What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-02-23 compared with 2023-02-23 · 466 added, 308 removed, 943 unchanged (45% of the section changed)

26 unchanged sentences

OTHER INFORMATION

Not applicable.

Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements

During the three months ended December 29, 2023, none of our officers or directors (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933) .

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

1 unchanged sentence

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 2023 Annual Meeting of Stockholders (the "Proxy Statement") entitled "Election of Class I 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 2024 Annual Meeting of Stockholders (the “Proxy Statement”) entitled “Election of Class II 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.”

7 unchanged sentences

Information required by this Item is incorporated by reference to the section of the Proxy Statement entitled “Certain Relationships and Related Transactions and Director Independence.”

PRINCIPAL ACCOUNTING FEES AND SERVICES

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information required by this Item is incorporated by reference to the section of the Proxy Statement entitled “Ratification of Appointment of Independent Registered Public Accounting Firm.”

4 unchanged sentences

Consolidated Balance Sheets as of December 29, 2023 and December 30, 2022 72

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

Consolidated Statements of Income for the years ended December 29, 2023, December 30, 2022 and December 31, 2021 73

Consolidated Statements of Comprehensive Income for the years ended December 29, 2023, December 30, 2022 and December 31, 2021 74

Consolidated Statements of Stockholders’ Equity for the years ended December 29, 2023, December 30, 2022 and December 31, 2021 75

Consolidated Statements of Cash Flows for the years ended December 29, 2023, December 30, 2022 and December 31, 2021 76

Notes to Consolidated Financial Statements 78

5 unchanged sentences

Filing Date Filed or Furnished Herewith

Agreement and Plan of Merger, dated November 1, 2023, by and among (i) Fox Factory, Inc;

(ii) Marucci Merger Sub, Inc.;

(iii) Wheelhouse Holdings Inc.;

and (iv) Compass Group Diversified Holdings LLC, as the Equityholders’ Representative 8-K 001-36040 November 3, 2023

Amended and Restated Certificate of Incorporation 10-Q 001-36040 September 19, 2013

2 unchanged sentences

Form of Indenture S-3 333-203146 March 31, 2015

Description of Securities 10-K 001-36040 March 3, 2020

Description of Securities 10-K 001-36040 February 23, 2023

Employment Agreement, dated May 1, 2018, by and between Fox Factory Holding Corp.

6 unchanged sentences

Dennison 8-K 001-36040 July 1, 2019

Employment Agreement, by and between Fox Factory Holding Corp.

and Scott Humphrey, dated August 4, 2020.

8-K 001-36040 August 5, 2020

Executed Separation and Release Agreement, dated April 4, 2023, by and between Fox Factory Holding Corp.

and Scott Humphrey 8-K 001-36040 April 3, 2023

Employment Agreement by and between Fox Factory, Inc.

18 unchanged sentences

8-K 001-36040 August 8, 2022

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

10-K 001-36040 February 25, 2021

Fifth Amended and Restated Non-Employee Director Compensation Policy, effective January 2, 2021.

10-K 001-36040 February 25, 2021

2023 Policy Regarding Terms Applicable to Restricted Stock Unit and Performance Share Unit Award Agreements in the Event of Qualified Retirement X

Sixth Amended and Restated Non-Employee Director Compensation Policy, effective January 1, 2022.

Form of Indemnification Agreement, by and between Fox Factory Holding Corp.

5 unchanged sentences

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

Form of Restricted Stock Unit Award Agreement under 2022 Omnibus Plan (U.S.) X

Form of Performance Share Unit Award Agreement under the 2022 Omnibus Plan X

First Incremental Facility Amendment, dated November 14, 2023, by and among Fox Factory Holding Corp., Bank of America, N.A., Wells Fargo Bank, National Association and PNC Bank, National Association 8-K 001-36040 November 15, 2023

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

23 unchanged sentences

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.

10-K 001-36040 February 23, 2023

Amendment No.

3 to Lease Agreement between the Gainesville and Hall County Development Authority and Fox Factory, Inc., dated December 31, 2022.

10-Q 001-36040 May 4, 2023

Employment Agreement, by and between Fox Factory Holding Corp.

and Dennis C.

Schemm, dated June 12, 2023 10-Q 001-36040 August 4, 2023

Employment Agreement, by and between Fox Factory Holding Corp.

Merchant, dated April 13, 2021 10-Q 001-36040 August 4, 2023

Employment Agreement, by and between Fox Factory Holding Corp.

and Thomas L.

Fletcher, dated May 24, 2021 10-Q 001-36040 August 4, 2023

Insider Trading Policy X

List of Subsidiaries X

7 unchanged sentences

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended X

Clawback Policy X

101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document X

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Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

FOX FACTORY HOLDING CORP.

February 23, 2023 Scott R.

Humphrey, Chief Financial Officer and Treasurer

February 22, 2024 By:

/s/ Dennis C.

Schemm, Chief Financial Officer and Treasurer

(Principal Financial and Accounting Officer & Duly Authorized Signatory)

February 22, 2024 By:

/s/ Brendan R.

Enick, Chief Accounting Officer

(Principal Accounting Officer)

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Scott R.

Humphrey and Michael C.

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Dennis C.

Schemm and Michael C.

Dennison, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution for him or her, and in his or her name in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the U.S.

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Dennison ( Principal Executive Officer )

Humphrey Chief Financial Officer and Treasurer February 23, 2023

Humphrey (Principal Financial and Accounting Officer)

/s/ Dennis C.

Schemm Chief Financial Officer and Treasurer February 22, 2024

Schemm (Principal Financial and Accounting Officer)

/s/ Dudley W.

14 unchanged sentences

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In conducting our assessment of the effectiveness of its internal control over financial reporting, we have excluded Custom Wheel House, LLC (“Custom Wheel House”) and Marucci Sports, LLC (“Marucci”) acquired in 2023, which are included in our 2023 consolidated financial statements.

Custom Wheel House and Marucci respectively constituted approximately 6.7% and 29.2% of total assets as of December 29, 2023, approximately 4.5% and 1.1% of total revenues, and approximately (1.4)% and (2.6)% of net earnings for the year then ended.

In making its assessment of internal control over financial reporting, management used criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013).

Based on the evaluation, our management concluded that its internal control over financial reporting was effective as of December 29, 2023.

Grant Thornton LLP, the independent registered public accounting firm that audited the Company's consolidated financial statements, has issued an attestation report on the Company's internal control over financial reporting, which is included elsewhere in this Annual Report on Form 10-K.

Grant Thornton LLP, the independent registered public accounting firm that audited the Company’s consolidated financial statements, issued an attestation report on the Company’s internal control over financial reporting, which is included elsewhere in this Annual Report on Form 10-K.

February 22, 2024

1 unchanged sentence

Chief Executive Officer

/s/ Dennis C.

Chief Financial Officer and Treasurer

4 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 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”).

(a Delaware corporation) and subsidiaries (the “Company”) as of December 29, 2023 and December 30, 2022, the related consolidated statements of income, comprehensive income, stockholder’s equity, and cash flows for each of the three years in the period ended December 29, 2023, 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 29, 2023 and December 30, 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 29, 2023, in conformity with accounting principles generally accepted in the United States of America.

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• 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.

Realizability of Deferred Tax Assets

As discussed in Note 1 to the consolidated financial statements, deferred tax assets and liabilities are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income.

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

We identified the realizability of deferred tax assets relating to the Company’s foreign tax credits as a critical audit matter.

The principal considerations for our determination that the realizability of deferred tax assets relating to the Company’s foreign tax credits represent a critical audit matter are the significance of the Company’s foreign tax credits and the use of forecasted profitability by jurisdiction and source.

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

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

Our audit procedures related to the realizability of deferred tax assets relating to the Company’s foreign tax credits included the following, among others:

• We considered the applicability of the Company’s international transfer pricing arrangements as it relates to the Company’s ability to utilize foreign tax credits.

• We tested the accuracy of the underlying data used in the forecasts by agreeing the baseline 2022 results for selected jurisdictions to general ledger balances.

• We compared the previous year’s forecast of future taxable income with the 2022 actual results to assess management’s ability to accurately estimate future growth.

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

• 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.

Valuation of acquired intangible assets

As described further in Note 1 and Note 18 to the consolidated financial statements, the Company completed the acquisitions of Custom Wheel House, LLC (“Custom Wheel House”) and Marucci Sports, LLC (“Marucci”) on March 3, 2023 and November 14, 2023 for total purchase price consideration of $129.8 million and $567.2 million, respectively.

The Company allocated the purchase price to the assets acquired and liabilities assumed based on their respective fair values, including to identified intangible assets.

We identified the determination of fair value for the acquired customer and distributor relationships, tradenames and developed technologies as a critical audit matter.

The principal consideration for our determination that the valuation of the intangible assets represents a critical audit matter include the complexity associated with the intangibles due to the significant estimation uncertainty in the Company’s determination of the fair values.

The significant estimation uncertainty was primarily due to the sensitivity of the respective fair values to underlying assumptions about the future performance of the acquired businesses, including future revenue growth rates, certain profitability measures, royalty rates, customer attrition rates and discount rates.

Auditing these assumptions requires a high degree of auditor judgment and an increased extent of effort, including the need to involve our valuation specialists.

Our audit procedures related to the determination of assumptions used in the fair value of certain acquired intangible assets in the acquisitions included the following, among others:

• We evaluated the appropriateness of the forecasted revenue growth rates and certain profitability measures by (1) comparing forecasted revenue growth rates and certain profitability measures to forecasted industry growth rates and available market data and (2) comparing forecasted revenue growth rates and certain profitability measures to historical growth rates of the acquired entities.

• We utilized a specialist to evaluate key inputs and assumptions used to determine fair value.

Our specialist compared the royalty rates used to royalty rates derived from publicly available data for comparable companies, compared the estimated customer attrition rates used to historical customer retention data of the acquired companies, and compared the discount rates used to independently developed discount rates derived from publicly available data for comparable companies.

• We tested the design and operating effectiveness of controls related to the selection and review of the methods and assumptions used in determining fair value.

/s/ GRANT THORNTON LLP

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We believe that our audit provides a reasonable basis for our opinion.

Our audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over financial reporting of Custom Wheel House, LLC (“Custom Wheel House”), a wholly-owned subsidiary, whose financial statements reflect total assets and revenues constituting 6.7 and 4.5 percent, respectively, and also does not include the internal control over financial reporting of Marucci Sports, LLC (“Marucci”), a wholly-owned subsidiary, whose financial statements reflect total assets and revenues constituting 29.2 and 1.1 percent, respectively, of the related consolidated financial statement amounts as of and for the year ended December 29, 2023.

As indicated in Management’s Report, Custom Wheel House and Marucci were acquired during 2023.

Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of Custom Wheel House and Marucci.

Definition and limitations of internal control over financial reporting

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Goodwill 636,565 323,978

Intangibles, net 178,980 197,021

Trademarks and brands, net 275,480 64,214

Customer and distributor relationships, net 182,731 109,887

Core technologies, net 25,136 4,879

Other assets 11,525 10,054

4 unchanged sentences

Accrued expenses 103,400 127,729

Current portion of long-term debt — 17,500

Total current liabilities 207,550 258,889

23 unchanged sentences

For the fiscal years ended

December 30 December 31 January 1

2022 2021 2021

Sales $ 1,602,491 $ 1,299,064 $ 890,554

December 29, 2023 December 30, 2022 December 31, 2021

Net sales $ 1,464,178 $ 1,602,491 $ 1,299,064

Cost of sales 999,366 1,071,148 866,732

1 unchanged sentence

Operating expenses:

General and administrative 124,582 116,103 97,241

Sales and marketing 100,451 90,801 70,925

Research and development 53,179 56,205 46,567

General and administrative 116,103 97,241 71,309

Amortization of purchased intangibles 26,509 21,537 20,685

1 unchanged sentence

Income from operations 160,091 246,697 196,914

Interest and other expense, net:

Interest expense 19,320 8,939 8,162

Other expense, net 2,108 3,994 371

Interest and other expense, net 12,933 8,533 9,619

Income before income taxes 138,663 233,764 188,381

1 unchanged sentence

Net income $ 120,846 205,278 163,818

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

Net income attributable to Fox stockholders $ 205,278 $ 163,818 $ 90,674

Earnings per share:

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For the fiscal years ended

December 30, December 31, January 1,

2022 2021 2021

December 29, 2023 December 30, 2022 December 31, 2021

Net income $ 120,846 $ 205,278 $ 163,818

Other comprehensive income

Interest rate swap, net of tax effects 14,824 3,644 ( 699 )

Foreign currency translation adjustments, net of tax effects ( 4,918 ) 164 1,617

Other comprehensive income 9,906 3,808 918

Other comprehensive (loss) income

Interest rate swap

Change in net unrealized gain, net of tax effects of $( 1,303 ), $ 4,226 , and $( 1,130 ), respectively

( 473 ) 18,001 3,692

reclassification of net gain on interest rate swap to net earnings ( 6,775 ) ( 3,177 ) ( 48 )

Net change, net of tax effects ( 7,248 ) 14,824 3,644

Foreign currency translation adjustments, net of tax effects of $ 0 , $ 0 , and $ 673 , respectively

1,507 ( 4,918 ) 164

Other comprehensive (loss) income ( 5,741 ) 9,906 3,808

Comprehensive income $ 115,105 $ 215,184 $ 167,626

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

Comprehensive income attributable to Fox stockholders $ 215,184 $ 167,626 $ 91,592

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

FOX FACTORY HOLDING CORP.

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

Consolidated Statements of Stockholders’ Equity

(in thousands, except per share amounts)

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

1 unchanged sentence

Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding 318 — — — ( 7,050 ) — — ( 7,050 )

Issuance of common stock, net 2,760 2 — — 198,233 — — 198,235 —

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

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

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

Stock-based compensation expense — — — — 14,335 — — 14,335

1 unchanged sentence

Net income — — — — — — 163,818 163,818

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 150 — — — ( 4,231 ) — — ( 4,231 )

5 unchanged sentences

Stock-based compensation expense — — — — 16,465 — — 16,465

Purchase and retirement of common stock ( 428 ) — — — ( 18,163 ) — ( 6,837 ) ( 25,000 )

Other comprehensive income — — — — — ( 5,741 ) — ( 5,741 )

6 unchanged sentences

For the fiscal years ended

December 30, December 31, January 1,

December 29, December 30, December 31,

2023 2022 2021

3 unchanged sentences

Depreciation and amortization 58,603 49,242 43,426

Provision for inventory reserve 6,184 8,923 3,916

Stock-based compensation 16,465 16,351 13,914

Amortization of acquired inventory step-up 13,008 — —

Amortization of loan fees 905 1,086 1,631

1 unchanged sentence

Amortization of deferred gains on prior swap settlements ( 4,252 ) ( 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:

(Gain) Loss on disposal of property and equipment 1,492 ( 1,740 ) ( 96 )

Deferred taxes ( 7,867 ) ( 18,445 ) ( 17,096 )

Changes in operating assets and liabilities, net of effects of acquisitions:

Accounts receivable 64,527 ( 63,957 ) ( 20,230 )

15 unchanged sentences

Proceeds from issuance of debt, net of origination fees 393,528 — —

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

Repayment of term debt — ( 382,500 ) ( 12,500 )

Prepayment of term debt ( 20,000 ) — —

Purchase and retirement of common stock ( 25,000 ) — —

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

Repurchases from stock compensation program, net ( 6,195 ) ( 4,231 ) ( 7,050 )

Deferred debt issuance costs ( 3,354 ) — —

Proceeds from termination of swap agreement — 12,270 324

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

Net cash provided by (used in) financing activities 508,979 ( 179,141 ) ( 23,776 )

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 1,066 2,346 ( 540 )

7 unchanged sentences

For the fiscal years ended

December 30, December 31, January 1,

SUPPLEMENTAL CASH FLOW INFORMATION:

2022 2021 2021

December 29, 2023 December 30, 2022 December 31, 2021

Cash paid during the period for:

Income taxes $ 44,655 $ 37,493 $ 14,980

Cash paid for interest, net of capitalized interest $ 9,922 $ 6,384 $ 7,171

Cash paid for amounts included in the measurement of lease liabilities $ 10,499 $ 8,747 $ 7,095

Interest, net of capitalized interest $ 21,147 $ 9,922 $ 6,384

Amounts included in the measurement of lease liabilities $ 14,009 $ 10,499 $ 8,747

Non-cash operating activities:

1 unchanged sentence

Non-cash investing and financing activities:

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

Capital expenditures included in accounts payable $ 977 $ 2,049 $ 3,491

(1) Includes new leases executed in the United States of America “U.S.” and acquired lease right-of-use assets from Custom Wheel House and Marucci.

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, and specialty vehicles and applications.

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.

Our premium brand, performance-defining products and systems are used primarily on 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, and specialty vehicles and applications.

In addition, we also offer premium baseball and softball gear and equipment.

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

Throughout this Annual Report on Form 10-K, unless stated otherwise or as the context otherwise requires, the “Company,” “FOX,” “Fox Factory,” “we,” “us,” “our,” and “ours” refer to Fox Factory Holding Corp.

3 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 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.

For the fiscal years 2023, 2022 and 2021, the Company’s fiscal year ended on December 29, 2023, December 30, 2022 and December 31, 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 $ 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.

Foreign currency transaction losses of $ 1,465 , $ 3,377 , and $ 455 for the years ended December 29, 2023, December 30, 2022 and December 31, 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.

7 unchanged sentences

All accounts or portions thereof deemed to be uncollectible or that may require an excessive collection cost are written off to the 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.

The provision is based on how long a receivable has been outstanding, taking into account the

FOX FACTORY HOLDING CORP.

2 unchanged sentences

(in thousands, except per share amounts)

historical credit loss rate and adjusting for both current conditions and forecasts of economic conditions into that expected credit loss rate.

If circumstances change, such as higher-than-expected defaults or an unexpected material adverse change in a major customer’s ability to meet its financial obligations, the Company’s estimate of the recoverability of the amounts due could be reduced by a material amount.

The following table presents the activity in the allowance for credit losses:

For the fiscal years ended

Allowance for credit losses:

December 29, 2023 December 30, 2022 December 31, 2021

Balance, beginning of year $ 443 $ 410 $ 663

bad debt expense (benefit) 907 446 ( 14 )

write-offs, net of recoveries ( 192 ) ( 413 ) ( 239 )

Balance, end of year $ 1,158 $ 443 $ 410

Concentration of Credit Risk - Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist primarily of cash and accounts receivable.

8 unchanged sentences

Customer A 18 % 14 %

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 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.

The Company purchased 29 %, 34 %, and 32 % of its product components for the years ended December 29, 2023, December 30, 2022 and December 31, 2021, respectively, from ten vendors.

As of December 29, 2023 and December 30, 2022, amounts due to these vendors represented 20 % and 38 % 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.

The provision is based on how long a receivable has been outstanding, taking into account the historical credit loss rate and adjusting for both current conditions and forecasts of economic conditions into that expected credit loss rate.

The following table presents the activity in the allowance for credit losses:

For the fiscal years ended

December 30 December 31 January 1

Allowance for credit losses:

2022 2021 2021

Balance, beginning of year $ 410 $ 663 $ 810

bad debt expense (benefit) 446 ( 14 ) 103

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

Balance, end of year $ 443 $ 410 $ 663

Inventories - Inventories are stated at the lower of actual cost (or standard cost which generally approximates actual costs on a first-in first-out basis) or net realizable value.

28 unchanged sentences

Fair value is estimated based on discounted future cash flows.

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

No impairment charges were recorded during the years ended December 29, 2023, December 30, 2022 and December 31, 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 30, 2022, December 31, 2021 and January 1, 2021.

No impairments of intangible assets were identified in the years ended December 29, 2023, December 30, 2022 and December 31, 2021.

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

6 unchanged sentences

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

The Company’s performance-defining products and systems are solutions that improve performance of powered vehicles and bikes.

Powered vehicles include side-by-sides, on-road vehicles with off-road capabilities, off-road vehicles and trucks, ATVs, snowmobiles, specialty vehicles and applications, and motorcycles.

The Company’s performance-defining products and systems are solutions that improve performance of powered vehicles, bikes, and baseball and softball gear and equipment.

Powered vehicles include side-by-sides, on-road vehicles with off-road capabilities, off-road vehicles and trucks, ATVs, snowmobiles, specialty vehicles and applications, motorcycles.

Revenue is measured based on the consideration specified in a contract with a customer.

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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.

The Company is required to place a deposit on Stellantis vehicle chassis, however that deposit is refunded when the chassis is sold through to the end customer.

For other chassis, the Company entered into floorplan financing agreements, in which the Company pays interest expense based on the duration of time the chassis stay on the Company's premises.

Revenues generated from custom upfit packages from our Outside Van subsidiary generally include the vehicle chassis, of which the Company has the risks and rewards of ownership and are recognized over-time as work is performed based on actual costs incurred.

We elected as a practical expedient to not capitalize the incremental costs to obtain contracts with customers since the amortization period would have been one year or less.

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.

Certain pricing provisions that provide the customer with future discounts are considered a material right.

Such material rights result in the deferral of revenues that are recognized when the rights are exercised by the customer.

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

Cost of Sales - Cost of sales primarily consists of materials and labor expense in the manufacturing of the Company’s products sold to customers.

Cost of sales also includes provisions for excess and obsolete inventory, warranty costs, certain allocated costs for facilities, depreciation and other manufacturing overhead.

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

Cost of sales also includes provisions for excess and obsolete inventory, warranty costs, certain allocated

FOX FACTORY HOLDING CORP.

2 unchanged sentences

(in thousands, except per share amounts)

costs for facilities, depreciation and other manufacturing overhead.

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.

Shipping costs associated with 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.

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The Company records professional and contract service expenses, occupancy related expenses associated with corporate locations and equipment, and legal expenses in general and administrative expenses.

Stock-Based Compensation - The Company measures stock-based compensation for all stock-based awards, including stock options and restricted stock units (“RSUs”), based on their estimated fair values on the date of the grant and recognizes the stock-based compensation cost for time-vested awards on a straight-line basis over the requisite service period.

Stock-Based Compensation - The Company measures stock-based compensation for all stock-based awards, including stock options and RSUs, based on their estimated fair values on the date of the grant and recognizes the stock-based compensation cost for time-vested awards on a straight-line basis over the requisite service period.

For performance-based RSUs, the number of shares ultimately expected to vest is estimated at each reporting date based on management’s expectations regarding the relevant performance criteria.

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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.

The net GILTI inclusion for the year ended December 29, 2023 was partially offset by foreign tax credits associated with the income.

The Company recognizes the tax effects of an uncertain tax position only if it is more likely than not to be sustained based solely on its technical merits as of the reporting date and then only in an amount more likely than not to be sustained upon review by the tax authorities.

1 unchanged sentence

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 $ 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 .

Costs incurred for advertising totaled $ 6,717 , $ 4,813 , and $ 2,741 for the years ended December 29, 2023, December 30, 2022 and December 31, 2021, respectively.

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

The Company recognizes estimated costs related to warranty activities as a component of cost of sales upon product shipment.

7 unchanged sentences

(in thousands, except per share amounts)

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

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

manufacturing, sale and service of performance-defining products.

2 unchanged sentences

The Chief Executive Officer reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance.

Fair Value Measurements and Financial Instruments - The Financial Accounting Standards Board ("FASB") has issued Accounting Standards Codification 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:

Reclassifications - We reclassified certain prior period amounts within our consolidated statements of other comprehensive income, consolidated statements of cash flows, and Note 2 - Revenues for the years ended December 30, 2022 and December 31, 2021 to conform to our current year presentation.

The reclassifications did not have any impact on net income or other major financial statement line items.

Fair Value Measurements and Financial Instruments - The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification 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:

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

2 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.

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.

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

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

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

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

the duration and scope of the pandemic;

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

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

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

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

The Company adopted ASU 2019-12 effective in the first quarter of fiscal year 2021.

The adoption of ASU 2021-12 did not have a material impact on the Company's consolidated financial statements.

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

The amendments in ASU 2020-10 contain improvements to the Codification to ensure consistency by including disclosure guidance in the appropriate Disclosure Section.

This guidance includes an option for an entity to provide certain information either on the face of the financial statements or in the notes.

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

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

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

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

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 30, 2022

(in thousands, except per share amounts)

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

As of December 29, 2023, amounts owed under the Company’s 2022 Credit Facility - Incremental Term A Loan 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.

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, disruptions in the operations of its or its customers’ facilities, or along its global supply chain, the successful protection of its proprietary technologies, compliance with government regulations, and the possibility of not being able to obtain additional financing when needed.

International geopolitical conflicts, including continuing tensions between Taiwan and China, the Russian invasion of Ukraine, and the Israel-Palestine conflict on the global economy, energy supplies and raw materials may prove to negatively impact the Company’s business and operations.

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

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

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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:

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

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

Refer to the “Bailment Pool Arrangements” section within Note 12 - Commitments and Contingencies for further details of this adoption.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

The amendments in ASU 2023-07 require disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items to reconcile to segment profit or loss, and the title and position of the entity’s CODM.

The amendments in this update also expand the interim segment disclosure requirements.

These amendments do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments.

The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted and the amendments in this update are required to be applied on a retrospective basis.

The Company is currently reviewing the impact that the adoption of ASU 2023-07 may have on our consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvement to Income Tax Disclosures to enhance the transparency and decision usefulness of income tax disclosures through changes to the rate reconciliation and income taxes paid information.

ASU 2023-09 is effective for annual periods beginning after December 15, 2024 on a prospective basis.

Early adoption is permitted.

The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures.

In the second quarter of fiscal year 2023, the Company realigned its Powered Vehicles Group into the Powered Vehicles Group and the Aftermarket Applications Group to be more aligned with the Company’s end customers and drive additional focus on product development.

The new Powered Vehicles Group is comprised of sales to original equipment off-road and power sports manufacturers and aftermarket businesses that sell shocks directly to dealers and distributors.

The Aftermarket Applications Group is comprised of aftermarket businesses that offer custom vehicle shock, tuning, suspension, lift kit, upfitting, and wheel and tire solutions for automotive and power sports enthusiasts.

All prior-period amounts have been recast to conform with the current period presentation.

The following table summarizes total net sales by product category:

For the fiscal years ended

December 30 December 31 January 1

2022 2021 2021

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

The following table summarizes total sales by sales channel:

December 29, 2023 December 30, 2022 December 31, 2021

Powered Vehicle Group $ 523,862 $ 432,388 $ 360,711

Aftermarket Applications Group 551,143 489,132 359,318

Specialty Sports Group 389,173 680,971 579,035

Total net sales $ 1,464,178 $ 1,602,491 $ 1,299,064

The following table summarizes total net sales by sales channel:

For the fiscal years ended

December 30 December 31 January 1

2022 2021 2021

December 29, 2023 December 30, 2022 December 31, 2021

OEM $ 725,232 $ 909,550 $ 718,000

Aftermarket 738,946 692,941 581,064

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

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

For the fiscal years ended

December 30 December 31 January 1

2022 2021 2021

North America $ 1,009,203 $ 811,312 $ 593,267

Asia 252,275 241,033 144,836

Europe 320,545 230,491 143,817

Rest of the World 20,468 16,228 8,634

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

Total net sales $ 1,464,178 $ 1,602,491 $ 1,299,064

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

FOX FACTORY HOLDING CORP.

2 unchanged sentences

(in thousands, except per share amounts)

For the fiscal years ended

December 29, 2023 December 30, 2022 December 31, 2021

North America $ 1,127,587 $ 1,009,203 $ 811,312

Europe 187,762 320,545 230,491

Asia 125,488 252,275 241,033

Rest of the World 23,341 20,468 16,228

Total net sales $ 1,464,178 $ 1,602,491 $ 1,299,064

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

Revenue expected to be recognized from remaining performance obligations as of December 29, 2023 for contracts with a duration more than one year was approximately $ 1,534 , all of which is expected to be recognized during fiscal years 2025 to 2027.

Inventory consisted of the following:

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Total prepaids and other assets $ 141,512 $ 101,364

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

Property, Plant and Equipment, net

1 unchanged sentence

December 29, 2023 December 30, 2022

Machinery and manufacturing equipment $ 149,502 $ 122,748

Building and building improvements 77,998 73,594

Information systems, office equipment and furniture 21,655 20,988

Internal-use computer software 35,518 30,290

Land and land improvements 14,493 15,663

Information systems, office equipment and furniture 26,972 21,655

Leasehold improvements 38,115 20,078

Machinery and manufacturing equipment 122,748 106,628

Transportation equipment 15,505 12,450

Land and land improvements 14,692 14,493

Total property, plant and equipment 358,302 295,308

1 unchanged sentence

Total property, plant and equipment, net $ 237,192 $ 202,215

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.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 30, 2022

(in thousands, except per share amounts)

Depreciation expense was $ 32,094 , $ 27,705 , and $ 22,741 for the years ended December 29, 2023, December 30, 2022 and December 31, 2021, respectively, including $ 2,916 , $ 3,787 , and $ 2,492 of internal-use software amortization for the years ended December 29, 2023, December 30, 2022 and December 31, 2021, respectively.

The Company capitalized $ 5,254 , $ 4,683 , and $5,847 in internal use computer software costs during the years ended December 29, 2023, December 30, 2022, and December 31, 2021, respectively.

The following table summarizes the allocation of depreciation expense in the accompanying consolidated statements of income:

For the fiscal years ended

December 30 December 31 January 1

2022 2021 2021

December 29, 2023 December 30, 2022 December 31, 2021

Cost of sales $ 15,040 $ 13,741 $ 11,656

8 unchanged sentences

Total long-lived assets $ 237,192 $ 202,215

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

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 ten years , and some of which include options to terminate the leases within one year .

These leases have remaining lease terms ranging from under one year to twenty 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

December 29, 2023 December 30, 2022 December 31, 2021

Operating lease cost $ 15,656 $ 11,209 $ 9,124

3 unchanged sentences

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:

12 unchanged sentences

Lease liabilities less current portion $ 69,237

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

Goodwill and Intangible Assets

1 unchanged sentence

December 29, 2023

Customer relationships $ 195,910 $ ( 86,023 ) $ 109,887 10

Core technology 39,291 ( 34,412 ) 4,879 8

Trademarks and brands, subject to amortization $ 226,563 $ ( 6,653 ) $ 219,910 14

Customer and distributor relationships 290,518 ( 107,787 ) 182,731 12

Core technologies 61,439 ( 36,303 ) 25,136 10

Total $ 578,520 $ ( 150,743 ) 427,777

2 unchanged sentences

December 30, 2022

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

Core technology 35,795 ( 33,989 ) 1,806 8

Trademarks and brands, subject to amortization $ 12,443 $ ( 3,799 ) $ 8,644 9

Customer and distributor relationships 195,910 ( 86,023 ) 109,887 10

Core technologies 39,291 ( 34,412 ) 4,879 8

Total $ 247,644 $ ( 124,234 ) 123,410

1 unchanged sentence

Total $ 178,980

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 30, 2022

(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

December 29, December 30, December 31,

2023 2022 2021

12 unchanged sentences

Balance as of December 29, 2023 $ 636,565

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

Accrued Expenses

2 unchanged sentences

Payroll and related expenses $ 17,988 $ 38,193

Current portion of lease liabilities 10,314 9,095

Warranty 17,071 15,510

Income tax payable 21,743 40,701

Warranty 20,001 17,071

Current portion of lease liabilities 14,115 10,314

Accrued sales rebate 11,885 8,693

NCI buyout liability — 2,700

Other accrued expenses 17,668 12,757

1 unchanged sentence

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

December 29, December 30, December 31,

2023 2022 2021

5 unchanged sentences

Related Party Transactions

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

Refer to Note 18.

Acquisitions for further details of this acquisition.

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 $ 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.

3 unchanged sentences

Commitments and Contingent Liabilities for additional details of this agreement.

On March 3, 2023, the Company acquired all of the outstanding equity interest of Custom Wheel House.

Custom Wheel House has building leases for its office facilities in California.

The buildings are owned by the former owner of Custom Wheel House, who is now an employee of the Company.

Rent expense under these leases was $ 600 for the year ended December 29, 2023.

Prior Credit Facility

3 unchanged sentences

The term loan was subject to quarterly amortization payments.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

2022 Credit Facility

4 unchanged sentences

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.

Notes to Consolidated Financial Statements - Continued

December 30, 2022

(in thousands, except per share amounts)

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.

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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 %.

On November 14, 2023, in connection and concurrently with the closing of the Marucci acquisition, the Company entered into the Amendment amending the 2022 Credit Facility.

The Amendment provided the Company with the Incremental Term A Loan in an amount of $ 400,000 and the Delayed Draw Term Loan in an amount of $ 200,000 , each of which are permitted under the 2022 Credit Facility, subject to satisfaction of certain conditions.

The Incremental Term A Loan was fully funded on November 14, 2023 and used to fund a portion of the consideration owed under the Marucci acquisition.

The Delayed Draw Term Loan is available to the Company for up to six months commencing on December 6, 2023, until the earlier of (a) May 14, 2024 and (b) the date on which the Delayed Draw Term commitments have been terminated.

Each Incremental Term Loan is subject to quarterly amortization payments of principal at a rate of 5.00 % per annum.

The Incremental Term Loans are in the form of term SOFR loans and base rate loans, at the option of the Company, and have an applicable margin ranging from 0.50 % to 1.50 % for base rate loans and 1.50 % to 2.50 % for term SOFR loans, subject to adjustment provisions.

Each Incremental Term Loan has a maturity date of April 5, 2027, consistent with the 2022 Credit Facility.

The Company paid $ 10,063 in debt issuance costs, of which $ 6,709 were allocated to the Term A Loan and $ 3,354 were allocated to the Delayed Draw Term Loan.

Loan fees allocated to the Term A Loan are amortized using the interest method over the term of the Credit Facility.

Loan fees allocated to the Delayed Draw Term Loan were deferred as an asset until the debt is drawn.

Upon the drawing of the Delayed Draw Term Loan, the fees will be reclassified to a contra-liability account and amortized over the term of the drawn debt using the interest method.

At December 29, 2023, the one-month SOFR and three-month SOFR rates were 5.34 % and 5.36 %, respectively.

2 unchanged sentences

The Company was in compliance with the covenants as of December 29, 2023.

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

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

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

December 29, December 30,

3 unchanged sentences

Total borrowing capacity $ 650,000 $ 650,000

Maturity date April 5, 2027 March 11, 2025

Maturity date April 5, 2027 April 5, 2027

As of December 29, 2023, future principal payments for long-term debt, including the current portion, as summarized as follows:

For fiscal year December 29, 2023

Total $ 380,000

Debt issuance cost ( 6,472 )

Long-term debt, net of issuance cost 373,528

current portion —

Long-term debt less current portion $ 373,528

Derivatives and Hedging

23 unchanged sentences

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.

The unrealized gains and losses, net of tax, deferred to accumulated other comprehensive income resulting from the derivative instruments designated as cash flow hedges for the years ended December 29, 2023, December 30, 2022, and December 31, 2021 were a loss of $ 473 , and gains of $ 18,001 and $ 3,692 , respectively.

The reclassifications of gains from accumulated other comprehensive income into earnings related to the derivative instruments designated as cash flow hedges during the years ended December 29, 2023, December 30, 2022 and December 31, 2021 were $ 6,775 , $ 3,177 and $ 48 , respectively.

Over the next twelve months, the Company expects to recognize $ 7,279 of the $ 8,511 of unrealized gains currently included in accumulated other comprehensive income as an offset to interest expense.

1 unchanged sentence

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

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

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

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

1 unchanged sentence

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.

On February 20, 2024, a complaint alleging violations of federal securities laws and seeking certification as a class action was filed against the Company and certain of its current and former officers in the United States District Court for the Northern District of Georgia in Atlanta.

The complaint has not yet been served.

The complaint purports to seek damages on behalf of a putative class of persons who purchased the Company’s common stock between May 6, 2021 and November 2, 2023.

The complaint asserts claims under Sections 10(b) and 20 of the Securities Exchange Act and alleges that the Company made material misstatements and omissions to investors regarding demand for the Company’s products and inventory levels.

The complaint generally seeks money damages, interest, attorneys’ fees, and other costs.

The case is in preliminary stages, and the Company anticipates filing a motion to dismiss all claims.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

Bailment Pool Arrangements - The Company has relationships with several OEM partners, including General Motors (“GM”), Ford Motor Company (“Ford”), and Chrysler to obtain truck chassis.

For Chrysler chassis, the Company pays a cash deposit upon transfer of the chassis to the Company’s premises and records the chassis within prepaids and other current assets on the consolidated balance sheets until the chassis is transferred to the dealer customer’s floorplan, at which time the cash deposit is returned to the Company.

For GM and Ford, the Company entered into floorplan financing agreements with the OEM.

The Company receives an allocation of chassis and pays interest expense on the allocated value of trucks based on the duration of time they are on the Company’s premises.

Bailment, which is the non-ownership transfer of the chassis from GM and Ford to the Company, ends when the vehicle is sold to an authorized dealer, or upon authorized return of the vehicle to the manufacturer.

The Company does not pay a cash deposit to obtain GM and Ford chassis, and accordingly it does not recognize an asset.

or a liability related to these chassis.

Interest payments made to manufacturer-affiliated finance companies are classified as operating activities in the consolidated statements of cash flows.

At December 29, 2023 and December 30, 2022, the Company had utilized $ 9,036 and $ 2,634 out of a maximum of $ 49,400 and $ 26,200 of Ford allocation of chassis, respectively, and $ 11,362 and $ 67,149 , respectively, out of a maximum of $ 100,000 GM allocation of chassis.

The company incurred $ 4,760 of interest expense related to chassis on hand during the year ended December 29, 2023.

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

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

Stockholders’ Equity

Share Repurchase Plan

On November 1, 2023, the Company’s Board of Directors authorized a share repurchase plan for up to $300,000 in shares of the Company’s common stock, par value $0.001 per share.

The share repurchase program is scheduled to expire on November 1, 2028.

Repurchases of shares of Common Stock under the stock repurchase plan will be made in accordance with applicable securities laws and may be made under a variety of methods, which may include open market purchases.

The stock repurchase program does not obligate the Company to acquire any particular amount of common stock, and it may be suspended or terminated at any time at the Company’s discretion.

During the fiscal year ended December 29, 2023, the Company repurchased approximately 428 shares for $25,000, at an average price of $58.44.

All repurchased shares were immediately retired.

The aggregate cost of share repurchases and average price paid per share exclude 1% excise tax on share repurchases imposed as part of the Inflation Reduction Act of 2022.

Common stock was reduced by the number of shares retired at $0.001 par value per shares.

The excess purchase price over par value was allocated between additional paid-in capital and retained earnings.

As of December 29, 2023, authorized repurchases of $275,000 remain available to the Company.

FOX FACTORY HOLDING CORP.

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(in thousands, except per share amounts)

Stockholders' Equity

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 .

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

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.

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

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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.

No further awards will be granted pursuant to the 2008 Plan or 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 ten 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 ten 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.

In addition to time-based vesting criteria, certain of our RSUs include performance-based vesting criteria.

As of December 30, 2022, there were 4,889 shares reserved for issuance under the Company's equity incentive plans and 4,463 shares available for grant under the 2022 Plan.

As of December 29, 2023, there were 3,367 shares available for issuance under the 2022 Plan.

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

Stock-Based Compensation

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.

Compensation expense related to the Company’s share-based awards for the fiscal years ended December 29, 2023, December 30, 2022, and December 31, 2021 was $ 16,465 , $ 16,351 , and $ 13,914 , respectively, all of which related to RSUs and performance share units (“PSUs”).

No compensation expense related to stock options was incurred during the fiscal years ended December 29, 2023, December 30, 2022, and December 31, 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

December 29, December 30, December 31,

2023 2022 2021

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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 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)

Stock-based compensation expense capitalized to inventory was not material for the years ended December 29, 2023, December 30, 2022 and December 31, 2021.

Restricted Stock Units

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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 29, 2023

(in thousands, except per share amounts)

The following table summarizes RSU activity:

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Vested ( 177 ) $ 49.17

Unvested at January 1, 2021 450 50.12

Unvested at December 30, 2021 338 $ 76.30

Granted 142 $ 95.34

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Unvested at December 29, 2023 247 $ 100.21

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.

The fair value of vested RSUs was $ 15,516 , $ 15,140 and $ 27,213 for the years ended December 29, 2023, December 30, 2022 and December 31, 2021, respectively.

As of December 29, 2023, the Company had approximately $ 15,203 of unrecognized stock-based compensation expense related to RSUs, which will be recognized over the remaining weighted-average vesting period of approximately 1.79 years.

Performance Stock Units

During the year ended December 30, 2022, the Company issued performance share units (“PSUs”) to certain executives that represent shares potentially issuable in the future.

During the year ended December 29, 2023, the Company issued PSUs to certain executives that represent shares potentially issuable in the future.

Issuance is based upon the Company’s performance, over a 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 fair value of PSUs is calculated based on the stock price on the date of grant.

FOX FACTORY HOLDING CORP.

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Unvested at December 30, 2022 48 $ 126.69

Granted 45 $ 114.04

Canceled ( 10 ) $ 120.08

Vested ( 13 ) $ 141.57

Unvested at December 29, 2023 70 $ 116.54

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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Options exercised ( 192 ) $ 5.41 $ 25,751

Balance at January 1, 2021 225 5.37 2 22,593

Balance at December 31, 2021 33 $ 5.16 2 $ 5,389

Options exercised ( 33 ) $ 5.16 $ 2,470

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Aggregate intrinsic value represents the difference between the closing price of the Company’s common stock on NASDAQ and the exercise price of outstanding, in-the-money options.

No options vested during the year ended December 30, 2022.

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

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.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 30, 2022

(in thousands, except per share amounts)

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

Earnings Per Share

Basic earnings per share ("EPS") amounts are computed by dividing net income attributable to Fox Factory Holding Corp.

stockholders for the period by the weighted average number of common shares outstanding during the period.

Basic earnings per share (“EPS”) amounts are computed by dividing net income attributable to Fox stockholders for the period by the weighted average number of common shares outstanding during the period.

Diluted EPS amounts are computed by dividing net income for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding during the period.

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For the fiscal years ended

December 30 December 31 January 1

December 29, December 30, December 31,

2023 2022 2021

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Diluted $ 2.85 $ 4.84 $ 3.87

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.

The Company excluded 12 and 20 shares from the calculation of diluted earnings per share for the years ended December 29, 2023 and December 30, 2022 as these shares would have been antidilutive.

No potentially antidilutive shares were excluded from the calculation of diluted earnings per share for the year ended December 31, 2021.

Provision for Income Taxes

1 unchanged sentence

For the fiscal years ended

December 30 December 31 January 1

December 29, December 30, December 31,

2023 2022 2021

14 unchanged sentences

For the fiscal years ended

December 30 December 31 January 1

December 29, December 30, December 31,

2023 2022 2021

4 unchanged sentences

For the fiscal years ended

December 30 December 31 January 1

December 29, December 30, December 31,

2023 2022 2021

1 unchanged sentence

Foreign derived income benefit ( 4.4 ) ( 6.6 ) ( 5.8 )

Valuation allowance on foreign tax credits ( 3.8 ) 1.1 0.7

Research and development tax credit ( 3.8 ) ( 2.9 ) ( 1.1 )

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

Federal return to provision ( 2.2 ) 1.0 0.4

Stock-based compensation ( 0.2 ) ( 0.5 ) ( 5.0 )

State taxes, net of federal benefit 0.8 0.6 1.9

Change in liability for unrecognized tax benefits 0.7 — ( 1.4 )

Executive compensation deduction limitation 0.6 0.8 1.2

Valuation allowance on foreign tax credits — ( 3.8 ) 1.1

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

Other 0.3 1.5 0.7

8 unchanged sentences

Foreign tax credits, including amounts associated with accrued charges $ 51,232 $ 47,779

Capitalized research & development 23,778 16,502

Lease liability 16,597 6,077

Inventory 9,673 8,222

Accrued liabilities 7,299 7,146

Lease liability 6,077 3,646

Capitalized research & development 16,502 5,880

Stock-based compensation — 2,254

Net operating losses 3,226 —

Research and development tax credits 2,402 3,963

Interest rate swap 2,010 3,313

Stock-based compensation 385 ( 121 )

Other 2,629 1,273

4 unchanged sentences

Intangible assets ( 65,090 ) ( 23,078 )

Depreciation ( 5,583 ) ( 5,711 )

Lease Right-of-use-asset ( 17,117 ) ( 6,232 )

Accrued withholding tax on unremitted foreign dividends — ( 854 )

Stock-based compensation ( 121 ) —

Depreciation ( 12,192 ) ( 5,583 )

Other ( 2,842 ) ( 1,642 )

3 unchanged sentences

As of December 29, 2023, 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.

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.

For the year ended December 29, 2023, the valuation allowance increased by $ 413 due to a taxable loss at the Company’s UK subsidiary.

There was no valuation allowance for foreign tax credits as of December 29, 2023.

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

An estimate of the range cannot be made.

FOX FACTORY HOLDING CORP.

4 unchanged sentences

For the fiscal years ended

December 30 December 31 January 1

December 29, December 30, December 31,

2023 2022 2021

1 unchanged sentence

Increase related to current year tax positions 1,274 — —

Increase related to prior year tax positions — — 187

Decrease related to prior year tax positions ( 119 ) ( 109 ) ( 2,923 )

1 unchanged sentence

Balance - end of period $ 1,274 $ 119 $ 228

As of December 30, 2022, the Company had $ 119 of unrecognized tax benefits.

As of December 29, 2023, the Company had $ 1,274 of unrecognized tax benefits related to certain state tax positions.

The Company regularly engages in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions.

It is reasonably possible that significant changes in the unrecognized tax benefit may occur within the next twelve months, including settlement of the full amount with the taxing authority.

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.

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Total assets measured at fair value $ — $ 3,394 $ — $ 3,394 $ — $ 5,087 $ — $ 5,087

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

Incremental Term A Loan $ — $ 373,528 $ — $ 373,528 $ — $ — $ — $ —

Total liabilities measured at fair value $ — $ 373,528 $ — $ 373,528 $ — $ — $ — $ —

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 29, 2023, and December 30, 2022.

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.

As of December 29, 2023, the carrying amount of the principal under the Company’s 2022 Credit Facility - Incremental Term A Loan 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.

FOX FACTORY HOLDING CORP.

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

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.

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 $ 10,326 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:

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 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 consolidated statements of income.

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

Refer to Note 10.

Debt for further details.

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.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 30, 2022

(in thousands, except per share amounts)

The Company made matching contributions of $ 3,873 , $ 3,649 , and $ 2,655 for each of the years ended December 29, 2023, December 30, 2022 and December 31, 2021, respectively.

Acquisition of Sola Sport Pty Ltd.

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.

Acquisition of Outside Van

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.

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

Acquisition of Shock Therapy Suspension, Inc.

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.

4 unchanged sentences

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

Acquisition of Custom Wheel House

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 acquired all of the outstanding equity interest of CWH.

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

Custom Wheel House is a designer, marketer, and distributor of high-performance wheels, performance off-road tires, and accessories, including the premier flagship brand Method Race Wheels.

The Company believes that this acquisition will be complementary to its upfitting businesses and will help to expand its product offerings.

This acquisition was financed through the Company’s existing 2022 Credit Facility.

The acquisition was closed on March 3, 2023 and accounted for as a business combination.

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

The purchase price of Custom Wheel House is allocated to the assets acquired and liabilities assumed based on their estimated respective fair values as of March 3, 2023 with the excess purchase price allocated to goodwill.

The weighted average amortization period of the total acquired intangible assets was 11 years.

The weighted average amortization periods of the acquired trade name, customer relationship and core technology assets were 12 , 7 , and 10 years, respectively.

The acquired goodwill represents the value of combining operations of Custom Wheel House and the Company, $ 25,000 of which is deductible for tax purposes.

During the year ended December 29, 2023, the Company finalized the purchase price allocation and recorded adjustments to net assets of $ 7,291 , identified intangible assets of $ 4,247 , and goodwill of $ 10,693 .

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

Acquisition consideration

Cash consideration $ 129,784

Total consideration at closing $ 129,784

Fair market values

Inventory $ 23,266

Other current assets 3,109

Property, plant and equipment 3,529

Lease right-of-use assets 4,718

Trademarks and brands 36,397

Customer and distributor relationships 10,808

Core technologies 1,548

Goodwill 67,610

Total assets acquired $ 150,985

Accounts payable and accrued expenses $ 10,783

Current portion of lease liabilities 1,693

Lease liabilities 3,024

Deferred taxes 5,701

Total liabilities assumed $ 21,201

Purchase price allocation $ 129,784

The Company incurred $ 1,001 of transaction costs related to the acquisition of Custom Wheel House during the year ended December 29, 2023.

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

The results of operations for Custom Wheel House have been included in the Company's consolidated statements of income since the closing date of the acquisition on March 3, 2023.

The total revenue and pre-tax net loss for Custom Wheel House for the year ended December 29, 2023 amounted to $ 65,558 and $ 1,630 , respectively.

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

The pro forma results include the effects of the amortization of purchased intangible assets and acquired inventory and property, plant and equipment valuation step-ups, interest expense on the revolving credit facility used to finance the transaction, and the net tax benefit of the above adjustments calculated at the statutory federal tax rate of 21%.

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

The pro forma results for the years ended December 29, 2023 and December 30, 2022 do not include transaction costs associated with the acquisition or transaction success bonuses as these were removed for pro forma purposes.

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

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

For the fiscal years ended

December 29, 2023 December 30, 2022

Pro forma sales $ 1,475,574 $ 1,684,375

Pro forma net income attributable to FOX stockholders $ 118,341 $ 206,152

Acquisition of Marucci Sports LLC

On November 14, 2023, the Company, through Fox Factory, Inc., acquired 100 % of the issued and outstanding stock of Wheelhouse Holdings Inc.

("Wheelhouse") from Compass Group Diversified Holdings LLC for $ 567,194 , net of cash acquired.

Wheelhouse is the parent company of Marucci, which is an industry-leading designer, manufacturer, and distributor of premium performance baseball, softball, and other sports-related products.

Marucci also develops and licenses franchises for sports training facilities, and its customer base is primarily located in the United States and certain international markets.

The Company believes the acquisition advances FOX’s position as a diversified provider of market-leading branded products with a proven ability to win over both professional athletes and passionate consumer bases, while positioning the combined company for future profitable growth.

This transaction was accounted for as a business combination.

The purchase price of Marucci has been preliminary allocated to the assets acquired and liabilities assumed based on their estimated respective fair values as of November 14, 2023 with the excess purchase price allocated to goodwill.

The following table summarizes the provisional fair values of the identifiable assets acquired and liabilities assumed at the date of the acquisition:

Acquisition consideration

Cash consideration, net of cash acquired $ 567,092

Due to sellers 102

Total consideration at closing $ 567,194

Fair market values

Accounts receivable $ 31,268

Inventory 44,972

Prepaid and other current assets 1,256

Property, plant and equipment 19,065

Lease right-of-use assets 9,423

Trademarks and brands 174,700

Customer and distributor relationships 83,800

Core technologies 20,600

Goodwill 244,790

Other assets 583

Total assets acquired $ 630,457

Accounts payable $ 6,995

Accrued expenses 10,512

Other current liabilities 1,854

Deferred Taxes 36,914

Other liabilities 6,988

Total liabilities assumed $ 63,263

Purchase price allocation $ 567,194

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

The gross contractual accounts receivable acquired in the acquisition was $ 32,455 , of which $ 1,187 was not expected to be collected.

The amounts above represent the Company’s provisional fair value estimates related to the acquisition as of November 14, 2023, and are subject to subsequent adjustments as additional information is obtained during the applicable measurement period.

The primary areas of estimates that are not yet finalized include certain tangible assets acquired and liabilities assumed, as well as the identifiable intangible assets.

The Company incurred $ 3,126 of acquisition costs in conjunction with the Marucci acquisition during the year ended December 29, 2023.

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

Additional debt issuance costs of $ 6,709 were incurred in association with financing the transaction and will be amortized over the term of the Incremental Term Loan A.

Refer to Note Note 10 - Debt for further details.

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 $ 244,790 reflects the strategic fit of Marucci with the Company’s operations.

The weighted average amortization period of the total acquired intangible assets was 16 years.

The weighted average amortization periods of the customer and distributor relationship, trade name and trademark, and developed technology assets were 18 , 15 , and 13 years, respectively.

Goodwill is expected to have an indefinite life and will be subject to impairment testing.

The goodwill is not deductible for income tax purposes.

Marucci previously purchased intangibles in asset acquisitions with a remaining net tax basis approximating $ 57,735 , which the Company may deduct for income tax purposes.

The results of operations for Marucci have been included in the Company's consolidated statements of income since the closing date of the acquisition on November 14, 2023.

The total revenue and pre-tax loss for Marucci for the year ended December 29, 2023 amounted to $ 16,791 and $ 3,150 , respectively.

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

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

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

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

The pro forma results for the years ended December 29, 2023 and December 30, 2022 do not include transaction costs associated with the acquisition or the acceleration of any stock-based compensation that resulted from the transaction as these were removed for pro forma purposes.

For the fiscal years ended

December 29, 2023 December 30, 2022

Pro forma sales $ 1,632,076 $ 1,767,902

Pro forma net income attributable to FOX stockholders $ 110,391 $ 177,081

FOX FACTORY HOLDING CORP.

Notes to Consolidated Financial Statements - Continued

December 29, 2023

(in thousands, except per share amounts)

Foreign Currency Translation Adjustment

The following table summarizes the changes in foreign currency translation adjustments:

Foreign currency translation adjustment

Balance as of 12/31/2021 $ 1,281

Other comprehensive loss ( 4,918 )

Balance as of 12/30/2022 ( 3,637 )

Other comprehensive income 1,507

Balance as of 12/29/2023 $ ( 2,130 )

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.

Subsequent to December 29, 2023 and up through February 15, 2024, the Company repurchased and subsequently retired approximately 378 shares of the Company’s Common Stock at a cost of approximately $ 25,000 , for an average price of $ 66.03 per share, under the Share Repurchase Program described further in Note 1 3 - Stockholders' Equity to the consolidated financial statements.

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