietary technologies, compliance with government regulations, and the possibility of not being able to obtain additional financing when needed.

Additionally, the Company has been impacted by the recent coronavirus (“COVID-19”) pandemic.

Additionally, the Company has been impacted by the ongoing coronavirus (“COVID-19”) outbreak.

The global outbreak of COVID-19 has negatively affected the U.S.

and global economy, disrupted global supply chains, resulted in significant travel and transport restrictions, including mandated closures and orders to “shelter-in-place,” and created significant disruption of the financial markets.

The Company’s manufacturing facilities in North America have been affected by local and state “shelter-in-place” orders including the temporary suspension of non-essential operations in certain facilities.

The Company took actions to manage costs during this time by enacting temporary executive pay cuts and furloughs, curtailing non-essential capital expenditures, and reducing expenses.

Despite the Company’s efforts to manage and remedy these impacts to the Company, the ultimate impact and the extent to which the COVID-19 pandemic will continue to affect the business, results of operation and financial condition is difficult to predict and depends on numerous evolving factors outside of the Company’s control, including:

1 unchanged sentence

government, social, business and other actions that have been and will be taken in response to the pandemic;

increases in COVID-19 case counts;

any additional waves of the virus, availability and ultimate efficacy of the vaccine on the new variants of the virus;

and the effect of the pandemic on short- and long-term general economic conditions.

8 unchanged sentences

(in thousands, except per share amounts)

Recent Accounting Pronouncements - In February 2016, the FASB issued accounting standards update ("ASU") 2016-02, Leases, which supersedes the existing guidance for lease accounting.

To meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases, this ASU requires lessees to recognize most leases on the balance sheet as right-of-use assets and lease liabilities.

The Company adopted this guidance as of the beginning of the first quarter of fiscal year 2019, with a cumulative effect adjustment to the opening balance of retained earnings at December 28, 2018 with no restatement of comparative periods’ financial information ("current-period adjustment method").

Additionally, the Company adopted this guidance using practical expedients with respect to the assessment of embedded leases, lease classification, and initial indirect costs for expired and existing leases.

The Company also elected the practical expedient related to treating lease and non-lease components as a single lease component for all of its leases and elected a policy exclusion permitting leases with an original lease term of less than one year to be excluded from the right-of-use assets and lease liabilities.

The Company did not use the hindsight practical expedient to adopt this guidance.

The Company recorded a cumulative effect adjustment of $ 13,637 to operating lease right-of-use assets, $ 13,937 to operating lease liabilities, and $ 300 gross ($ 228 net of taxes) to the opening balance of the Company's retained earnings to reflect the cumulative effect of the adoption of the standard.

This standard did not have a material impact on our consolidated income statements.

In June 2016, the FASB issue ASU 2016-13, Financial Instruments:

Credit Losses, which adds an impairment model that is based on expected losses rather than incurred losses.

Under this standard, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses.

The Company adopted ASU 2016-13 effective in the first quarter of fiscal year 2020 using the aging method, which calculates the allowance based on how long a receivable has been outstanding, taking into account the historical credit loss rate and adjusting for both current conditions and forecasts of economic conditions into that expected credit loss rate.

The adoption of ASU 2016-13 did not have a material impact on the Company's consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows:

Classification of Certain Cash Receipts and Cash Payments, which clarifies the presentation of certain transactions, including but not limited to contingent consideration payments made after a business combination and debt prepayment and extinguishment costs in the cash flow statement.

The Company adopted ASU 2016-15 effective in the first quarter of fiscal year 2019.

The adoption of ASU 2016-15 did not have a material impact on the Company's consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement, which modifies the disclosure requirements of fair value measurements in Topic 820.

This standard is effective for fiscal years beginning after December 15, 2019.

The Company adopted ASU 2018-13 effective in the first quarter of fiscal year 2020.

The adoption of ASU 2018-13 did not have a material impact on the Company's consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other:

Internal-Use Software, which helps simplify how entities evaluate the accounting for costs paid by a customer in a cloud computing arrangement that is a service contract.

Recent Accounting Pronouncements - In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which helps simplify how entities account for income taxes by removing various exceptions related to the recognition of deferred tax liabilities and updating other tax computation requirements.

This standard is effective for fiscal years beginning after December 15, 2020 and early adoption is permitted.

1 unchanged sentence

The adoption of ASU 2019-12 did not have a material impact on the Company's consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which helps simplify how entities account for income taxes by removing various exceptions related to the recognition of deferred tax liabilities and updating other tax computation requirements.

This standard is effective for fiscal years beginning after December 15, 2020 and early adoption is permitted.

The Company is currently assessing the impact this guidance will have on its consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Facilitation of Effects of Reference Rate Reform on Financial Reporting, which was created in response to concerns about structural risks of interbank offered rates ("IBORs") and the risk of cessation of the London Interbank Offered Rate ("LIBOR").

This standard provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met.

This standard is effective for all entities as of March 12, 2020 through December 31, 2022.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements.

The amendments in ASU 2020-10 contain improvements to the Codification by including disclosure guidance in appropriate disclosure and ensuring that all guidance that requires or provides an option for an entity to provide information in the notes to financial statements is codified in the Disclosure Section of the Codification.

The ASU also provides clarification to various codification topics to improve consistency in guidance application.

The amendments are effective for interim and annual reporting periods in fiscal years beginning after December 15, 2020, with early adoption permitted.

The Company adopted ASU 2020-10 effective in the first quarter of fiscal year 2021.

The adoption of ASU 2020-04 did not have a material impact on the Company's consolidated financial statements.

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share amounts)

The adoption of ASU 2020-10 did not have a material impact on the Company's consolidated financial statements and related disclosures.

The following table summarizes total sales by product category:

For the three months ended For the nine months ended

October 2, 2020 September 27, 2019 October 2, 2020 September 27, 2019

For the three months ended

April 2, 2021 April 3, 2020

Powered Vehicles $ 162,747 $ 120,526

2 unchanged sentences

The following table summarizes total sales by sales channel:

For the three months ended For the nine months ended

October 2, 2020 September 27, 2019 October 2, 2020 September 27, 2019

For the three months ended

April 2, 2021 April 3, 2020

OEM $ 151,480 $ 103,748

2 unchanged sentences

The following table summarizes total sales generated by geographic location of the customer:

For the three months ended For the nine months ended

October 2, 2020 September 27, 2019 October 2, 2020 September 27, 2019

For the three months ended

April 2, 2021 April 3, 2020

North America $ 180,483 $ 130,622

3 unchanged sentences

Total sales $ 281,136 $ 184,361

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share amounts)

Remaining performance obligations represent the transaction price of contracts, generally considered to be the customer's purchase order, for which work has not been performed or has been partially performed.

The Company has elected to exclude remaining performance obligations with an original expected duration of one year or less.

Revenue expected to be recognized from remaining performance obligations as of April 2, 2021 for contracts with a duration more than one year was approximately $ 30,304 , all of which is expected to be recognized during fiscal year 2022.

Inventory consisted of the following:

October 2, January 3

April 2, January 1,

Raw materials $ 118,902 $ 87,503

2 unchanged sentences

Total inventory $ 166,546 $ 127,091

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share amounts)

Prepaids and Other Current Assets

Prepaids and other current assets consisted of the following:

October 2, January 3

April 2, January 1,

Prepaid chassis deposits $ 30,150 $ 66,812

3 unchanged sentences

Total $ 55,814 $ 87,920

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share amounts)

Property, Plant and Equipment, net

Property, plant and equipment, net consisted of the following:

October 2, January 3

April 2, January 1,

Building and building improvements $ 75,738 $ 75,753

9 unchanged sentences

The Company’s long-lived assets by geographic location are as follows:

October 2, January 3

April 2, January 1,

United States $ 149,277 $ 144,529

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As most of the Company's leases do not provide an interest rate, the Company used the incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

The weighted-average remaining lease term for the Company's operating leases was 4.71 years and the weighted-average incremental borrowing rate was 3.24 % as of October 2, 2020.

The weighted-average remaining lease term for the Company's operating leases was 4.36 years and the weighted-average incremental borrowing rate was 3.14 % as of April 2, 2021.

Operating lease costs consisted of the following:

For the three months ended For the nine months ended

October 2, 2020 September 27, 2019 October 2, 2020 September 27, 2019

For the three months ended

April 2, 2021 April 3, 2020

Operating lease cost $ 2,070 $ 1,576

2 unchanged sentences

(1) Includes short-term leases and variable lease costs.

The Company elected a policy permitting leases with an original lease term of less than one year to be excluded from the right-of-use assets and lease liabilities.

The Company elected a policy exclusion permitting leases with an original lease term of less than one year to be excluded from the right-of-use assets and lease liabilities.

Supplemental balance sheet information related to the Company's operating leases is as follows:

Balance Sheet Classification October 2, 2020

Balance Sheet Classification April 2, 2021

Operating lease right-of-use assets Lease right-of-use assets $ 25,308

3 unchanged sentences

For fiscal year Total future payments

2020 (excluding the 9 months ended October 2, 2020) $ 1,856

2021 (excluding the 3 months ended April 2, 2021) $ 5,983

Thereafter 2,727

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Accrued expenses consisted of the following:

October 2, January 3

April 2, January 1,

Payroll and related expenses $ 19,268 $ 22,407

2 unchanged sentences

Income tax payable 10,231 7,595

Accrued sales rebate 6,904 4,471

Current portion of non-controlling interest buyout liability 3,600 4,550

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Activity related to warranties is as follows:

For the three months ended For the nine months ended

October 2, 2020 September 27, 2019 October 2, 2020 September 27, 2019

For the three months ended

April 2, 2021 April 3, 2020

Beginning warranty liability $ 9,835 $ 5,649

6 unchanged sentences

(in thousands, except per share amounts)

Former Second Amended and Restated Credit Facility

In August 2013, the Company entered into a credit facility with SunTrust Bank, N.A.

and other named lenders, which was periodically amended and restated (the "Second Amended and Restated Credit Facility").

The Company paid off the Second Amended and Restated Credit Facility in June 2019 upon entering into the new credit facility with Bank of America, N.A.

("Bank of America").

First Amended and Restated Credit Facility

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Additionally, the Company had $ 434 of remaining unamortized debt issuance costs.

The Company expensed $ 277 of the remaining unamortized debt issuance costs, which are included in other expense, net in the condensed consolidated statements of income for the nine months ended October 2, 2020.

The Company expensed $ 277 of the remaining unamortized debt issuance costs, which are included in interest and other expense, net in the condensed consolidated statements of income for the three months ended April 3, 2020.

The remaining $ 157 were allocated to the line of credit.

1 unchanged sentence

The First Amended and Restated Credit Facility provides for interest at a rate either based on the London Interbank Offered Rate, or LIBOR, plus a margin ranging from 1.00 % to 2.25 %, with a floor rate of 0.50%, or based on the base rate offered by Bank of America plus a margin ranging from 0.00 % to 1.25 %.

At October 2, 2020, the one-month LIBOR and prime rates were 0.14 % and 3.25 %, respectively.

At October 2, 2020, our weighted-average interest rate on outstanding borrowing was 1.87 %.

At April 2, 2021, the one-month LIBOR and prime rates were 0.11 % and 3.25 %, respectively.

At April 2, 2021, our weighted-average interest rate on outstanding borrowing was 1.87 %.

The First Amended and Restated Credit Facility is secured by substantially all of the Company’s assets, restricts the Company's ability to make certain payments and engage in certain transactions, and requires that the Company satisfy customary financial ratios.

The Company was in compliance with the covenants as of October 2, 2020.

The Company was in compliance with the covenants as of April 2, 2021.

In August 2020, the Company entered into an interest rate swap agreement to hedge the variability of cash flows in interest payments associated with $ 200,000 of its variable rate term debt.

Refer to Note 10 - Derivatives and Hedging for further details of this agreement.

The First Amended and Restated Credit Facility permits up to $ 25,000 of the aggregate revolving commitment to be used by the Company for issuance of letters of credit, of which $ 15,000 was outstanding at October 2, 2020.

The following table summarizes the line of credit under the First Amended and Restated Credit Facility:

7 unchanged sentences

(in thousands, except per share amounts)

As of October 2, 2020, future principal payments for long-term debt, including the current portion, as summarized as follows:

As of April 2, 2021, future principal payments for long-term debt, including the current portion, as summarized as follows:

For fiscal year

2020 (remaining three months) $ 2,500

Thereafter 325,000

2021 (remaining 9 months) $ 10,000

Total 392,500

5 unchanged sentences

Indemnification Agreements - In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services to be provided by the Company or intellectual property infringement claims made by third parties.

In addition, the Company has entered into indemnification agreements with directors and certain officers and employees that will require the Company, among other things, to indemnify them against certain liabilities that may arise due to their status or service as directors, officers or employees.

In addition, the Company has entered into indemnification agreements with directors and certain officers and employees that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees.

While the outcome of these matters cannot be predicted with certainty, the Company does not believe that the outcome of any claims under indemnification arrangements will have a material effect on the Company’s results of operations, financial position or liquidity.

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SRAM filed a second lawsuit in the same court against RFE Canada on May 16, 2016, alleging patent infringement of U.S Patent number 9,291,250 ("250 Patent").

The Company believes that the lawsuits are without merit and intends vigorously to defend itself.

The Company believes that the lawsuits are without merit and intends to vigorously defend itself.

As such, the Company has filed, before the U.

Patent and Trademark Appeals Board ("PTAB"), for Interparties Reviews ("IPR") of the 027 Patent and separately the same for the 250 Patent.

In April 2018, the PTAB issued opinions in the ‘027 Patent petition cases stating that the Company has not shown the claims of the ‘027 Patent to be obvious.

Regarding the PTAB ‘027 opinions, the Company has filed an Appeal to the Court of Appeals for the Federal Circuit ("CAFC").

The CAFC found in favor of the Company and has vacated and remanded all of the PTAB findings with the exception of their finding that the ‘027 patent met the prima facia test for obviousness, which was affirmed.

The CAFC has declined to rehear the case and has issued the final remand order sending the case back to the PTAB.

SRAM filed ‘027 writ of certiorari before the Supreme Court of the United States, the writ of certiorari was denied and the case is before the PTAB on remand.

The PTAB has issued an opinion in the ‘250 Patent case stating that the Company has not shown the claims of the ‘250 Patent to be obvious.

The Company has appealed that PTAB opinion to the CAFC and the CAFC has affirmed the PTAB opinion.

District Court, Northern District of Illinois, has again stayed the SRAM lawsuits against the Company pending outcome of the remanded ‘027 PTAB issue.

In February 2021, the PTAB issued opinions in the 027 Patent petition cases stating that the Company has shown all of the claims of the 027 Patent to be obvious.

The PTAB has also issued an opinion in the 250 Patent case stating that the Company has not shown the claims of the 250 Patent to be obvious.

In a separate action, the Company filed a lawsuit on January 29, 2016 in the U.S.

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District Court, District of Colorado and are otherwise proceeding.

District Court, Northern District of Illinois has, in view of the 027 Patent PTAB process and opinion, stayed the SRAM lawsuits against the Company.

FOX FACTORY HOLDING CORP.

1 unchanged sentence

(in thousands, except per share amounts)

Due to the inherent uncertainties of litigation, the Company is not able to predict either the outcome or a range of reasonably possible losses, if any, at this time.

Due to the inherent uncertainties of litigation, the Company is not able to predict either the outcomes or a range of reasonably possible losses, if any, at this time.

Accordingly, no amounts have been recorded in the consolidated financial statements for the settlement of these matters.

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On July 22, 2020, the Company exercised the Call Option and, pursuant to a stock purchase agreement with Flagship, Inc., the Company purchased the remaining 20 % interest for $ 24,975 payable in a combination of stock and cash.

The cash portion will be settled in quarterly installment payments through July 2022, which amount to $ 6,556 , $ 4,550 and $ 2,700 in 2020, 2021 and 2022, respectively.

The Company paid $ 3,000 during the nine months ended October 2, 2020.

The stock portion of 136 shares held in escrow will be released quarterly starting January 2021 through July 2022.

The cash portion has been or will be settled in quarterly installment payments beginning in July 2020 through July 2022, which amount to $ 6,556 , $ 4,550 and $ 2,700 in 2020, 2021 and 2022, respectively.

The Company paid $ 1,850 during the three months ended April 2, 2021 and had a remaining liability of $ 16,569 as of April 2, 2021.

The stock portion of 136 shares held in escrow has been or will be released quarterly starting January 2021 through July 2022.

The Company released 19 shares of stock during the three months ended April 2, 2021.

The exercise of the Call Option effectively canceled the put option held by Flagship, Inc.

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As a result of the Court’s decision, most states enacted legislation to require sellers who meet economic nexus thresholds to register, collect and remit sales and use taxes on transactions with out-of-state customers.

The Company believes that it is possible that it will incur a liability for uncollected sales tax on some portion of its e-commerce sales through October 2, 2020.

The Company believes that it is possible that it will incur a liability for uncollected sales tax on some portion of its e-commerce sales through April 2, 2021.

Based on information currently available, any retroactively imposed liability is not expected to be material to the Company’s results of operations or financial position because direct end-user sales in states where the Company is not registered comprise a small portion of total revenues.

Derivatives and Hedging

On August 17, 2020 the Company entered into a Swap to mitigate the cash flow risk associated with changes in interest rates on $ 200,000 of its variable rate debt.

On August 17, 2020 the Company entered into a swap (the "Swap") to mitigate the cash flow risk associated with changes in interest rates on $ 200,000 of its variable rate debt.

Refer to Note 8 - Debt for further details of the Company's variable rate debt.

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The Company accounts for interest rate swap contracts in accordance with ASC 815, Derivatives and Hedging, which requires all derivatives, including derivatives designated as accounting hedges, to be recorded on the balance sheet at fair value.

The swap has been designated and accounted for as a cash flow hedge of the forecasted interest payments on the Company’s debt.

The Swap has been designated and accounted for as a cash flow hedge for a portion of the forecasted interest payments on the Company’s debt.

As long as the Swap continues to be a highly effective hedge of the designated interest rate risk, changes in the fair value of the Swap are recorded in accumulated other comprehensive income (loss), a component of equity.

Any ineffective portion of a change in the fair value of a hedge is recorded in earnings.

The fair value of the Swap on October 2, 2020 was a liability of $ 1,038 .

Refer to Note 11 - Fair Value Measurement s and Finan cial Instruments for information on determining the fair value.

The liability is included in other liabilities in the consolidated balance sheets.

At both the inception of the Swap and at October 2, 2020, the interest rate swap was considered highly effective and accordingly, the $ 1,038 change in fair value incurred from inception was deferred and recorded in other comprehensive income (loss), net of taxes.

The fair value of the Swap on April 2, 2021 was an asset of $ 1,895 .

Refer to Note 11 - Fair Value Measurements and Financial Instruments for additional information on determining the fair value.

The asset is included in Other Assets in the Consolidated Balance Sheets.

At both the inception of the Swap and at April 2, 2021, the interest rate swap was considered highly effective and accordingly, the $ 1,895 change in fair value incurred from inception was deferred and recorded in other comprehensive income (loss), net of taxes.

As required under ASC 815, the Swap’s effectiveness will be assessed on a quarterly basis.

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The following table presents the Company's hierarchy for its assets, liabilities and redeemable non-controlling interest measured at fair value on a recurring basis as of the following periods:

October 2, 2020 January 3, 2020

April 2, 2021 January 1, 2021

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

Interest Rate Swap $ — $ 1,895 $ — $ 1,895 $ — $ — $ — $ —

Total assets measured at fair value $ — $ 1,895 $ — $ 1,895 $ — $ — $ — $ —

Credit Facility $ — $ 387,433 $ — $ 387,433 $ — $ 389,588 $ — $ 389,588

Interest Rate Swap — — — — — 915 — 915

Non-controlling interest subject to put provisions — — — — — — 15,719 15,719

Total liabilities measured at fair value $ — $ 387,433 $ — $ 387,433 $ — $ 390,503 $ — $ 390,503

There were no transfers of assets or liabilities between Level 1, Level 2, and Level 3 categories of the fair value hierarchy during the three and nine month period ended October 2, 2020.

There were no transfers of assets or liabilities between Level 1, Level 2, and Level 3 categories of the fair value hierarchy during the three month period ended April 2, 2021.

The Company used Level 2 inputs to determine the fair value of its First Amended and Restated Credit Facility.

The Company believes the carrying amount of its First Amended and Restated Credit Facility approximates the fair value at October 2, 2020 because, while subject to a minimum LIBOR floor rate, the interest rate approximates current market rates of debt with similar terms and comparable credit risk.

The Company believes the carrying amount of its First Amended and Restated Credit Facility approximates the fair value at April 2, 2021 because, while subject to a minimum LIBOR floor rate, the interest rate approximates current market rates of debt with similar terms and comparable credit risk.

On August 17, 2020 the Company entered into an interest rate swap agreement to mitigate the cash flow risk associated with changes in interest rates on its variable rate debt.

Refer to N ote 10 - Derivatives and Hedging for additional details of the agreement.

In accordance with ASC 815, Derivatives and Hedging Interest rate swap contract is recognized as an asset or liability on the consolidated balance sheets and is measured at fair value.

In accordance with ASC 815, Derivatives and Hedging, an interest rate swap contract is recognized as an asset or liability on the consolidated balance sheets and is measured at fair value.

The fair value was calculated utilizing Level 2 inputs.

On July 22, 2020, the Company, pursuant to a stock purchase agreement with Flagship, Inc., dated as of the same date, purchased the remaining 20 % interest of FF US Holding Corp.

for $ 24,975 payable in a combination of stock and cash.

Refer to Note 9 - Commitments and Contingencies for additional details of this agreement.

Prior to the consummation of the stock purchase, the non-controlling interest was measured at fair value using Level 3 inputs.

The following table provides a reconciliation of the beginning and ending balances for the Company's redeemable non-controlling interest:

Redeemable Non-Controlling Interest (Level 3 measurement)

Balance at January 3, 2020 $ 15,719

Net income attributable to non-controlling interest 1,072

Change in fair value 8,184

Purchase of non-controlling interest (24,975)

Balance at October 2, 2020 $ —

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share amounts)

Stockholders' Equity

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The following table summarizes the allocation of stock-based compensation in the accompanying consolidated statements of income:

For the three months ended For the nine months ended

October 2, 2020 September 27, 2019 October 2, 2020 September 27, 2019

For the three months ended

April 2, 2021 April 3, 2020

Cost of sales $ 121 $ 129

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Total $ 2,494 $ 1,921

The following table summarizes the activity for the Company's unvested restricted stock units ("RSU") for the nine months ended October 2, 2020:

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share amounts)

As of January 1, 2021, $ 421 of stock-based compensation expense related to our executive bonus plan is included in Accrued Expenses on the Consolidated Balance Sheets.

This amount was recognized as additional paid in capital during the three months ended April 2, 2021 upon the issuance of the underlying restricted stock units.

The following table summarizes the activity for the Company's unvested restricted stock units ("RSU") for the three months ended April 2, 2021:

Unvested RSUs

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Vested ( 19 ) $ 55.00

Unvested at October 2, 2020 457 $ 49.81

As of October 2, 2020, the Company had approximately $ 19,447 of unrecognized stock-based compensation expense related to RSUs, which will be recognized over the remaining weighted-average vesting period of approximately 2.74 years.

During the nine months ended October 2, 2020, 120 shares of common stock were issued due to the exercise of stock options and no options to purchase common stock expired or were forfeited.

As of October 2, 2020, stock-based compensation expense related to stock options has been fully recognized.

Unvested at April 2, 2021 464 $ 56.97

As of April 2, 2021, the Company had approximately $ 19,544 of unrecognized stock-based compensation expense related to RSUs, which will be recognized over the remaining weighted-average vesting period of approximately 2.45 years.

During the three months ended April 2, 2021, the Company issued performance share units (“PSUs”) to certain executives that represent shares potentially issuable in the future.

Issuance is based upon the Company's performance, over a 2 - 3 year performance period, on certain measures including return on invested capital and free cash flow.

The PSUs vest only upon the achievement of the applicable performance goals for the performance period and depending on the actual achievement on the performance goals, the grantee may earn between 0 % and 200 % of the target PSUs.

The fair value of performance share units is calculated based on the stock price on the date of grant.

The following table summarizes the activity for the Company's unvested PSUs for the three months ended April 2, 2021:

Unvested PSUs

Number of shares outstanding Weighted-average grant date fair value

Unvested at January 1, 2021 — $ —

Granted 26 $ 140.24

Unvested at April 2, 2021 26 $ 140.24

The stock-based compensation expense recognized each period is dependent upon our estimate of the number of shares that will ultimately be issued.

Future stock-based compensation expense for unvested performance based awards could reach a maximum of $ 7,270 assuming payout of all unvested awards.

The unrecognized stock-based compensation expense is expected to be recognized over a weighted average period of 2.25 years.

For the three months ended April 2, 2021, the Company had 54 unvested RSUs and PSUs outstanding which were excluded from the calculation of dilutive earnings per share because the effect would be anti-dilutive.

During the three months ended April 2, 2021, 144 shares of common stock were issued due to the exercise of stock options and no options to purchase common stock expired or were forfeited.

As of April 2, 2021, stock-based compensation expense related to stock options has been fully recognized.

FOX FACTORY HOLDING CORP.

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(in thousands, except per share amounts)

For the three months ended For the nine months ended

October 2, 2020 September 27, 2019 October 2, 2020 September 27, 2019

For the three months ended

April 2, 2021 April 3, 2020

Provision for income taxes $ 4,007 $ 920

Effective tax rates 9.5 % 9.5 %

For the three and nine months ended October 2, 2020, the difference between the Company's effective tax rate and the 21 % federal statutory rate resulted primarily from lower foreign tax rates, a lower tax rate on foreign derived intangible income, research and development credits, realization of foreign tax credits, and $ 3,107 and $ 3,793 in excess benefits related to stock-based compensation, respectively.

For the three months ended April 3, 2020, the Company benefited from a negotiated reduction of Switzerland withholding tax on prior year earnings.

These benefits were partially offset by state taxes, global low-tax intangible income tax and non-deductible expenses.

For the three and nine months ended September 27, 2019, the difference between the Company's effective tax rate and the 21 % federal statutory rate resulted primarily from lower foreign tax rates, lower effective federal rates on foreign derived intangible income, research and development credits, and $ 1,873 and $ 5,508 in excess benefits related to stock-based compensation, respectively.

In the three months ended September 27, 2019, the Company refined its 2019 estimated deduction for foreign derived intangible income, resulting in a 4 % benefit to the effective tax rate.

These benefits were partially offset by state taxes, foreign withholding taxes and the impact of non-deductible expenses.

We do not expect the results from any ongoing income tax audit to have a material impact on our consolidated financial condition, results of operations, or cash flows.

For the three months ended April 2, 2021, the difference between the Company's effective tax rate of 9.5 % and the 21 % federal statutory rate resulted primarily from windfall on stock based compensation, the recognition of uncertain tax positions due to the conclusion of an audit and a lower tax rate on foreign derived intangible income.

These benefits were partially offset by an increase in the valuation allowance for foreign tax credits, state taxes and non-deductible expenses.

For the three months ended April 3, 2020, the difference between the Company's effective tax rate of 9.5 % and the 21 % federal statutory rate resulted primarily from the negotiated reduction of Switzerland withholding tax on prior year earnings.

These benefits were partially offset by state taxes, global low-tax intangible income tax, non-deductible expenses, and an excess benefit related to stock-based compensation.

There are no ongoing income tax audits as of April 2, 2021.

Related Party Transactions

On May 3, 2019, the Company acquired substantially all of the assets of Air Ride Technologies, Inc., d/b/a Ridetech, which has a building lease for its manufacturing and offices in Jasper, Indiana.

The building is owned by a former owner of Ridetech, who is now an employee of the Company.

The lease is effective through April 1, 2024, with monthly rent payments of $ 16 .

Rent expense under this lease was $ 48 and $ 144 for the three and nine months ended October 2, 2020.

On May 3, 2019, the Company acquired substantially all of the assets of Air Ride Technologies, Inc., d/b/a Ridetech.

Ridetech has a building lease for its manufacturing and office facilities in Jasper, Indiana.

The buildings are owned by a former owner of Ridetech, who is now an employee of the Company.

The lease is effective from May 1, 2019 through April 1, 2024, with monthly rent payments of $ 16 .

Rent expense under this lease was $ 48 for the three months ended April 2, 2021.

On March 11, 2020, the Company acquired 100% of the issued and outstanding stock of SCA Performance Holdings, Inc.

("SCA"), which has a building lease for its manufacturing and offices in Trussville, Alabama.

The building is owned by a former owner of SCA, who is now an employee of the Company.

The lease is effective through April 13, 2028, with monthly rent payments of $ 28 .

Rent expense under this lease was $ 84 and $ 196 for the three and nine months ended October 2, 2020.

The Company has transactions with an automotive dealership owned by a former owner of SCA, who is now an employee of the Company.

The Company purchased approximately $ 202 of parts and vehicles and sold approximately $ 120 of upfit packages to the dealership during the three months ended April 2, 2021.

As of April 2, 2021, the Company had $ 27 and $ 88 in accounts payable and accounts receivable, respectively, related to this dealership.

Refer to Note 15 - Acquisitions for further details of this acquisition.

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(in thousands, except per share amounts)

On March 11, 2020, the Company, through Fox Factory, Inc., acquired 100 % of the issued and outstanding stock of SCA Performance Holdings, Inc.

("SCA") from Southern Rocky Holdings, LLC for $ 329,531 , net of cash acquired and exclusive of vehicle inventory.

On March 11, 2020, the Company, through Fox Factory, Inc., acquired 100 % of the issued and outstanding stock of SCA from Southern Rocky Holdings, LLC for $ 331,853 , net of cash acquired and exclusive of vehicle inventory.

SCA is a leading OEM authorized specialty vehicle manufacturer for light duty trucks and SUVs with headquarters in Trussville, Alabama.

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SCA Performance, Rocky Ridge Trucks, and Rocky Mountain Truckworks.

The Company believes the acquisition will be complementary to FOX’s Tuscany business, expanding its North American geographic manufacturing footprint and broadening its product offering in a growing segment of the automotive industry.

This transaction was accounted for as a business combination.

The Company also agreed to an additional $ 10,589 of contingent retention incentives for key SCA management, of which $ 9,283 is cash and $ 1,306 is stock, to be held in escrow and payable over the next two years.

The Company recognized $ 1,429 and $ 2,921 in costs associated with such retention incentives during the three and nine months ended October 2, 2020.

Additionally, the Company paid $ 1,750 in transaction compensation to key SCA management concurrently with the closing.

The purchase price of SCA has been preliminarily allocated to the assets acquired and liabilities assumed based on their estimated respective fair values as of March 11, 2020 with the excess purchase price allocated to goodwill.

The Company recognized $ 1,290 in costs associated with such retention incentives during the three months ended April 2, 2021.

The Company’s allocation of the purchase price to the net tangible and intangible assets acquired and liabilities assumed is as follows:

Acquisition consideration

Cash consideration $ 329,209

Non-cash consideration 322

Total consideration at closing $ 329,531

Fair market values

Other current assets $ 15,227

Property, plant and equipment 8,953

Lease right-of-use assets 4,027

Customer relationships 129,000

Trademarks and brand 11,500

Tangible assets acquired $ 28,678

Liabilities assumed ( 32,479 )

Intangible assets 139,900

Goodwill 195,754

Total assets acquired $ 362,251

Accounts payable and accrued expenses $ 9,454

Lease liabilities 4,027

Deferred taxes 19,239

Total liabilities assumed 32,720

Purchase price allocation $ 329,531

The Company incurred $ 10,582 of acquisition costs in conjunction with the SCA acquisition, including $ 1,750 of transaction compensation during the nine months ended October 2, 2020 and $ 602 of transaction costs during the three months ended January 3, 2020.

Total $ 331,853

The Company incurred $ 10,579 of acquisition costs in conjunction with the SCA acquisition, including $ 1,750 of transaction compensation, during the three months ended April 3, 2020.

These costs are classified as general and administrative expenses in the accompanying condensed consolidated statements of income.

Additional debt issuance costs of $ 6,622 were incurred in association with financing the transaction and will be amortized over the term of the First Amended and Restated Credit Facility.

Refer to Note 8 - Debt for further details.

The primary areas of the preliminary purchase price allocations that have not been finalized relate to the finalization of working capital and the valuation of real estate, intangible assets and related deferred tax liabilities.

Upon completion of the fair value assessment, the Company anticipates that the ultimate intangible assets may differ from the preliminary assessment outlined above.

Any change in the finalization of working capital will reduce or increase the cash consideration.

Any changes to the preliminary estimates of the fair value of the real estate and intangible assets will be adjusted to goodwill during the measurement period, with subsequent changes in estimates recorded in the statement of operations.

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share amounts)

The preliminarily values assigned to the identifiable intangible assets were determined by discounting the estimated future cash flows associated with these assets to their present value.

The values assigned to the identifiable intangible assets were determined by discounting the estimated future cash flows associated with these assets to their present value.

The goodwill of $ 195,754 reflects the strategic fit of SCA with the Company’s operations.

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SCA previously purchased intangibles in asset acquisitions with a remaining net tax basis approximating $ 77,989 , which the Company may deduct for income tax purposes.

The following unaudited pro forma financial information shows the combined results of operations of the Company and SCA, as if the acquisition had occurred as of the beginning of the periods presented.

The pro forma results include the effects of the amortization of purchased intangible assets and acquired inventory valuation step-up, interest expense on the term debt secured to finance the acquisition, and the net tax benefit of the above adjustments calculated at the statutory federal tax rate of 21 %.

SCA was operated as a C Corporation for federal taxation purposes.

A pro forma adjustment has been made to reflect the income taxes that would have been recorded at the federal statutory rate based on SCA’s net income.

The pro forma results for the nine months ended October 2, 2020 exclude transaction costs associated with the acquisition and the results for the nine months ended September 27, 2019 have been adjusted to include these charges.

This pro forma data is presented for informational purposes only and does not purport to be indicative of the results of future operations or of the results that would have occurred had the acquisition taken place in the periods noted below.

For the nine months ended

October 2, 2020 September 27, 2019

Pro forma sales $ 647,512 $ 632,848

Pro forma net income attributable to FOX stockholders $ 66,684 $ 57,432

Pro forma basic earnings per share $ 1.68 $ 1.50

Pro forma diluted earnings per share $ 1.65 $ 1.47

Total SCA revenues included in the condensed consolidated statements of income $ 49,868

Total SCA pre-tax income included in the condensed consolidated statements of income $ 2,950

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements