What changed in this filing

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Item 1. Financial Statements

2022-05-05 compared with 2021-11-04 · 188 added, 250 removed, 386 unchanged (53% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

October 1, January 1,

April 1, December 31,

Current assets:

Cash and cash equivalents $ 68,773 $ 179,686

Accounts receivable (net of allowances of $ 929 and $ 663 at October 1, 2021 and January 1, 2021, respectively)

Accounts receivable (net of allowances of $ 512 and $ 410 at April 1, 2022 and December 31, 2021, respectively)

177,858 142,040

13 unchanged sentences

Accrued expenses 103,792 112,378

Reserve for uncertain tax positions — 1,095

Current portion of long-term debt 20,000 17,500

6 unchanged sentences

Stockholders’ equity

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

Preferred stock, $ 0.001 par value — 10,000 authorized and no shares issued or outstanding as of April 1, 2022 and December 31, 2021

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

42,994 shares issued and 42,104 outstanding as of October 1, 2021;

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

43,039 shares issued and 42,149 outstanding as of April 1, 2022;

43,010 shares issued and 42,120 outstanding as of December 31, 2021

Additional paid-in capital 346,328 344,119

Treasury stock, at cost;

890 common shares as of October 1, 2021 and January 1, 2021

890 common shares as of April 1, 2022 and December 31, 2021

( 13,754 ) ( 13,754 )

7 unchanged sentences

(in thousands, except per share data)

For the three months ended For the nine months ended

October 1, October 2, October 1, October 2,

2021 2020 2021 2020

For the three months ended

April 1, April 2,

Sales $ 377,977 $ 281,136

10 unchanged sentences

Interest expense 1,977 2,904

Other (income) expense ( 187 ) ( 189 ) 855 ( 57 )

Other expense, net 1,692 959

Interest and other expense, net 3,669 3,863

2 unchanged sentences

Net income $ 48,050 $ 37,986

net income attributable to non-controlling interest — — — 1,072

Net income attributable to FOX stockholders $ 43,823 $ 38,020 $ 126,084 $ 58,878

Earnings per share:

8 unchanged sentences

(in thousands)

For the three months ended For the nine months ended

October 1, October 2, October 1, October 2,

2021 2020 2021 2020

For the three months ended

April 1, April 2,

Net income $ 48,050 $ 37,986

Other comprehensive (loss) income

Other comprehensive income

Interest rate swap, net of tax effects 5,811 2,145

Foreign currency translation adjustments, net of tax effects ( 1,068 ) ( 524 )

Other comprehensive (loss) income ( 601 ) ( 165 ) 1,151 ( 182 )

Other comprehensive income 4,743 1,621

Comprehensive income $ 52,793 $ 39,607

comprehensive income attributable to non-controlling interest — — — 1,072

Comprehensive income attributable to FOX stockholders $ 43,222 $ 37,855 $ 127,235 $ 58,696

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

FOX FACTORY HOLDING CORP.

Condensed Consolidated Statements of Stockholders' Equity and Redeemable Non-controlling Interest

Condensed Consolidated Statements of Stockholders' Equity

(in thousands)

Common Stock Treasury Additional paid-in capital Accumulated other comprehensive income (loss) 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

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

Issuance of stock for business acquisition — — — — 322 — — 322

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

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

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

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

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 income — — — — — 1,621 — 1,621

Net income — — — — — — 37,986 37,986

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 — — — — — ( 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 condensed consolidated statements.

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

FOX FACTORY HOLDING CORP.

Condensed Consolidated Statements of Stockholders' Equity and Redeemable Non-controlling Interest

Condensed Consolidated Statements of Stockholders' Equity

(in thousands)

Common Stock Treasury Additional paid-in capital Accumulated other comprehensive 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

Shares Amount Shares Amount

Balance - January 1, 2021 42,692 $ 42 890 $ ( 13,754 ) $ 336,834 $ 1,068 $ 394,981 $ 719,171 $ —

Balance - December 31, 2021 43,010 $ 42 890 $ ( 13,754 ) $ 344,119 $ 4,876 $ 558,799 $ 894,082

Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding 29 — — — ( 820 ) — — ( 820 )

3 unchanged sentences

Balance - April 1, 2022 43,039 $ 42 890 $ ( 13,754 ) $ 346,328 $ 9,619 $ 606,849 $ 949,084

Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding 118 — — — ( 5,702 ) — — ( 5,702 ) —

Stock-based compensation expense — — — — 3,374 — — 3,374 —

Other comprehensive income — — — — — 131 — 131 —

Net income — — — — — 44,275 44,275 —

Balance - July 2, 2021 42,972 $ 42 890 $ ( 13,754 ) $ 338,019 $ 2,820 $ 477,242 $ 804,369 $ —

Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding 22 — — — ( 1,537 ) — — ( 1,537 ) —

Stock-based compensation expense — — — — 3,986 — — 3,986 —

Other comprehensive loss — — — — — ( 601 ) — ( 601 ) —

Net income — — — — — — 43,823 43,823 —

Balance - October 1, 2021 42,994 $ 42 890 $ ( 13,754 ) $ 340,468 $ 2,219 $ 521,065 $ 850,040 $ —

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

2 unchanged sentences

(in thousands)

For the nine months ended

October 1, 2021 October 2, 2020

For the three months ended

April 1, 2022 April 2, 2021

OPERATING ACTIVITIES:

Net income $ 48,050 $ 37,986

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

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

Depreciation and amortization 11,897 10,069

2 unchanged sentences

Amortization of loan fees 402 411

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

Changes in operating assets and liabilities:

Accounts receivable ( 37,781 ) ( 16,536 )

4 unchanged sentences

Accrued expenses and other liabilities ( 3,521 ) 2,912

Net cash provided by operating activities 149,309 99,801

Net cash (used in) provided by operating activities ( 143,124 ) 66,028

INVESTING ACTIVITIES:

Purchases of property and equipment ( 8,191 ) ( 16,885 )

Acquisition of businesses, net of cash acquired ( 15,625 ) ( 329,176 )

Acquisition of other assets — ( 250 )

Net cash used in investing activities ( 8,191 ) ( 16,885 )

2 unchanged sentences

Payments on line of credit ( 66,484 ) ( 8,480 )

Proceeds from issuance of debt, net of origination fees of $7,615 — 392,385

Repayment of debt ( 2,500 ) ( 2,500 )

Installment on purchase of non-controlling interest ( 900 ) ( 1,850 )

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

Repurchases from stock compensation program, net ( 6,641 ) ( 4,602 )

Net cash (used in) provided by financing activities ( 20,291 ) 510,019

(Repurchases) proceeds from stock compensation program, net ( 820 ) 598

Net cash provided by (used in) financing activities 38,632 ( 3,752 )

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 1,770 316

5 unchanged sentences

(in thousands)

For the nine months ended

For the three months ended

SUPPLEMENTAL CASH FLOW INFORMATION:

October 1, 2021 October 2, 2020

April 1, 2022 April 2, 2021

Cash paid during the period for:

4 unchanged sentences

Right-of-use assets obtained in exchange for lease obligations $ 7,619 $ 1,160

Non-cash investing activities:

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

Non-cash investing and financing activities:

Capital expenditures included in accounts payable $ 4,406 $ 3,633

14 unchanged sentences

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 1, 2021 included in the Company’s Annual Report on Form 10-K, as filed with the SEC on February 25, 2021.

Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the fiscal year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K, as filed with the SEC on February 24, 2022.

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.

1 unchanged sentence

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 and nine month periods ended October 1, 2021 and October 2, 2020 each included 13 weeks and 39 weeks, respectively.

For 2022 and 2021, the Company's fiscal year will end or has ended on December 30, 2022 and December 31, 2021, respectively.

The twelve month periods ended December 30, 2022 and December 31, 2021, will include or have included 52 weeks.

The three month periods ended April 1, 2022 and April 2, 2021 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 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.

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 December 31, 2021, as filed with the SEC on February 24, 2022 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.

29 unchanged sentences

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, including the Delta variant;

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

and the effect of the COVID-19 pandemic on short- and long-term general economic conditions.

Furthermore, during the first quarter of 2022, Russia commenced a military invasion of Ukraine, and the ensuing conflict has created disruption in the region and around the world.

In addition, in response to this invasion, the United States and several European and Asian countries instated sanctions against Russia.

The impact of the Russia invasion of Ukraine on the global economy, energy supplies and raw materials is uncertain but may prove to negatively impact the Company’s business and operations.

Fair Value Measurements and Financial Instruments - The Financial Accounting Standards Board ("FASB") has issued Accounting Standards Codification ("ASC") 820, Fair Value Measurements and Disclosures, that requires the valuation of assets and liabilities required or permitted to be either recorded or disclosed at fair value based on hierarchy of available inputs as follows:

3 unchanged sentences

The carrying amounts of the Company's financial instruments, including cash, receivables, accounts payable, and accrued liabilities approximate their fair values due to their short-term nature.

Amounts owed under the Company's Credit Facility (as defined in Note 8 - Debt below) approximate fair value due to the variable interest rate features embedded in both the line of credit and the term debt.

Amounts owed under the Company's Prior Credit Facility (as defined in Note 8 - Debt below) approximate fair value due to the variable interest rate features embedded in both the line of credit and the term debt.

FOX FACTORY HOLDING CORP.

13 unchanged sentences

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

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share amounts)

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.

Under ASU 2021-08, an acquirer must recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606.

The guidance is effective for interim and annual periods beginning after December 15, 2022, with early adoption permitted.

The Company adopted this guidance in the first quarter of 2022.

This adoption did not have a material impact on our financial statements.

The following table summarizes total sales by product category:

For the three months ended For the nine months ended

October 1, 2021 October 2, 2020 October 1, 2021 October 2, 2020

For the three months ended

April 1, 2022 April 2, 2021

Powered Vehicles $ 208,107 $ 162,747

2 unchanged sentences

The following table summarizes total sales by sales channel:

For the three months ended For the nine months ended

October 1, 2021 October 2, 2020 October 1, 2021 October 2, 2020

For the three months ended

April 1, 2022 April 2, 2021

OEM $ 201,265 $ 151,480

1 unchanged sentence

Total sales $ 377,977 $ 281,136

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share amounts)

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

For the three months ended For the nine months ended

October 1, 2021 October 2, 2020 October 1, 2021 October 2, 2020

For the three months ended

April 1, 2022 April 2, 2021

North America $ 233,959 $ 180,483

3 unchanged sentences

Total sales $ 377,977 $ 281,136

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 disclosure of remaining performance obligations with an original expected duration of one year or less.

Revenue expected to be recognized from remaining performance obligations as of October 1, 2021 for contracts with a duration of more than one year was approximately $ 191,216 , all of which is expected to be recognized during fiscal years 2022 and 2023.

The increase from prior quarter is due the timing of model year releases.

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share amounts)

Inventory consisted of the following:

October 1, January 1,

April 1, December 31,

Raw materials $ 227,391 $ 200,460

4 unchanged sentences

Prepaids and other current assets consisted of the following:

October 1, January 1,

April 1, December 31,

Prepaid chassis deposits $ 262,029 $ 98,618

Advanced payments and prepaid contracts 18,724 14,024

Current portion of acquisition-related compensation held in escrow 1,970 4,518

Other current assets 13,174 10,465

5 unchanged sentences

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

October 1, January 1,

April 1, December 31,

Building and building improvements $ 72,639 $ 72,088

8 unchanged sentences

Property, plant and equipment, net $ 193,609 $ 192,003

During the nine months ended October 1, 2021, the Company reclassified certain assets from buildings to land and land improvements to better depict the nature of the assets.

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

October 1, January 1,

April 1, December 31,

United States $ 162,126 $ 161,451

5 unchanged sentences

The Company has operating lease agreements for administrative, research and development, manufacturing, and sales and marketing facilities.

These leases have remaining lease terms ranging from 1 to 10 years, some of which include options to extend the lease term for up to 5 years, and some of which include options to terminate the leases within 1 year.

These leases have remaining lease terms ranging from one to nine years , some of which include options to extend the lease term for up to five years , and some of which include options to terminate the leases within one year .

Certain leases are subject to annual escalations as specified in the lease agreements.

2 unchanged sentences

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 5.09 years and the weighted-average incremental borrowing rate was 2.47 % as of October 1, 2021.

The weighted-average remaining lease term for the Company's operating leases was 5.16 years and the weighted-average incremental borrowing rate was 2.11 % as of April 1, 2022.

Operating lease costs consisted of the following:

For the three months ended For the nine months ended

October 1, 2021 October 2, 2020 October 1, 2021 October 2, 2020

For the three months ended

April 1, 2022 April 2, 2021

Operating lease cost $ 2,823 $ 2,070

4 unchanged sentences

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

Balance Sheet Classification October 1, 2021

Balance Sheet Classification April 1, 2022

Operating lease right-of-use assets Lease right-of-use assets $ 44,122

3 unchanged sentences

For fiscal year Total future payments

2021 (excluding the 9 months ended October 1, 2021) $ 2,327

2022 (remaining nine months) $ 7,972

Thereafter 6,760

9 unchanged sentences

Accrued expenses consisted of the following:

October 1, January 1,

April 1, December 31,

Payroll and related expenses $ 21,659 $ 32,968

3 unchanged sentences

Accrued sales rebate 11,307 8,568

Current portion of non-controlling interest buyout liability 1,800 2,700

Other accrued expenses 13,841 8,692

1 unchanged sentence

Activity related to warranties is as follows:

For the three months ended For the nine months ended

October 1, 2021 October 2, 2020 October 1, 2021 October 2, 2020

For the three months ended

April 1, 2022 April 2, 2021

Beginning warranty liability $ 15,510 $ 9,835

Charge to cost of sales 3,127 3,261

Fair value of warranty assumed in acquisition — — 150 3,158

Costs incurred ( 2,644 ) ( 1,575 )

Ending warranty liability $ 15,993 $ 11,521

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share amounts)

Credit Facility

In June 2019, the Company entered into a credit facility with Bank of America and other named lenders, which has been periodically amended and restated and/or amended.

The credit facility was amended and restated on March 11, 2020, and further amended on June 19, 2020, and June 11, 2021 (as amended to date, the "Credit Facility").

The Credit Facility, which matures on March 11, 2025, provides a senior secured revolving line of credit with a borrowing capacity of $ 250,000 and a term loan of $ 400,000 .

The term loan is subject to quarterly amortization payments.

Prior Credit Facility

In June 2019, the Company entered into a credit facility with Bank of America and other named lenders, which was periodically amended and restated and/or amended.

The credit facility was amended and restated on March 11, 2020, and further amended on June 19, 2020, and June 11, 2021 (as amended to date, the "Prior Credit Facility").

The Prior Credit Facility (which was terminated on April 5, 2022 and replaced with the 2022 Credit Facility (as discussed below)), would have matured on March 11, 2025, and provided a senior secured revolving line of credit with a borrowing capacity of $ 250,000 and a term loan of $ 400,000 .

The term loan was subject to quarterly amortization payments.

The Company paid $ 7,615 in debt issuance costs, of which $ 6,458 were allocated to the term debt and $ 1,157 were allocated to the line of credit.

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 interest and 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.

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

Loan fees allocated to the term debt will be amortized using the interest method and loan fees allocated to the line of credit will be amortized on a straight-line basis over the term of the Credit Facility.

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

At October 1, 2021, the one-month LIBOR and prime rates were 0.08 % and 3.25 %, respectively.

At October 1, 2021, our weighted-average interest rate on outstanding borrowing was 1.30 %.

The 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 1, 2021.

On June 11, 2021, the Company terminated its existing swap agreement and entered into a new interest rate swap agreement to obtain a more favorable interest rate and to manage interest rate risk exposure, which was effective July 2, 2021.

Through the interest rate swap agreement, the Company hedges 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 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 1, 2021.

The following table summarizes the line of credit under the Credit Facility:

Loan fees allocated to the term debt were amortized using the interest method and loan fees allocated to the line of credit were amortized on a straight-line basis over the term of the Prior Credit Facility.

The Prior Credit Facility provided for interest at a rate either based on the London Interbank Offered Rate ("LIBOR"), plus a margin ranging from 1.00 % to 2.25 %, with a floor rate of 0.00%, or based on the base rate offered by Bank of America plus a margin ranging from 0.00 % to 1.25 %.

At April 1, 2022, the one-month LIBOR and prime rates were 0.44 % and 3.50 %, respectively.

At April 1, 2022, our weighted-average interest rate on outstanding borrowing was 1.68 %.

The Prior Credit Facility was secured by substantially all of the Company’s assets, restricted the Company's ability to make certain payments and engage in certain transactions, and required that the Company satisfy customary financial ratios.

The Company was in compliance with the covenants as of April 1, 2022.

The Prior Credit Facility permitted 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 April 1, 2022.

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share amounts)

The following table summarizes the line of credit under the Prior Credit Facility:

April 1, December 31,

Amount outstanding $ 42,852 $ —

3 unchanged sentences

Maturity date March 11, 2025

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share amounts)

As of October 1, 2021, future principal payments for long-term debt, including the current portion, are summarized as follows:

In June 2021, the Company entered into a swap agreement (the "2021 Swap Agreement") to obtain a more favorable interest rate and to manage interest rate risk exposure.

On April 5, 2022, the Company terminated its 2021 Swap Agreement and entered into a new interest rate swap agreement (the "2022 Swap Agreement").

Through the 2022 Swap Agreement, the Company hedges the variability of cash flows in interest payments associated with $ 100,000 of its variable rate debt.

Refer to Note 16 - Subsequent Events for further details of this agreement.

As of April 1, 2022, future principal payments for long-term debt, including the current portion, are summarized as follows:

For fiscal year

2021 (remaining 3 months) $ 2,500

2022 (remaining nine months) $ 15,000

Total 380,000

3 unchanged sentences

Long-term debt less current portion $ 356,288

2022 Credit Facility

On April 5, 2022, the Company entered into the a new credit agreement with Wells Fargo Bank, National Association, and other named lenders (the "2022 Credit Facility"), and concurrently repaid in full and terminated the Prior Credit Facility.

The 2022 Credit Facility, which matures on April 5, 2027, provides for revolving loans, swingline loans and letters of credit up to an aggregate amount of $ 650,000 .

Refer to Note 1 6 - Subsequent Events for further details of the 2022 Credit Facility.

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share amounts)

Commitments and Contingencies

2 unchanged sentences

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.

Legal Proceedings - A lawsuit was filed on December 17, 2015 by SRAM Corporation (“SRAM”) in the U.S.

District Court, Northern District of Illinois, against the Company’s wholly-owned subsidiary, RFE Canada Holding Corp.

(“RFE Canada”).

The lawsuit alleges patent infringement of U.S.

Patent number 9,182,027 ("027 Patent") and violation of the Lanham Act.

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 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 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.

District Court, Northern District of California against SRAM.

That lawsuit alleges SRAM’s infringement of two separate Company-owned patents, specifically U.S.

Patent numbers 6,135,434 and 6,557,674.

The Company filed a second lawsuit on July 1, 2016 in the U.S.

District Court, Northern District of California against SRAM alleging infringement of the Company’s U.S.

Patent numbers 8,226,172 and 8,974,009.

These lawsuits have been moved to U.S.

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.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share amounts)

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 condensed consolidated financial statements for the settlement of these matters.

Were an unfavorable ruling to occur, or if factors indicate that a loss is probable and reasonably estimable, the Company's business, financial condition or results of operations could be materially and adversely affected.

The Company is involved in other legal matters that arise in the ordinary course of business.

Based on information currently available, management does not believe that the ultimate resolution of these matters will have a material adverse effect on the Company's financial condition, results of operations or cash flows.

Legal Proceedings - From time to time, the Company is involved in legal proceedings that arise in the ordinary course of business.

Although the Company cannot assure the outcome of any such legal proceedings, based on information currently available, management does not believe that the ultimate resolution of any pending matters will have a material adverse effect on the Company's financial condition, results of operations or cash flows.

Other Commitments - On November 30, 2017, the Company through FF US Holding Corp., acquired the assets of Flagship, Inc.

6 unchanged sentences

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 $ 900 and $ 3,650 during the three and nine months ended October 1, 2021, respectively.

The Company paid $ 900 and $ 1,850 during the three months ended April 1, 2022 and April 2, 2021, respectively.

The Company had a remaining liability of $ 1,800 as of April 1, 2022.

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 and 58 shares of stock during the three and nine months ended October 1, 2021, respectively.

The Company released 19 shares of stock during each of the three months ended April 1, 2022 and April 2, 2021.

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

3 unchanged sentences

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 1, 2021.

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 1, 2022.

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.

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Interest rate swaps involve the receipt of floating-rate amounts in exchange for fixed-rate interest payments based on the one-month LIBOR over the lives of the agreements without an exchange of the underlying principal amounts.

As of October 1, 2021 and January 1, 2021, the Company had the following interest rate swap contracts:

October 1, 2021 January 1, 2021

Effective Date Termination Date Notional Amount Unrealized Gain (Loss) in AOCI Unrealized Gain (Loss) in AOCI

As of April 1, 2022 and December 31, 2021, the Company had the following interest rate swap contracts:

April 1, 2022 December 31, 2021

Effective Date Termination Date Notional Amount Unrealized Gain in AOCI Unrealized Gain in AOCI

September 2, 2020 June 11, 2021 $ 200,000 $ 254 $ 276

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Total $ 11,322 $ 3,859

On June 11, 2021, the Company terminated its existing swap agreement and entered into a new interest rate swap agreement with a notional amount of $ 200,000 .

On June 11, 2021, the Company terminated its existing swap agreement and entered into an interest rate swap agreement (the "2021 Swap Agreement") with a notional amount of $ 200,000 .

The terminated swap resulted in an unrealized gain of $ 324 at the termination date that will continue to be accounted for in accumulated other comprehensive income and amortized into earnings over the term of the associated debt instrument.

The new swap agreement (the "Interest Rate Swap") has a maturity date of March 11, 2025 and is indexed to a one-month LIBOR with a fixed leg of 0.50 %.

The Interest Rate Swap met the criteria for cash flow hedges under ASC 815, Derivatives and Hedging, and is recorded in other assets on the Condensed Consolidated Balance Sheet.

The 2021 Swap Agreement has a maturity date of March 11, 2025 and is indexed to a one-month LIBOR with a fixed leg of 0.50 %.

The Interest Rate Swap met the criteria for cash flow hedges under ASC 815, Derivatives and Hedging ("ASC 815"), and is recorded in other assets on the Condensed Consolidated Balance Sheet.

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

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As required under ASC 815, the Interest Rate Swap’s effectiveness will be assessed on a quarterly basis using a quantitative regression analysis.

The gains and losses, net of tax, related to the effective portion of derivative instruments designated as cash flow hedges recognized in accumulated other comprehensive income for the three and nine months ended October 1, 2021 were a loss of $ 45 and a gain of $ 1,575 , respectively.

No gains or losses were incurred for the three and nine months ended October 2, 2020.

Unrealized losses of $ 864 included in accumulated other comprehensive income related to the Interest Rate Swap are expected to be recognized in interest expense over the next twelve months.

The gains and losses, net of tax, related to the effective portion of derivative instruments designated as cash flow hedges recognized in accumulated other comprehensive income for the three months ended April 1, 2022 and April 2, 2021 were a gain of $ 5,811 and $ 2,145 , respectively.

Unrealized gain of $ 4,203 included in accumulated other comprehensive income related to the Interest Rate Swap are expected to be recognized in interest expense over the next twelve months.

2022 Swap Agreement

On April 5, 2022, the Company terminated its 2021 Swap Agreement and entered into a new 2022 Swap Agreement with a notional amount of $ 100,000 .

Refer to Note 16 - Subsequent Events for further details of the 2022 Swap Agreement.

FOX FACTORY HOLDING CORP.

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

October 1, 2021 January 1, 2021

April 1, 2022 December 31, 2021

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

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Total assets measured at fair value $ — $ 11,068 $ — $ 11,068 $ — $ 3,583 $ — $ 3,583

Credit Facility $ — $ 380,615 $ — $ 380,615 $ — $ 389,588 $ — $ 389,588

Interest Rate Swap — — — — — 915 — 915

Prior Credit Facility $ — $ 419,140 $ — $ 419,140 $ — $ 378,453 $ — $ 378,453

Total liabilities measured at fair value $ — $ 419,140 $ — $ 419,140 $ — $ 378,453 $ — $ 378,453

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 1, 2021.

The Company used Level 2 inputs to determine the fair value of the Credit Facility.

The Company believes the carrying amount of its Credit Facility approximates the fair value at October 1, 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 June 11, 2021, 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.

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 1, 2022.

The Company used Level 2 inputs to determine the fair value of the Prior Credit Facility.

The Company believes the carrying amount of the Prior Credit Facility approximates the fair value at April 1, 2022 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 June 11, 2021, the Company entered into the 2021 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, an interest rate swap contract is recognized as an asset or liability on the Condensed Consolidated Balance Sheets and is measured at fair value.

In accordance with ASC 815, an interest rate swap contract is recognized as an asset or liability on the Condensed Consolidated Balance Sheets and is measured at fair value.

The fair value was calculated utilizing Level 2 inputs.

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Stockholders' Equity

Follow-on Stock Offerings

In June 2020, the Company completed a follow-on offering whereby it sold 2,760 shares of its common stock at a price of $ 76.00 per share for gross proceeds of $ 209,760 .

The net proceeds to the Company were $ 198,233 after underwriters' discounts and commissions of $ 11,015 and offering costs of $ 511 .

The total shares sold included 360 shares that were sold in connection with the underwriters' option to purchase additional shares.

This offering was made pursuant to the Company's registration statement on Form S-3.

Equity Incentive Plans

The following table summarizes the allocation of stock-based compensation in the accompanying Condensed Consolidated Statements of Income:

For the three months ended For the nine months ended

October 1, 2021 October 2, 2020 October 1, 2021 October 2, 2020

For the three months ended

April 1, 2022 April 2, 2021

Cost of sales $ 178 $ 121

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

This amount was recognized as additional paid in capital during the nine months ended October 1, 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 nine months ended October 1, 2021:

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 ("RSUs").

The following table summarizes the activity for the Company's unvested RSUs for the three months ended April 1, 2022:

Unvested RSUs

Number of shares outstanding Weighted-average grant date fair value

Unvested at January 1, 2021 450 $ 50.12

Unvested at December 31, 2021 338 $ 76.30

Granted 41 $ 120.90

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Vested ( 35 ) $ 96.49

Unvested at October 1, 2021 347 $ 75.64

As of October 1, 2021, the Company had approximately $ 20,625 of unrecognized stock-based compensation expense related to RSUs, which will be recognized over the remaining weighted-average vesting period of approximately 2.22 years.

Unvested at April 1, 2022 340 $ 79.57

As of April 1, 2022, the Company had approximately $ 19,408 of unrecognized stock-based compensation expense related to RSUs, which will be recognized over the remaining weighted-average vesting period of approximately 2.15 years.

FOX FACTORY HOLDING CORP.

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(in thousands, except per share amounts)

During the nine months ended October 1, 2021, the Company issued performance share units (“PSUs”) to certain executives that represent shares potentially issuable in the future.

During the three months ended April 1, 2022, 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 nine months ended October 1, 2021:

The fair value of PSUs 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 1, 2022:

Unvested PSUs

Number of shares outstanding Weighted-average grant date fair value

Unvested at January 1, 2021 — $ —

Unvested at December 31, 2021 29 $ 141.46

Granted 37 $ 120.90

Unvested at October 1, 2021 29 $ 141.46

Unvested at April 1, 2022 66 $ 129.94

The stock-based compensation expense recognized each period is dependent upon our estimate of the number of shares that will ultimately vest based on the achievement of certain performance conditions.

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The unrecognized stock-based compensation expense is expected to be recognized over a weighted average period of 2.21 years.

For the nine months ended October 1, 2021, the Company had 3 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 nine months ended October 1, 2021, 182 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 1, 2021, stock-based compensation expense related to stock options has been fully recognized.

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share amounts)

For the three months ended For the nine months ended

October 1, 2021 October 2, 2020 October 1, 2021 October 2, 2020

For the three months ended April 1, 2022, the Company had 3 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 1, 2022, no 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 1, 2022, stock-based compensation expense related to stock options has been fully recognized.

For the three months ended

April 1, 2022 April 2, 2021

Provision for income taxes $ 2,436 $ 4,007

Effective tax rates 4.8 % 9.5 %

For the three months ended October 1, 2021, the difference between the Company's effective tax rate and the 21 % federal statutory rate resulted primarily from a lower tax rate on foreign-derived intangible income and a windfall of stock-based compensation.

These benefits were partially offset by other non-deductible expenses and state taxes.

For the nine months ended October 1, 2021, the difference between the Company’s effective tax rate and the 21 % federal statutory rate resulted primarily from a lower tax rate on foreign-derived intangible income and a windfall on stock-based compensation.

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

For the three 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 excess benefits related to stock-based compensation.

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

For the nine months ended October 2, 2020, the difference between the Company's effective tax rate and the 21 % federal statutory rate resulted primarily from a lower tax rate on foreign-derived intangible income, research and development credits, a negotiated reduction of Switzerland's withholding tax on prior year earnings, and excess tax benefits related to stock-based compensation.

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

For the three months ended April 1, 2022, the difference between the Company's effective tax rate of 4.8 % and the 21 % federal statutory rate resulted primarily from the impact of the recently finalized U.S.

tax regulations published by the U.S Treasury and Internal Revenue Service on January 4, 2022.

These regulations limit the amount of newly generated foreign taxes that are creditable against U.S income taxes which resulted in a release of the Company’s valuation allowance against foreign tax credits due to the Company's ability to use foreign tax credit carryforwards that had previously been reserved against.

This benefit was partially offset by state taxes and other nondeductible expenses.

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 nondeductible expenses.

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

FOX FACTORY HOLDING CORP.

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share amounts)

Related Party Transactions

On May 3, 2019, the Company acquired substantially all of the assets of Air Ride Technologies, Inc., d/b/a Ridetech ("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 and $ 144 for the three and nine months ended October 1, 2021, respectively.

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

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 $ 392 and $ 856 of parts and vehicles and sold approximately $ 217 and $ 467 of upfit packages to the dealership during the three and nine months ended October 1, 2021, respectively.

As of October 1, 2021, the Company had $ 123 and $ 57 in accounts payable and accounts receivable, respectively, related to this dealership.

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

The Company purchased approximately $ 281 and $ 202 of parts and vehicles and sold approximately $ 457 and $ 120 of upfit packages to the dealership during the three months ended April 1, 2022 and April 2, 2021, respectively.

As of April 1, 2022, the Company had $ 17 and $ 85 in accounts payable and accounts receivable, respectively, related to this dealership.

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

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

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

On May 21, 2021, the Company, through its wholly owned subsidiary, Fox Factory Australia Pty Ltd., acquired substantially all the assets of Sola Sport Pty Ltd.

The acquisition was not material to the Company's financial statements.

On May 25, 2021, the Company, through its wholly owned subsidiary, SCA Performance, Inc., acquired 100% of the issued and outstanding stock of Manifest Joy LLC, d/b/a Outside Van ("Outside Van") a custom van conversion company.

The total purchase price of $ 15,275 , net of cash acquired, was allocated to the assets acquired and liabilities assumed based on their estimated respective fair values as of May 25, 2021, with the excess purchase price allocated to goodwill.

The purchase price was allocated to the net liabilities assumed of $ 1,057 , $ 5,560 in identifiable intangible assets and goodwill acquired of $ 10,772 .

The Company will amortize the acquired customer relationship and trade name assets over their expected useful lives of one and ten years, respectively.

This purchase was accounted for as a business combination and was not material to the Company's financial statements.

On December 30, 2021, the Company, through its wholly owned subsidiary, Shock Therapy Suspension, Inc., acquired substantially all the assets of Shock Therapy LLC ("STS"), for $ 36,120 , net of cash acquired.

STS is a premier suspension tuning company in the off-road industry, with headquarters in Phoenix, Arizona.

This purchase was accounted for as a business combination.

The purchase price of STS is allocated to the assets acquired and liabilities assumed based on their estimated respective fair values as of December 30, 2021, with the excess purchase price allocated to goodwill.

The allocation of the purchase price to the net assets assumed of $ 5,244 , $ 7,086 in identifiable intangible assets and goodwill acquired of $ 23,790 , is preliminary and subject to the completion of the Company's validation of working capital, valuation of intangible assets and deferred taxes, with the assistance of specialists.

The Company will amortize the acquired non-compete and trade name assets over their expected useful lives of one and ten years , respectively.

The acquired goodwill represents the value of combining operations of STS and the company and is expected to be deductible for tax purposes.

The acquisition was not material to the Company's financial statements.

FOX FACTORY HOLDING CORP.

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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 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.

SCA operates under three aftermarket brands:

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

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 $ 1,130 and $ 3,550 in costs associated with such retention incentives during the three and nine months ended October 1, 2021, respectively.

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

Fair market values

Tangible assets acquired $ 28,678

Liabilities assumed ( 32,479 )

Intangible assets 139,900

Goodwill 195,754

Total $ 331,853

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.

These costs are classified as general and administrative expenses in the accompanying Condensed Consolidated Statements of Income.

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.

The Company will amortize the acquired customer relationships assets over their expected useful lives of 5 - 10 years.

Trademarks, brand names and goodwill are expected to have an indefinite life, and will be subject to impairment testing.

The goodwill is not deductible for income tax purposes.

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.

On May 25, 2021, the Company, through its wholly owned subsidiary, SCA Performance, Inc., acquired 100 % of the issued and outstanding stock of Manifest Joy LLC, dba Outside Van ("Outside Van") for $ 15,139 , net of cash acquired.

Outside Van is a custom van conversion company that designs and custom engineers recreational vehicles with headquarters in Portland, Oregon.

This purchase was accounted for as a business combination.

The purchase price of Outside Van is allocated to the assets acquired and liabilities assumed based on their estimated respective fair values as of May 25, 2021, with the excess purchase price allocated to goodwill.

The allocation of the purchase price to the net liabilities assumed of $ 1,057 , $ 5,560 in identifiable intangible assets and goodwill acquired of $ 10,636 , is preliminary and subject to the completion of the Company's validation of working capital, with the assistance of specialists.

The acquisition was not material to the Company's financial statements.

On May 21, 2021, the Company, through its wholly owned subsidiary, Fox Factory Australia Pty Ltd., acquired substantially all the assets of Sola Sport Pty Ltd.

The acquisition was not material to the Company's financial statements.

Subsequent Events

2022 Credit Facility

On April 5, 2022, the Company entered into a new credit agreement with Wells Fargo Bank, National Association, and other named lenders (the "2022 Credit Facility"), and concurrently repaid in full and terminated the Prior Credit Facility.

The 2022 Credit Facility, which matures on April 5, 2027, provides for revolving loans, swingline loans and letters of credit up to an aggregate amount of $ 650,000 .

On April 5, 2022, the Company borrowed $ 475,000 under the 2022 Credit Facility, which was used to repay all outstanding amounts owed under the Prior Credit Facility and for general corporate purposes.

Future advances under the 2022 Credit Facility will be used to finance working capital, capital expenditures and other general corporate purposes of the Company.

To the extent not previously paid, all then-outstanding amounts under the 2022 Credit Facility are due and payable on the maturity date.

The Company paid $ 1,980 in debt issuance costs in connection with the 2022 Credit Facility, which will be allocated to the line of credit and amortized on a straight-line basis over the term of the facility.

Additionally, the Company had $ 4,473 of remaining unamortized debt issuance costs related to the Prior Credit Facility.

The Company expects to expense a portion of the remaining unamortized debt issuance costs and allocate a portion to the 2022 Credit Facility.

The Company may borrow, prepay and re-borrow principal under the 2022 Credit Facility during its term.

Advances under the 2022 Credit Facility can be either Adjusted Term Secured Overnight Financing Rate ("SOFR") loans or base rate loans.

SOFR rate revolving loans bear interest on the outstanding principal amount thereof for each interest period at a rate per annum equal to Term SOFR for such calculation plus 0.10 % plus a margin ranging from 1.00 % to 2.00 %.

Base rate revolving loans bear interest on the outstanding principal amount thereof at a rate per annum equal to the highest of (i) Federal Funds Rate plus 0.50 %, (ii) the rate of interest in effect for such day as publicly announced from time to time by the lender as its “prime rate”, and (iii) Adjusted Term SOFR rate for a one-month tenor plus 1.00 %, subject to the interest rate floors set forth therein, plus a margin ranging from 0.00 % to 1.00 %.

The 2022 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.

2022 Swap Agreement

On April 5, 2022, the Company terminated its 2021 Swap Agreement and entered into a new interest rate swap agreement (the "2022 Swap Agreement") with a notional amount of $ 100,000 .

The 2022 Swap Agreement has a maturity date of April 5, 2027 and is indexed to a three-month Term SOFR.

The 2022 Swap Agreement met the criteria for cash flow hedges under ASC 815, and will be recorded to other assets or other liabilities on the Condensed Consolidated Balance Sheet.

The unrealized gains or losses, after tax, will be recorded in accumulated other comprehensive income, a component of equity, and are expected to be reclassified into interest expense on the Condensed Consolidated Statement of Income when the forecasted transactions affect earnings.

As required under ASC 815, the Interest Rate Swap’s effectiveness will be assessed on a quarterly basis using a quantitative regression analysis.

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