What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-02-23 compared with 2022-02-24 · 265 added, 296 removed, 986 unchanged (36% of the section changed)

30 unchanged sentences

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information required by this Item regarding our directors and executive officers is incorporated by reference to the sections of our proxy statement to be filed with the SEC in connection with our 2022 Annual Meeting of Stockholders (the "Proxy Statement") entitled "Election of Class III Directors" and "Corporate Governance."

Information required by this Item regarding our directors and executive officers is incorporated by reference to the sections of our proxy statement to be filed with the SEC in connection with our 2023 Annual Meeting of Stockholders (the "Proxy Statement") entitled "Election of Class I Directors" and "Corporate Governance."

Information required by this Item regarding our corporate governance, including our audit committee and code of ethics, is incorporated by reference to the sections of the Proxy Statement entitled "Corporate Governance" and "The Board of Directors."

13 unchanged sentences

Reports of Independent Registered Public Accounting Firm (PCAOB ID Number:

Consolidated Balance Sheets as of December 31, 2021 and January 1, 2021 66

Consolidated Statements of Income for the years ended December 31, 2021, January 1, 2021 and January 3, 2020 67

Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, January 1, 2021 and January 3, 2020 68

Consolidated Statements of Stockholders' Equity for the years ended December 31, 2021, January 1, 2021 and January 3, 2020 69

Consolidated Statements of Cash Flows for the years ended December 31, 2021, January 1, 2021 and January 3, 2020 70

Consolidated Balance Sheets as of December 30, 2022 and December 31, 2021 68

Consolidated Statements of Income for the years ended December 30, 2022, December 31, 2021 and January 1, 2021 69

Consolidated Statements of Comprehensive Income for the years ended December 30, 2022, December 31, 2021 and January 1, 2021 70

Consolidated Statements of Stockholders' Equity and Redeemable Non-controlling Interest for the years ended December 30, 2022, December 31, 2021 and January 1, 2021 71

Consolidated Statements of Cash Flows for the years ended December 30, 2022, December 31, 2021 and January 1, 2021 72

Notes to Consolidated Financial Statements 74

37 unchanged sentences

8-K 001-36040 August 10, 2020

Second Amendment to the Employment Agreement, by and between Fox Factory, Inc.

and Richard T.

Winters, dated August 5, 2022.

8-K 001-36040 August 8, 2022

Fourth Amended and Restated Non-Employee Director Compensation Policy, effective March 2, 2020.

6 unchanged sentences

2008 Non-Statutory Stock Option Plan, as amended S-1/A 333-189841 August 2, 2013

2013 Omnibus Plan S-1/A 333-189841 July 29, 2013

2013 Omnibus Plan, as amended by the First Amendment, approved by stockholders on May 4, 2017 8-K 001-36040 May 8, 2017

Form of Restricted Stock Unit Award Agreement under 2013 Omnibus Plan (U.S.) 10-K 001-36040 February 25, 2021

Form of Restricted Stock Unit Award Agreement under 2013 Omnibus Plan (Canada) 10-K 001-36040 February 25, 2021

Form of Restricted Stock Unit Award Agreement under 2013 Omnibus Plan (Taiwan) 10-K 001-36040 February 25, 2021

Form of Performance Stock Unit Award Agreement under 2013 Omnibus Plan 10-K 001-36040 February 25, 2021

Standard Form of Agreement between Owner and Design-Builder, dated July 24, 2019 (the “Standard Form of Agreement”), by and between Fox Factory, Inc.

and Carroll Daniel Construction Company 8-K 001-36040 December 30, 2019

Amendment No.

1 to the Standard Form of Agreement, dated December 23, 2019 8-K 001-36040 December 30, 2019

Amendment No.

2 to the Standard Form of Agreement between Owner and Design-Builder, dated December 21, 2020.

8-K 001-36040 December 23, 2020

Stock Purchase Agreement, by and among Fox Factory, Inc., Southern Rocky Holdings, LLC, and SCA Performance Holdings, Inc., dated February 11, 2019 10-K 001-36040 March 3, 2020

Amended and Restated Credit Agreement, among Fox Factory Holding Corp., Bank of America, N.A.

and other financial institutions party thereto, dated March 11, 2020 8-K 001-36040 March 16, 2020

Fox Factory Holding Corp.

2022 Omnibus Plan 8-K 001-36040 May 6, 2022

Form of Employee Restricted Stock Unit Award Agreement for Non-Employee Directors under 2022 Omnibus Plan (U.S.) 8-K 001-36040 May 6, 2022

Form of Restricted Stock Unit Award Agreement under 2022 Omnibus Plan 8-K 001-36040 May 6, 2022

Form of Performance Share Unit Award Agreement under the 2022 Omnibus Plan 8-K 001-36040 May 6, 2022

Pilot Agreement, between the Gainesville and Hall County Development Authority and Fox Factory, Inc., effective June 12, 2020.

8 unchanged sentences

1 to Lease Agreement between the Gainesville and Hall County Development Authority and Fox Factory, Inc., dated December 31, 2020.

10-K 001-36040 February 24, 2022

Amendment No.

2 to Lease Agreement between the Gainesville and Hall County Development Authority and Fox Factory, Inc., dated December 31, 2021.

10-K 001-36040 February 24, 2022

Deed to Secure Debt and Security Agreement, between the Gainesville and Hall County Development Authority and Fox Factory, Inc., effective June 12, 2020.

4 unchanged sentences

8-K 001-36040 June 16, 2020

First Amendment to the Amended and Restated Credit Agreement, among Fox Factory Holding Corp., Bank of America, N.A.

and other financial institutions party thereto, dated June 19, 2020.

8-K 001-36040 June 17, 2020

Second Amendment to the Amended and Restated Credit Agreement, among Fox Factory Holding Corp., Bank of American, N.A.

and other financial institutions party thereto, dated June 11, 2021.

10-Q 001-36040 August 5, 2021

Third Amendment to the Amended and Restated Credit Agreement, among Fox Factory Holding Corp., Bank of America, N.A.

and other financial institutions party thereto, dated December 16, 2021.

8-K 001-36040 December 17, 2021

Credit Agreement, among Fox Factory Holding Corp., Wells Fargo Bank, N.A., as Administrative Agent, Swingline Lender and L/C Issuer, and a group of lenders party thereto, dated April 5, 2022.

8-K 001-36040 April 5, 2022

Deferred Compensation Plan, effective June 30, 2021.

S-8 333-264858 June 29, 2021

Securities Purchase Agreement, between Fox Factory, Inc., CWH Holdco, LLC, CWH Blocker Corp., and Thompson Street Capital Partners V, L.P., effective February 17, 2023.

List of Subsidiaries X

38 unchanged sentences

/s/ Dudley W.

Mendenhall Lead Independent Director February 24, 2022

/s/ Tom Duncan Director February 24, 2022

Mendenhall Chairman February 23, 2023

/s/ Thomas E.

Duncan Director February 23, 2023

/s/ Elizabeth A.

22 unchanged sentences

We have audited the accompanying consolidated balance sheets of Fox Factory Holding Corp.

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2021 and January 1, 2021, the related consolidated statements of income, comprehensive income, stockholders’ equity and redeemable non-controlling interest, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and January 1, 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

(a Delaware corporation) and subsidiaries (the “Company”) as of December 30, 2022 and December 31, 2021, the related consolidated statements of income, comprehensive income, stockholder's equity and redeemable non-controlling interest, and cash flows for each of the three years in the period ended December 30, 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 30, 2022 and December 31, 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 30, 2022, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 30, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 23, 2023 expressed an unqualified opinion.

13 unchanged sentences

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Net realizable value of inventory

3 unchanged sentences

The principal consideration for our determination that the net realizable value of inventory represents a critical audit matter is that the assessment of the valuation of inventory is complex and includes an estimate of forecasted demand.

The demand estimate is subjective and requires the Company to consider significant assumptions such as economic conditions, consumer trends, product acceptance and competition, all of which are subject to significant uncertainty and therefore require significant auditor judgement.

The demand estimate is subjective and requires the Company to consider significant assumptions such as economic conditions, technology changes, and new product introductions, which are subject to significant uncertainty and therefore require significant auditor judgement.

Our audit procedures related to the net realizable value of inventory included the following, among others:

• We obtained management’s analysis of parts in inventory and expected customer demand, recalculated inputs into the analysis and tested for completeness.

This included, among other inputs, forecasted demand and general ledger balances.

• We tested selected inventory items by making inquiries of management and evaluating the appropriateness of judgments, assumptions and documentation supporting adjustments to the net realizable value of inventory.

• We compared selected 2022 estimated demand to actual customer sales orders and forecasted demand information as provided by the sales and operations team in order to test the accuracy of demand information included in the calculation.

• We obtained management’s analysis for estimated excess or obsolete inventory.

We evaluated the appropriateness of management's approach and tested the completeness and accuracy of the underlying data.

• We tested selected inventory items by making inquiries of management and evaluating the appropriateness of judgments and assumptions.

We also reviewed industry reports and inquired with management and various staff members outside of the finance function to understand macroeconomic, technology, and product trends.

• We performed a retrospective review by comparing previous demand forecasts to actual usage during the year for a sample of items.

• We inquired with management and various staff members outside of the finance function to obtain support for selected forecasted demand inputs as well as to understand macroeconomic and customer specific trends.

• We compared selected 2023 estimated demand to actual customer sales orders and forecasted demand information as provided by the sales and operations team in order to test the accuracy of demand information included in the calculation.

• We tested the design and operating effectiveness of controls related to the forecasted demand for the Company’s products as well as management’s review of the net realizable value of inventory.

5 unchanged sentences

The forecasts, including future sales and expenses by jurisdiction, are subject to a high level of estimation uncertainty and subjectivity.

Additionally, realizability depends on continued implementation of a tax planning strategy.

As a result, significant auditor judgment is necessary to audit management’s judgments and assumptions.

4 unchanged sentences

• We evaluated the appropriateness of the assumptions supporting the future revenue growth rate by jurisdiction.

• We evaluated management’s assumptions with respect to anticipated relief from withholding on intercompany charges paid by selected jurisdictions for consistency and credibility.

• We tested the design and operating effectiveness of controls related to the generation of the forecasts and assumptions that underpin the assessment of the realizability of deferred tax assets relating to the Company’s foreign tax credits.

33 unchanged sentences

(in thousands, except par value)

December 31, January 1,

December 30, December 31,

Current assets:

Cash and cash equivalents $ 145,250 $ 179,686

Accounts receivable (net of allowances of $ 410 and $ 663 at December 31, 2021 and January 1, 2021, respectively)

Accounts receivable (net of allowances of $ 443 and $ 410 at December 30, 2022 and December 31, 2021, respectively)

200,440 142,040

13 unchanged sentences

Accrued expenses 127,729 112,378

Reserve for uncertain tax positions — 1,095

Current portion of long-term debt — 17,500

Total current liabilities 258,889 229,862

Line of credit 200,000 —

Long-term debt, less current portion — 360,953

1 unchanged sentence

Total liabilities 496,950 621,647

Commitments and contingencies (Refer to Note 12.

" Commitments and Contingencies ")

Commitments and contingent liabilities (Refer to Note 12.

Commitments and Contingent Liabilities )

Stockholders’ equity

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

Preferred stock, $ 0.001 par value — 10,000 authorized and no shares issued or outstanding as of December 30, 2022 and December 31, 2021

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

43,160 shares issued and 42,270 outstanding as of December 30, 2022;

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

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

Additional paid-in capital 356,239 344,119

Treasury stock, at cost;

890 common shares as of December 31, 2021 and January 1, 2021

890 common shares as of December 30, 2022 and December 31, 2021

( 13,754 ) ( 13,754 )

8 unchanged sentences

For the fiscal years ended

December 31 January 1 January 3

December 30 December 31 January 1

2022 2021 2021

29 unchanged sentences

For the fiscal years ended

December 31, January 1, January 3,

December 30, December 31, January 1,

2022 2021 2021

11 unchanged sentences

(in thousands, except per share amounts)

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

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 469 1 — — ( 6,776 ) — — ( 6,775 ) —

Issuance of stock for business acquisition 98 — — — 7,167 — — 7,167 —

Stock-based compensation expense — — — — 6,864 — — 6,864 —

Other comprehensive income — — — — — 934 — 934 —

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

Net income — — — — — — 93,033 93,033 1,437

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

13 unchanged sentences

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 150 — — — ( 4,231 ) — — ( 4,231 ) —

Stock-based compensation expense — — — — 16,351 — — 16,351 —

Other comprehensive income — — — — — 9,906 — 9,906 —

Net income — — — — — — 205,278 205,278 —

Balance - December 30, 2022 43,160 $ 42 890 $ ( 13,754 ) $ 356,239 $ 14,782 $ 764,077 $ 1,121,386 $ —

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

3 unchanged sentences

For the fiscal years ended

December 31, January 1, January 3,

December 30, December 31, January 1,

2022 2021 2021

4 unchanged sentences

Stock-based compensation 16,351 13,914 8,618

Deferred taxes and uncertain tax positions ( 17,095 ) ( 14,075 ) ( 10,615 )

Amortization of loan fees 1,086 1,631 1,543

Loss on extinguishment of debt — — 516

Write off of unamortized loan origination fees 1,927 — —

Amortization of deferred gains on prior swap settlements ( 3,177 ) ( 48 ) —

Gain on disposal of property and equipment ( 1,740 ) ( 96 ) —

Deferred taxes and uncertain tax positions ( 18,445 ) ( 17,096 ) ( 14,291 )

Changes in operating assets and liabilities:

10 unchanged sentences

Purchases of property and equipment ( 43,701 ) ( 54,846 ) ( 56,744 )

Proceeds from sale of property and equipment 3,180 1,781 —

Net cash used in investing activities ( 44,735 ) ( 104,946 ) ( 388,525 )

FINANCING ACTIVITIES:

Proceeds from line of credit 37,931 225,125 67,500

Proceeds from line of credit, net of origination fees 602,356 37,931 225,125

Payments on line of credit ( 404,336 ) ( 37,931 ) ( 293,125 )

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

Repayment of debt ( 12,500 ) ( 5,000 ) ( 2,813 )

Proceeds from stock compensation program, net ( 7,050 ) ( 4,343 ) ( 6,775 )

Installment on purchase of non-controlling interest ( 4,550 ) ( 6,556 ) —

Repayment of term debt upon refinancing of Prior Credit Facility ( 382,500 ) ( 12,500 ) ( 5,000 )

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

Net (used in) provided by financing activities ( 24,100 ) 506,722 859

Installment on purchase of non-controlling interest ( 2,700 ) ( 4,550 ) ( 6,556 )

Repurchases from stock compensation program, net ( 4,231 ) ( 7,050 ) ( 4,343 )

Proceeds from termination of swap agreement 12,270 324 —

Net cash (used in) provided by financing activities ( 179,141 ) ( 23,776 ) 506,722

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 2,346 ( 540 ) 1,332

2 unchanged sentences

CASH AND CASH EQUIVALENTS—End of year $ 145,250 $ 179,686 $ 245,764

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

FOX FACTORY HOLDING CORP.

2 unchanged sentences

For the fiscal years ended

December 31, January 1, January 3,

December 30, December 31, January 1,

SUPPLEMENTAL CASH FLOW INFORMATION:

7 unchanged sentences

Non-cash investing and financing activities:

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

Acquisition of non-controlling interest in exchange for equity and installment payments $ — $ — $ 18,419

Capital expenditures included in accounts payable $ 2,049 $ 3,491 $ 6,997

Refinancing of the Credit Facility $ — $ — $ 88,875

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

6 unchanged sentences

(the "Company") designs, engineers, manufactures and markets performance-defining products and systems for customers worldwide.

Our premium brand, performance-defining products and systems are used primarily for bicycles ("bikes"), side-by-side vehicles ("side-by-sides"), on-road vehicles with and without off-road capabilities, off-road vehicles and trucks, all-terrain vehicles ("ATVs"), snowmobiles, specialty vehicles and applications, motorcycles and commercial trucks.

Some of our products are specifically designed and marketed to the leading cycling and powered vehicle original equipment manufacturers ("OEMs"), while others are distributed to consumers through a global network of dealers and distributors.

4 unchanged sentences

Therefore, the financial results of certain fiscal years and quarters, which will contain 53 and 14 weeks, respectively, will not be exactly comparable to the prior and subsequent fiscal years and quarters, which contain 52 and 13 weeks, respectively.

For the fiscal years 2021, 2020 and 2019, the Company's fiscal year ended on December 31, 2021, January 1, 2021 and January 3, 2020 and had 52, 52 and 53 weeks, respectively.

For the fiscal years 2022, 2021 and 2020, the Company's fiscal year ended on December 30, 2022, December 31, 2021 and January 1, 2021 and each had 52 weeks.

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

10 unchanged sentences

The effects of these translation adjustments are a component of other comprehensive income.

Foreign currency transaction losses of $ 455 , $ 396 , and $ 881 for the years ended December 31, 2021, January 1, 2021 and January 3, 2020, respectively, are included as a component of other income or expense.

Foreign currency transaction losses of $ 3,377 , $ 455 , and $ 396 for the years ended December 30, 2022, December 31, 2021 and January 1, 2021, respectively, are included as a component of other income or expense.

Cash and Cash Equivalents - Cash consists of cash maintained in checking or money market accounts.

19 unchanged sentences

The following customers accounted for 10% or more of the Company's accounts receivable balance:

December 31, January 1,

December 30, December 31,

Customer A 14 % 6 %

Customer B 9 % 11 %

Customer C 8 % 10 %

No other customers were individually significant in any of these periods presented.

The Company depends on a limited number of vendors to supply component parts for its products.

The Company purchased 32 %, 28 %, and 35 % of its product components for the years ended December 31, 2021, January 1, 2021 and January 3, 2020, respectively, from ten vendors.

As of December 31, 2021 and January 1, 2021, amounts due to these vendors represented 10 % and 17 % of accounts payable, respectively.

The Company purchased 34 %, 32 %, and 28 % of its product components for the years ended December 30, 2022, December 31, 2021 and January 1, 2021, respectively, from ten vendors.

As of December 30, 2022 and December 31, 2021, amounts due to these vendors represented 38 % and 10 % of accounts payable, respectively.

Allowance for Credit Losses - The Company records a provision for credit losses based on historical experience and a detailed assessment of the collectability of its accounts receivable.

3 unchanged sentences

For the fiscal years ended

December 30 December 31 January 1

Allowance for credit losses:

1 unchanged sentence

Balance, beginning of year $ 410 $ 663 $ 810

bad debt (benefit) expense ( 14 ) 103 335

bad debt expense (benefit) 446 ( 14 ) 103

write-offs, net of recoveries ( 413 ) ( 239 ) ( 250 )

30 unchanged sentences

Fair value is estimated based on discounted future cash flows.

No impairment charges were recorded during the years ended December 31, 2021, January 1, 2021 and January 3, 2020.

No impairment charges were recorded during the years ended December 30, 2022, December 31, 2021 and January 1, 2021.

Business Combinations - The Company accounts for acquisitions of entities that include inputs and processes and have the ability to create outputs as business combinations.

24 unchanged sentences

Certain trademarks and brands are considered to be indefinite life intangibles, and are not amortized but are subject to testing for impairment annually.

No impairments of intangible assets were identified in the years ended December 31, 2021, January 1, 2021 and January 3, 2020.

Self-Insurance - The Company is partially self-insured for its U.S.

No impairments of intangible assets were identified in the years ended December 30, 2022, December 31, 2021 and January 1, 2021.

Self-Insurance - The Company is self-insured for its U.S.

employee health and welfare benefits.

3 unchanged sentences

The Company has third-party insurance coverage to limit exposure for individually significant claims.

The estimates for unpaid claims incurred as of December 31, 2021 and January 1, 2021 are $ 1,754 and $ 1,472 respectively, and are recorded within accrued expenses on the consolidated balance sheets.

The estimates for unpaid claims incurred as of December 30, 2022 and December 31, 2021 are $ 1,988 and $ 1,754 respectively, and are recorded within accrued expenses on the consolidated balance sheets.

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

6 unchanged sentences

Sales tax and other similar taxes are excluded from revenues.

Revenues generated from upfit packages generally do not include the vehicle chassis, as the Company is not the principal in this arrangement and the automotive dealer purchases the chassis directly from the OEM.

The Company is required to place a deposit on all vehicle chassis that the dealer purchases directly from the OEM, however that deposit is refunded when the chassis is sold through to the end customer.

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.

5 unchanged sentences

Additionally, it includes stock-based compensation for personnel directly involved with manufacturing the Company’s product offerings.

Shipping and Handling Fees and Costs - The Company includes shipping and handling fees billed to customers in sales.

Shipping costs associated with inbound freight are capitalized as part of inventory and included in cost of sales as products are sold.

FOX FACTORY HOLDING CORP.

2 unchanged sentences

(in thousands, except per share amounts)

Sales and Marketing - Sales and marketing expenses include costs related to sales, customer service and marketing personnel, including their wages, employee benefits and related stock-based compensation, and occupancy related expenses.

Other significant sales and marketing expenses include race support and sponsorships of events and athletes, advertising and promotions related to trade shows, travel and entertainment, and promotional materials, products and sales offices costs.

Shipping and Handling Fees and Costs - The Company includes shipping and handling fees billed to customers in sales.

Shipping costs associated with inbound freight are capitalized as part of inventory and included in cost of sales as products are sold.

Sales and Marketing - Our sales and marketing expenses include costs related to our sales, customer service and marketing personnel, including their wages, employee benefits and related stock-based compensation, and occupancy related expenses.

Other significant sales and marketing expenses include commissions paid to outside sales representatives, promotional materials and products, our sales office costs, race support and sponsorships of events and athletes, advertising and promotions related to trade shows, and travel and entertainment.

Research and Development - Research and development expenses consist primarily of salaries and personnel costs, including wages, employee benefits and related stock-based compensation for the Company’s engineering, research and development teams, occupancy related expenses, fees for third party consultants, service fees, and expenses for prototype tooling and materials, travel, and supplies.

11 unchanged sentences

Valuation allowances are provided when necessary to reduce net deferred tax assets to an amount that is more likely than not to be realized.

The Company has elected to account for global intangible low-taxed income ("GILTI") in the year the tax is incurred, rather than recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years.

The Company accounts for global intangible low-taxed income ("GILTI") in the year the tax is incurred, rather than recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years.

The net GILTI inclusion for the year ended December 30, 2022 was fully offset by foreign tax credits associated with the income.

2 unchanged sentences

Advertising - Advertising costs are expensed as incurred and recorded as sales and marketing expenses on our Consolidated Statements of Income.

Costs incurred for advertising totaled $ 2,741 , $ 2,188 , and $ 1,413 for the years ended December 31, 2021, January 1, 2021 and January 3, 2020, respectively.

Costs incurred for advertising totaled $ 4,813 , $ 2,741 , and $ 2,188 for the years ended December 30, 2022, December 31, 2021 and January 1, 2021, respectively.

Warranties - The Company offers limited warranties on its products generally for one to two years .

18 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 approximate fair value due to the variable interest rate features embedded in both the line of credit and term debt.

As of December 31, 2021, amounts owed under the Company's Prior Credit Facility approximated fair value because it had a variable interest rate that reflected market changes in interest rates and changes in the Company’s net leverage ratio.

The Prior Credit Facility was terminated on April 5, 2022 and replaced with the revolving 2022 Credit Facility.

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.

16 unchanged sentences

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

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

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

FOX FACTORY HOLDING CORP.

6 unchanged sentences

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

The Company expects to early adopt this guidance in the first quarter of 2022.

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

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

In September 2022, the FASB issued ASU 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405):

Disclosure of Supplier Finance Program Obligations.

Under ASU 2022-04, the buyer in a supplier finance program is required to disclose sufficient information to allow a user of the financial statements to understand the program's nature, activity during the period, changes from period to period, and potential magnitude.

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

These amendments will be applied retrospectively to each period in which a balance sheet is presented, except for the disclosure of rollforward information, which will be applied prospectively.

The Company expects to adopt the interim disclosure requirements as applicable during the first quarter of 2023 and the annual disclosure requirements, except for the annual rollforward, in the 2023 Annual Report on Form 10-K.

The Company expects to adopt the annual rollforward requirement in the 2024 Annual Report on Form 10-K.

This adoption is not expected to have a material impact on our financial statements.

The Company is currently evaluating ASU 2022-04 and assessing the impact this guidance will have on its consolidated financial statements and disclosures.

The following table summarizes total sales by product category:

For the fiscal years ended

December 30 December 31 January 1

2022 2021 2021

Powered Vehicles $ 720,029 $ 523,694 $ 451,253

Specialty Sports 579,035 366,860 299,767

Powered Vehicle products $ 921,520 $ 720,029 $ 523,694

Specialty Sports products 680,971 579,035 366,860

Total sales $ 1,602,491 $ 1,299,064 $ 890,554

1 unchanged sentence

For the fiscal years ended

December 30 December 31 January 1

2022 2021 2021

4 unchanged sentences

For the fiscal years ended

December 30 December 31 January 1

2022 2021 2021

4 unchanged sentences

Total sales $ 1,602,491 $ 1,299,064 $ 890,554

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 December 31, 2021 for contracts with a duration of more than one year was approximately $ 1,752 , all of which is expected to be recognized during fiscal year 2023.

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

FOX FACTORY HOLDING CORP.

3 unchanged sentences

Inventory consisted of the following:

December 31, January 1,

December 30, December 31,

Raw materials $ 247,441 $ 200,460

4 unchanged sentences

Prepaids and other current assets consisted of the following:

December 31, January 1

December 30, December 31

Prepaid chassis deposits $ 74,013 $ 98,618

Advanced payments and prepaid contracts 13,598 14,024

Current portion of acquisition-related compensation held in escrow 841 4,518

Other current assets 13,753 10,465

Total $ 123,107 $ 87,920

Total prepaids and other assets $ 101,364 $ 123,107

Property, Plant and Equipment, net

Property, plant and equipment consisted of the following:

December 31, January 1,

December 30, December 31,

Building and building improvements $ 73,594 $ 72,088

5 unchanged sentences

Transportation equipment 12,450 7,372

Total 271,274 222,023

Total property, plant and equipment 295,308 271,274

accumulated depreciation and amortization ( 93,093 ) ( 79,271 )

Property, plant and equipment, net $ 192,003 $ 163,288

During the year ended December 31, 2021, the Company reclassified certain assets from buildings to land and land improvements to better depict the nature of the assets.

Depreciation expense was $ 22,741 , $ 16,341 , and $ 11,261 for the years ended December 31, 2021, January 1, 2021 and January 3, 2020, respectively, including $ 2,492 , $ 2,250 , and $ 1,861 of internal-use software amortization for the years ended December 31, 2021, January 1, 2021 and January 3, 2020, respectively.

Total property, plant and equipment, net $ 202,215 $ 192,003

At the end of March 2022, the Company retired approximately $6,717 in assets that were fully depreciated in response to the shutdown of our Watsonville, California facility.

Depreciation expense was $ 27,705 , $ 22,741 , and $ 16,341 for the years ended December 30, 2022, December 31, 2021 and January 1, 2021, respectively, including $ 3,787 , $ 2,492 , and $ 2,250 of internal-use software amortization for the years ended December 30, 2022, December 31, 2021 and January 1, 2021, respectively.

The Company capitalized $ 4,863 in internal use computer software costs during the year ended December 30, 2022.

5 unchanged sentences

For the fiscal years ended

December 30 December 31 January 1

2022 2021 2021

Cost of sales $ 13,741 $ 11,656 $ 9,266

Sales and marketing $ 225 $ 163 $ 154

Research and development $ 2,080 $ 2,044 $ 1,176

General and administrative 11,003 8,780 4,868

Total $ 22,741 $ 16,341 $ 11,261

Research and development 2,441 2,080 2,044

Sales and marketing 520 225 163

Total depreciation expense $ 27,705 $ 22,741 $ 16,341

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

December 31, January 1,

December 30, December 31,

United States $ 166,544 $ 161,451

2 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 one to ten 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 .

These leases have remaining lease terms ranging from one to ten years , some of which include options to extend the lease term for up to ten 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.

5 unchanged sentences

For the fiscal years ended

December 30 December 31 January 1

2022 2021 2021

1 unchanged sentence

Other lease costs (1) 3,638 1,122 937

Total $ 10,246 $ 8,138 $ 7,195

Total lease costs $ 14,847 $ 10,246 $ 8,138

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

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.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 30, 2022

(in thousands, except per share amounts)

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

3 unchanged sentences

Non-current lease liabilities Other liabilities $ 37,098

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 31, 2021

(in thousands, except per share amounts)

Maturities of lease liabilities by fiscal year for the Company's operating leases are as follows:

For fiscal year Total future payments

2023 $ 11,376

Thereafter 9,649

4 unchanged sentences

Lease liabilities less current portion $ 37,098

In January 2021, the Company signed a lease contract to expand its principal executive offices, which has not commenced as of December 31, 2021.

The Company is actively involved in the design and construction of the expanded space.

Based on the present value of the lease payments, the estimated right-of-use asset and lease liability related to this contract is approximately $ 2,676 and $ 2,707 , respectively.

Goodwill and Intangible Assets

7 unchanged sentences

Total $ 178,980

January 1, 2021

December 31, 2021

Customer relationships $ 195,910 $ ( 66,240 ) $ 129,670 10

4 unchanged sentences

Total $ 197,021

For the fiscal years ended

2021 2020 2019

Amortization of intangibles $ 20,685 $ 17,583 $ 6,344

FOX FACTORY HOLDING CORP.

2 unchanged sentences

(in thousands, except per share amounts)

The following table summarizes the amortization of intangible assets in the accompanying consolidated statements of income:

For the fiscal years ended

December 30 December 31 January 1

2022 2021 2021

Amortization of intangibles $ 21,537 $ 20,685 $ 17,583

Future amortization expense for finite-lived intangibles as of December 30, 2022 is as follows:

5 unchanged sentences

Goodwill activity consisted of the following:

Balance as of January 1, 2021 $ 289,349

Balance as of December 31, 2021 $ 323,299

Acquisitions (Refer to Note 18.

Acquisitions )

Purchase price adjustments (Refer to Note 18.

" Acquisitions ")

Currency translation and other adjustments ( 35 )

2 unchanged sentences

Accrued expenses consisted of the following:

December 31, January 1,

December 30, December 31,

Payroll and related expenses $ 38,193 $ 32,968

5 unchanged sentences

Other accrued expenses 12,757 8,692

Total $ 112,378 $ 59,391

Total accrued expenses $ 127,729 $ 112,378

Activity related to warranties is as follows:

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 30, 2022

(in thousands, except per share amounts)

For the fiscal years ended

December 30 December 31 January 1

2022 2021 2021

4 unchanged sentences

Ending warranty liability $ 17,071 $ 15,510 $ 9,835

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 31, 2021

(in thousands, except per share amounts)

Related Party Transactions

On May 3, 2019, the Company acquired substantially all 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 the former owner of Ridetech, who is now an employee of the Company.

The lease is effective from May 3, 2019 through April 1, 2024, with monthly rent payments of $ 16 .

Rent expense under this lease was $ 192 for the years ended December 31, 2021 and January 1, 2021.

Rent expense under this lease was $ 125 for the year ended January 3, 2020.

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

2 unchanged sentences

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 $ 1,206 and $ 1,172 in parts and vehicles, and sold approximately $ 538 and $ 404 of upfit packages to the dealership during the years ended December 31, 2021 and January 1, 2021, respectively.

The Company had $ 105 and $ 1,014 in accounts payable, and $ 50 and $ 404 in accounts receivable, related to this dealership for the years ended December 31, 2021 and January 1, 2021, respectively.

The Company purchased approximately $ 2,015 , $ 1,206 and $ 1,172 in parts and vehicles, and sold approximately $ 1,010 , $ 538 and $ 404 of upfit packages to the dealership during the years ended December 30, 2022, December 31, 2021 and January 1, 2021, respectively.

The Company had $ 99 and $ 105 in accounts payable, related to this dealership as of December 30, 2022 and December 31, 2021, respectively.

The Company had $ 50 in accounts receivable related to this dealership as of December 31, 2021.

No accounts receivable were outstanding as of December 30, 2022.

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.

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

The cash portion will be settled in quarterly installment payments through July 2022.

The cash and stock portions were settled in quarterly installments through July 2022.

Refer to Note 12.

" Commitments and Contingencies " for additional details of this agreement.

On December 30, 2021, the Company acquired substantially all the assets of Shock Therapy LLC ("Shock Therapy").

Shock Therapy has building leases for its manufacturing, service, sales and marketing, and office facilities, which are located in Phoenix, Arizona.

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

The leases are effective from December 30, 2021 through February 13, 2027, and December 30, 2021 through December 30, 2026, with monthly rent payments of $ 14 and $ 11 , respectively.

No rent expense was incurred under these lease agreements for the year ended December 31, 2021.

Commitments and Contingent Liabilities for additional details of this agreement.

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, June 11, 2021 and December 16, 2021 (as amended, 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.

2022 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, June 11, 2021 and December 16, 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.

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.

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, or LIBOR, plus a margin ranging from 1.00 % to 2.25 %, with a floor rate of 0.0%, or based on the base rate offered by Bank of America plus a margin ranging from 0.00 % to 1.25 %.

At December 31, 2021, the one-month LIBOR and prime rates were 0.10 % and 3.25 %, respectively.

At December 31, 2021 and January 1, 2021, our weighted average interest rates on outstanding borrowing were 1.31 % and 1.62 %, respectively.

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 December 31, 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 11.

" 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 December 31, 2021.

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.

FOX FACTORY HOLDING CORP.

2 unchanged sentences

(in thousands, except per share amounts)

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

December 31, January 1,

The Company paid $ 1,980 in debt issuance costs in connection with the 2022 Credit Facility, which were 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 expensed $ 1,927 of the remaining unamortized debt issuance costs and allocated $ 2,546 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 administrative agent 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 %.

At December 30, 2022, the one-month SOFR and three-month SOFR rates were 4.06 % and 3.62 %, respectively.

At December 30, 2022, our weighted-average interest rate on outstanding borrowing was 4.38 %.

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.

The Company was in compliance with the covenants as of December 30, 2022.

The following table summarizes the line of credit under the 2022 Credit Facility and the Prior Credit Facility:

December 30, December 31,

Amount outstanding $ 200,000 $ —

2 unchanged sentences

Total borrowing capacity $ 650,000 $ 250,000

Maturity date March 11, 2025

As of December 31, 2021, future principal payments for long-term debt, including the current portion, as summarized as follows:

For fiscal year

2022 $ 17,500

Total 382,500

Debt issuance cost ( 4,047 )

Long-term debt, net of issuance cost 378,453

current portion ( 17,500 )

Long-term debt less current portion $ 360,953

Maturity date April 5, 2027 March 11, 2025

Derivatives and Hedging

2 unchanged sentences

The Company utilizes interest rate swaps to limit its exposure to interest rate risk by converting a portion of its floating-rate debt to a fixed-rate basis, thus reducing the impact of interest rate changes on future interest expense.

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 December 31, 2021 and January 1, 2021, the Company had the following interest rate swap contracts:

December 31, 2021 January 1, 2021

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

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

As of December 30, 2022 and December 31, 2021, the Company had the following interest rate swap contracts:

December 30, December 31,

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

September 2, 2020 June 11, 2021 $ 200,000 $ 189 $ 276

July 2, 2021 March 11, 2025 $ 200,000 3,583 —

July 2, 2021 April 5, 2022 $ 200,000 9,180 3,583

April 5, 2022 April 5, 2027 $ 100,000 5,087 —

Total $ 14,456 $ 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 .

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.

FOX FACTORY HOLDING CORP.

2 unchanged sentences

(in thousands, except per share amounts)

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 Consolidated Balance Sheet.

On June 11, 2021, the Company terminated its existing swap agreement (the "2020 Swap Agreement") and entered into an interest rate swap agreement (the "2021 Swap Agreement") with a notional amount of $ 200,000 .

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 terminated 2020 and 2021 Swap Agreements resulted in unrealized gains of $ 324 and $ 12,270 , respectively, at the termination dates 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 2022 Swap Agreement has a maturity date of April 5, 2027 and is indexed to a three-month Term SOFR (as defined in the 2022 Swap Agreement).

The 2022 Swap Agreement met the criteria as a cash flow hedge under ASC 815, Derivatives and Hedging ("ASC 815"), and is recorded to other assets or other liabilities on the Consolidated Balance Sheets.

Refer to Note 16.

Fair Value Measurements and Financial Instruments for additional information on determining the fair value.

The unrealized gains or losses, after tax, are recorded in Accumulated Other Comprehensive Income, a component of equity, and are expected to be reclassified into interest expense on the 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.

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 years ended December 31, 2021 and January 1, 2021 were a gain of $ 3,645 and a loss of $ 699 , respectively.

The gains and losses, related to the effective portion of derivative instruments designated as cash flow hedges recognized in Interest Expense for the years ended December 31, 2021 and January 1, 2021 were losses of $ 600 and $ 115 , respectively.

Unrealized losses of $ 814 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.

Commitments and Contingencies

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 Consolidated Statements of Income when the forecasted transactions affect earnings.

As required under ASC 815, the interest rate swap contracts’ effectiveness will be assessed on a quarterly basis using a quantitative regression analysis.

The gains and losses, net of tax, related to the derivative instruments designated as cash flow hedges recognized in accumulated other comprehensive income for the years ended December 30, 2022 and December 31, 2021 were gains of $ 14,824 and $ 3,645 , respectively.

The gains and losses, related to the effective portion of derivative instruments designated as cash flow hedges recognized in interest expense for the years ended December 30, 2022, December 31, 2021 and January 1, 2021 were a gain of $ 2,750 and losses of $ 600 and $ 115 , respectively.

Over the next twelve months, the Company expects to recognize $ 3,256 of the $ 14,456 of unrealized gains currently included in accumulated other comprehensive income as an offset to interest expense.

Commitments and Contingent Liabilities

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.

1 unchanged sentence

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 - SRAM, LLC (“SRAM”) filed (i) a lawsuit on December 17, 2015 in the U.S.

District Court, Northern District of Illinois, against RFE Holding (Canada) Corp.

(“RFE Canada”), a wholly-owned subsidiary of Fox Factory Holding Corp.

(“Fox Factory”), alleging patent infringement of U.S.

Patent number 9,182,027 (“027 Patent”) and violation of the Lanham Act, and (ii) a second lawsuit on May 16, 2016 in the same court against RFE Canada alleging patent infringement of U.S.

Patent number 9,291,250 (“250 Patent” and, together with 027 Patent, the “Applicable SRAM Chainring Patents”).

In addition, Fox Factory, Inc.

(a wholly owned subsidiary of Fox Factory) filed (i) a lawsuit on January 29, 2016 in the U.S.

District Court, Northern District of California against SRAM alleging SRAM’s infringement of two separate Fox Factory, Inc.

owned patents, specifically U.S.

Patent number 6,135,434, and (ii) a second lawsuit on July 1, 2016 in the U.S.

District Court, Northern District of California against SRAM alleging infringement of Fox Factory, Inc.’s U.S.

Patent numbers 8,226,172 and 8,974,009 (collectively, the “Applicable Fox Axle Patents”) (which actions were later moved to U.S.

District Court, District of Colorado).

As previously disclosed on December 22, 2021, Fox Factory entered into a Settlement and License Agreement with SRAM that, among other things, provides (i) all claims amongst the parties in the aforementioned complaints shall be dismissed with prejudice, without any admission of liability or fault by any party, (ii) SRAM granted Fox Factory a non-exclusive license to make and use products and services covered by the Applicable SRAM Chainring Patents under the FOX brand in exchange for specified royalty rates, (iii) Fox Factory granted SRAM a non-exclusive, royalty-free license to make and use products and services covered by the Applicable Fox Axle Patents under the SRAM brand, and (iv) the exchange of mutual releases by the parties.

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

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

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 31, 2021

(in thousands, except per share amounts)

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, either individually or in the aggregate, 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.

5 unchanged sentences

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 $ 4,550 during the year ended December 31, 2021.

The stock portion of 136 shares held in escrow is released quarterly as of January 2021 through July 2022.

The Company released 78 during the year ended December 31, 2021.

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

The Company had no remaining liability as of December 30, 2022.

The stock portion of 136 shares were released from escrow on a quarterly basis starting January 2021 through July 2022.

The Company released 58 and 78 shares during the years ended December 30, 2022 and December 31, 2021, respectively.

The Company had no remaining shares to be released as of December 30, 2022.

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

Other Contingencies - On June 21, 2018, the U.S.

Supreme Court (the “Court”) decided South Dakota v.

Wayfair, Inc., et al., holding that internet retailers do not have to maintain a physical presence in a state in order to be required to collect the state’s sales and use tax.

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 December 31, 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.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 30, 2022

(in thousands, except per share amounts)

Stockholders' Equity

S econdary Stock Offering

Secondary Stock Offering

In June 2020, the Company completed a secondary 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 .

2 unchanged sentences

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

The Company did not incur any expenses related to secondary offerings during the fiscal years ended December 31, 2021 and January 3, 2020.

The Company did not incur any expenses related to secondary offerings during the fiscal years ended December 30, 2022 and December 31, 2021.

Equity Incentive Plans

1 unchanged sentence

the 2008 Stock Option Plan (the "2008 Plan"), the 2008 Non-Statutory Stock Option Plan (the "2008 Non-Statutory Plan") and the 2013 Omnibus Plan (the "2013 Plan").

No further awards will be granted pursuant to the 2008 Plan or the 2008 Non-Statutory Plan.

On February 23, 2022, the Board of Directors, upon recommendation of the Compensation Committee approved the 2022 Omnibus Plan (the "2022 Plan"), which replaced the 2013 Plan.

All remaining available shares under the 2013 Plan were rolled into the 2022 Plan and made available for issuance.

No further awards will be granted pursuant to the 2008 Plan, the 2008 Non-Statutory Plan.

Under the 2022 Plan, the Company has the ability to issue incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, RSUs, performance units and/or performance shares.

The equity incentive plans are administered by the Compensation Committee of the Board of Directors of the Company, which has the authority to determine the type of incentive award, as well as the terms and conditions of the awards.

Options granted under the plans have vesting periods ranging from one to five years and expire no later than 10 years from the date of grant.

Options granted under the plans have vesting periods ranging from one to ten years and expire no later than 10 years from the date of grant.

RSUs generally vest over a three to four-year period with equal annual installments beginning at the end of one year and the remaining vesting annually thereafter.

2 unchanged sentences

The Company generally issues new shares in connection with awards under its equity incentive plans.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 31, 2021

(in thousands, except per share amounts)

Stock-Based Compensation

Compensation expense related to the Company's share-based awards for the fiscal years ended December 31, 2021, January 1, 2021, and January 3, 2020 was $ 13,914 , $ 8,618 , and $ 6,864 , respectively, all of which related to RSUs.

No compensation expense related to stock options was incurred during the fiscal years ended December 31, 2021, January 1, 2021, and January 3, 2020.

Compensation expense related to the Company's share-based awards for the fiscal years ended December 30, 2022, December 31, 2021, and January 1, 2021 was $ 16,351 , $ 13,914 , and $ 8,618 , respectively, all of which related to RSUs.

No compensation expense related to stock options was incurred during the fiscal years ended December 30, 2022, December 31, 2021, and January 1, 2021.

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

For the fiscal years ended

December 30 December 31 January 1

2022 2021 2021

4 unchanged sentences

Total $ 16,351 $ 13,914 $ 8,618

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

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

This amount was recognized as additional paid in capital during the year ended December 31, 2021 upon the issuance of the underlying restricted stock units.

Stock-based compensation expense capitalized to inventory was not material for the years ended December 31, 2021, January 1, 2021 and January 3, 2020.

Stock-based compensation expense capitalized to inventory was not material for the years ended December 30, 2022, December 31, 2021 and January 1, 2021.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 30, 2022

(in thousands, except per share amounts)

Restricted Stock Units

3 unchanged sentences

The recognition of compensation expense associated with performance-based stock awards requires defined criteria for assessing achievement and judgment in assessing the probability of meeting the performance goals.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 31, 2021

(in thousands, except per share amounts)

The following table summarizes RSU activity:

1 unchanged sentence

Number of shares outstanding Weighted-average grant date fair value

Unvested at December 28, 2018 655 $ 29.34

Unvested at January 3, 2020 427 $ 44.98

Granted 260 47.46

5 unchanged sentences

Vested ( 177 ) 49.17

Unvested at January 1, 2021 450 50.12

Unvested at December 31, 2021 338 76.30

Granted 142 95.34

2 unchanged sentences

Unvested at December 30, 2022 297 $ 87.05

The fair value of vested RSUs was $ 27,213 , $ 15,625 and $ 21,793 for the years ended December 31, 2021, January 1, 2021 and January 3, 2020, respectively.

The fair value of vested RSUs was $ 15,140 , $ 27,213 and $ 15,625 for the years ended December 30, 2022, December 31, 2021 and January 1, 2021, respectively.

As of December 30, 2022, the Company had approximately $ 17,591 of unrecognized stock-based compensation expense related to RSUs, which will be recognized over the remaining weighted-average vesting period of approximately 1.76 years.

14 unchanged sentences

Unvested at December 31, 2021 29,000 141.46

Granted 37,000 120.90

Canceled ( 4,000 ) 126.73

Vested ( 14,000 ) 141.46

Unvested at December 30, 2022 48,000 $ 126.69

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.

4 unchanged sentences

Number of shares outstanding Weighted-average exercise price Weighted-average remaining contractual life (years) Aggregate intrinsic value

Balance at December 28, 2018 720 $ 5.17 3 $ 39,403

Options exercised ( 289 ) 5.03 17,422

Balance at January 3, 2020 431 $ 5.27 2 $ 27,814

3 unchanged sentences

Balance at December 31, 2021 33 5.16 1 5,389

Options exercised ( 33 ) 5.16 2,470

Balance at December 30, 2022 — — 0 —

Options vested and expected to vest - December 30, 2022 — — 0 —

3 unchanged sentences

As of December 30, 2022, stock-based compensation expense related to stock options has been fully recognized.

During the years ended December 31, 2021, January 1, 2021 and January 3, 2020, 192 , 206 , and 289 shares of common stock, respectively, were issued due to the exercise of stock options, resulting in proceeds to the Company of approximately $ 1,042 , $ 1,063 , and $ 1,451 , respectively.

During the years ended December 30, 2022, December 31, 2021 and January 1, 2021, 33 , 192 , and 206 shares of common stock, respectively, were issued due to the exercise of stock options, resulting in proceeds to the Company of approximately $ 169 , $ 1,042 , and $ 1,063 , respectively.

As of December 30, 2022, stock-based compensation expense related to stock options has been fully recognized.

10 unchanged sentences

For the fiscal years ended

December 30 December 31 January 1

2022 2021 2021

6 unchanged sentences

Diluted $ 4.84 $ 3.87 $ 2.22

The Company excluded some potentially dilutive shares from the calculation of diluted earnings per share for the year ended December 31, 2021, as these shares would have been antidilutive.

No potentially dilutive shares were excluded from the calculation of diluted earnings per share for the years ended January 1, 2021 and January 3, 2020.

The Company excluded 20 shares from the calculation of diluted earnings per share for the year ended December 30, 2022 as these shares would have been antidilutive.

No potentially dilutive shares were excluded from the calculation of diluted earnings per share for the years ended December 31, 2021 and January 1, 2021, respectively.

Provision for Income Taxes

1 unchanged sentence

For the fiscal years ended

December 30 December 31 January 1

2022 2021 2021

2 unchanged sentences

Foreign 11,964 8,617 8,043

Total 39,177 27,694 24,493

Total current 49,958 39,177 27,694

Federal ( 17,447 ) ( 14,447 ) ( 14,589 )

1 unchanged sentence

Foreign ( 1,188 ) ( 144 ) ( 694 )

Total ( 14,614 ) ( 14,910 ) ( 10,394 )

Total deferred ( 21,472 ) ( 14,614 ) ( 14,910 )

Provision for income taxes $ 28,486 $ 24,563 $ 12,784

5 unchanged sentences

For the fiscal years ended

December 30 December 31 January 1

2022 2021 2021

1 unchanged sentence

Foreign 36,124 39,143 29,753

$ 188,381 $ 104,530 $ 108,569

Total income before provision for income taxes $ 233,764 $ 188,381 $ 104,530

The following table presents a reconciliation of the statutory federal rate and the Company’s effective tax rate for the periods presented:

For the fiscal years ended

December 30 December 31 January 1

2022 2021 2021

Tax at federal statutory rate 21.0 % 21.0 % 21.0 %

State taxes, net of federal benefit 1.9 1.8 1.8

Stock-based compensation ( 5.0 ) ( 5.9 ) ( 6.3 )

Foreign derived income benefit ( 6.6 ) ( 5.8 ) ( 5.0 )

Valuation allowance on foreign tax credits ( 3.8 ) 1.1 0.7

Research and development tax credit ( 2.9 ) ( 1.1 ) ( 0.9 )

Foreign withholding taxes, net of foreign tax credits 1.1 — —

Executive compensation deduction limitation 0.8 1.2 0.8

State taxes, net of federal benefit 0.6 1.9 1.8

Stock-based compensation ( 0.5 ) ( 5.0 ) ( 5.9 )

Change in liability for unrecognized tax benefits — ( 1.4 ) 0.6

Valuation allowance on foreign tax credits 1.1 0.7 0.2

Other 2.5 1.1 ( 0.9 )

Total provision 13.0 % 12.2 % 13.0 %

Effective tax rate 12.2 % 13.0 % 12.2 %

FOX FACTORY HOLDING CORP.

3 unchanged sentences

Deferred Income Taxes

December 31, January 1,

December 30, December 31,

Deferred tax assets:

15 unchanged sentences

Accrued withholding tax on unremitted foreign dividends — ( 854 )

Stock-based compensation ( 121 ) —

Other ( 1,642 ) ( 300 )

3 unchanged sentences

As of December 30, 2022, the Company assessed the realizability of deferred tax assets and evaluated the need for a valuation allowance for deferred tax assets for each jurisdiction based on the framework of ASC 740.

As a result of the TCJA, the Company believes that it is more likely than not that a portion of its foreign tax credits will not be realizable, and as such, provided an allowance of $ 7,172 as of January 1, 2021.

For the year ended December 31, 2021, the valuation allowance increased by $ 2,051 , due to a generation of additional foreign tax credits from the foreign derived earnings.

The valuation allowance for foreign tax credits was $ 9,161 as of December 31, 2021.

For the year ended December 30, 2022, the valuation allowance decreased by $ 9,161 .

Tax Regulations proposed by the U.S.

Treasury and Internal Revenue Service on November 22, 2022, which were early adopted by the Company, provided clarification to earlier guidance and resulted in the Company's ability to utilize certain foreign tax credits related to royalties.

As a result, the Company determined a valuation allowance was not needed.

Other components of the valuation allowance were not significant.

It is reasonably possible that the Company could record a material adjustment to the valuation allowance in the next twelve months as management assesses the progress and outcome of its plans to alter the generation and utilization of foreign tax credits.

It is reasonably possible that the Company could record a material adjustment to the valuation allowance in the next twelve months.

FOX FACTORY HOLDING CORP.

4 unchanged sentences

For the fiscal years ended

December 30 December 31 January 1

2022 2021 2021

8 unchanged sentences

The Company's 2019 and forward federal tax returns, state tax returns from 2017 and forward, and foreign tax returns from 2019 and forward are subject to examination by tax authorities.

Due to a favorable conclusion of a state audit in the first quarter of 2021, the Company released $ 2,923 of uncertain tax positions, of which $ 2,608 favorably impacts the effective tax rate.

Fair Value Measurement and Financial Instruments

Fair Value Measurements and Financial Instruments

The FASB's Accounting Standards Codification 820, "Fair Value Measurements and Disclosures" 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 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:

December 31, 2021 January 1, 2021

December 30, 2022 December 31, 2021

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

1 unchanged sentence

Total assets measured at fair value $ — $ 5,087 $ — $ 5,087 $ — $ 3,583 $ — $ 3,583

Credit Facility $ — $ 378,453 $ — $ 378,453 $ — $ 389,588 $ — $ 389,588

Interest Rate Swap — — — — — 915 — 915

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

Total liabilities measured at fair value $ — $ — $ — $ — $ — $ 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 years ended December 31, 2021, and January 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 December 31, 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.

There were no transfers of assets or liabilities between Level 1, Level 2 and Level 3 categories of the fair value hierarchy during the years ended December 30, 2022, and December 31, 2021.

As of December 31, 2021, the carrying amount of the principal under the Company’s Prior Credit Facility approximated fair value because it had a variable interest rate that reflected market changes in interest rates and changes in the Company’s net leverage ratio.

The Prior Credit Facility was terminated on April 5, 2022 and replaced with the revolving 2022 Credit Facility.

FOX FACTORY HOLDING CORP.

2 unchanged sentences

(in thousands, except per share amounts)

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.

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.

On April 5, 2022, the Company terminated its 2021 Swap Agreement and entered into the 2022 Swap Agreement.

Refer to Note 11.

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, 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.

2 unchanged sentences

Participants may make voluntary contributions to the 401(k) plan, limited by certain IRS restrictions.

The Company made matching contributions of $ 2,655 , $ 2,078 , and $ 1,153 for each of the years ended December 31, 2021, January 1, 2021 and January 3, 2020, respectively.

The Company made matching contributions of $ 3,649 , $ 2,655 , and $ 2,078 for each of the years ended December 30, 2022, December 31, 2021 and January 1, 2021, respectively.

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.

3 unchanged sentences

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 $ 4,680 and $ 4,211 in costs associated with such retention incentives during the years ended December 31, 2021 and January 1, 2021, respectively.

The Company also agreed to an additional $ 10,326 of contingent retention incentives for key SCA management of which $ 9,036 is cash and $ 1,290 is stock, to be held in escrow and payable over two years from the acquisition date.

The Company recognized $ 955 , $ 5,160 and $ 4,211 in costs associated with such retention incentives during the years ended December 30, 2022, December 31, 2021 and January 1, 2021, respectively.

As of December 30, 2022, all contingent retention incentives had been recognized.

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

6 unchanged sentences

The Company incurred $ 10,582 of acquisition costs in conjunction with the SCA acquisition, including $ 1,750 of transaction compensation during the year ended January 1, 2021 and $ 602 of transaction costs during the year ended January 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 Credit Facility.

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

Additional debt issuance costs of $ 6,622 were incurred in association with financing the transaction.

Refer to Note 10.

12 unchanged sentences

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, dba Outside van ("Outside Van") for $ 15,275 , 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 $ 10,772 , is preliminary and subject to the completion of the Company's validation of working capital and deferred taxes, with the assistance of specialists.

On May 25, 2021, the Company, through its wholly owned subsidiary, SCA, 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 net liabilities assumed of $ 1,057 , identifiable intangibles assets of $ 5,560 and goodwill acquired of $ 10,772 based on their respective fair values as of May 25, 2021, with the excess purchase price allocated to goodwill.

The Company will amortize the acquired customer relationship and trade name assets over their expected useful lives of 1 and 10 years, respectively.

The acquired goodwill represents the value of synergies from combining operations of Outside Van and the Company, and is expected to be deductible for tax purposes.

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

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 $ 36,834 , 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.

This purchase price of STS is allocated to the net assets assumed of $ 5,244 , identifiable intangible assets of $ 7,086 and goodwill acquired of $ 24,504 , based on their respective fair values as of December 30, 2021.

The Company will amortize the acquired non-compete and trade name assets over their expected useful lives of 5 and 10 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.

Selected Quarterly Financial Data (Unaudited)

Selected summarized quarterly financial information for 2021 and 2020 is as follows:

Quarter Ended

Dec 31, Oct 1, Jul 2, April 2, Jan 1, Oct 2 Jul 3 April 3,

2021 2021 2021 2021 2021 2020 2020 2020

Sales $ 342,329 $ 347,435 $ 328,164 $ 281,136 $ 262,391 $ 260,700 $ 183,102 $ 184,361

Gross profit 107,302 116,018 111,088 97,924 83,472 89,474 59,986 56,615

Income from operations 43,086 55,249 52,723 45,856 37,670 45,553 19,359 11,567

Net income attributable to Fox Stockholders 37,734 43,823 44,275 37,986 31,796 38,020 12,608 8,250

Earnings per share:

Basic $ 0.90 $ 1.04 $ 1.05 $ 0.91 $ 0.76 $ 0.91 $ 0.32 $ 0.21

Diluted $ 0.89 $ 1.03 $ 1.05 $ 0.90 $ 0.75 $ 0.90 $ 0.32 $ 0.21

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

Subsequent Events

On February 17, 2023 the Company entered into a Securities Purchase Agreement with CWH Holdco, LLC (“CWH”), CWH Blocker Corp., (“Blocker”), Thompson Street Capital Partners V, L.P., and each other member of CWH to purchase all of the outstanding equity of Blocker, and thereafter Blocker will acquire all of the outstanding equity interest of CWH for $ 131,600 .

CWH is the parent company of Custom Wheel House, LLC ("Custom Wheel House").

The transaction will be financed through a combination of cash on hand and the Company's existing 2022 Credit Facility, and is expected to close in March 2023, subject to customary closing conditions.

The acquisition is not considered significant to the Company's financial results.

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-K

Item 9A. Controls and Procedures