ý | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 26-1647258 |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
6634 Hwy 53 Braselton, GA | 30517 |
(Address of Principal Executive Offices) | (Zip Code) |
Securities registered pursuant to Section 12(b) of the Act: | ||
Title of Each Class | Name of each exchange on which registered | |
Common Stock, par value $0.001 per share | The NASDAQ Stock Market LLC (NASDAQ Global Select Market) |
Large accelerated filer | ý | Accelerated filer | ¨ |
Non-accelerated filer | ¨ | Smaller reporting company | ¨ |
Emerging growth company | ¨ |
• | our ability to develop new and innovative products in our current end-markets; |
• | our ability to leverage our technologies and brand to expand into new categories and end-markets; |
• | our ability to increase our aftermarket penetration; |
• | our ability to accelerate international growth; |
• | our exposure to exchange rate fluctuations; |
• | the loss of key customers; |
• | our ability to improve operating and supply chain efficiencies; |
• | our ability to enforce our intellectual property rights; |
• | our future financial performance, including our sales, cost of sales, gross profit or gross margins, operating expenses, ability to generate positive cash flow and ability to maintain our profitability; |
• | our ability to maintain our premium brand image and high-performance products; |
• | our ability to maintain relationships with the professional athletes and race teams we sponsor; |
• | our ability to selectively add additional dealers and distributors in certain geographic markets; |
• | the growth of the markets in which we compete, our expectations regarding consumer preferences and our ability to respond to changes in consumer preferences; |
• | changes in demand for performance-defining products; |
• | the loss of key personnel, management and skilled engineers; |
• | our ability to successfully identify, evaluate and manage potential or completed acquisitions and to benefit from such acquisitions; |
• | the outcome of pending litigation; |
• | future disruptions in the operations of our manufacturing facilities; |
• | our ability to adapt our business model to mitigate the impact of certain changes in tax laws including those enacted in the US in December 2017; |
• | changes in the relative proportion of profit earned in the numerous jurisdictions in which we do business and in tax legislation, case law and other authoritative guidance in those jurisdictions; |
• | products recalls and product liability claims; and |
• | future economic or market conditions. |
Page | ||
PART I. | ||
Item 1 | Business | |
Item 1A | Risk Factors | |
Item 1B | Unresolved Staff Comments | |
Item 2 | Properties | |
Item 3 | Legal Proceedings | |
Item 4 | Mine Safety Disclosures | |
PART II. | ||
Item 5 | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | |
Item 6 | Selected Financial Data | |
Item 7 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
Item 7A | Quantitative and Qualitative Disclosures About Market Risk | |
Item 8 | Financial Statements and Supplementary Data | |
Item 9 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | |
Item 9A | Controls and Procedures | |
Item 9B | Other Information | |
PART III. | ||
Item 10 | Directors, Executive Officers and Corporate Governance | |
Item 11 | Executive Compensation | |
Item 12 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | |
Item 13 | Certain Relationships and Related Transactions, and Director Independence | |
Item 14 | Principal Accounting Fees and Services | |
PART IV. | ||
Item 15 | Exhibits, Financial Statement Schedules | |
Signatures | ||
Financial Statements | ||
Management’s Report on Internal Control Over Financial Reporting | ||
Reports of Independent Registered Public Accounting Firm | ||
Consolidated Balance Sheets as of December 28, 2018 and December 29, 2017 | ||
Consolidated Statements of Income for the years ended December 28, 2018, December 29, 2017 and December 30, 2016 | ||
Consolidated Statements of Comprehensive Income for the years ended December 28, 2018, December 29, 2017 and December 30, 2016 | ||
Consolidated Statements of Stockholders' Equity for the years ended December 28, 2018, December 29, 2017 and December 30, 2016 | ||
Consolidated Statements of Cash Flows for the years ended December 28, 2018, December 29, 2017 and December 30, 2016 | ||
Notes to Consolidated Financial Statements |
• | increasing consumer appetite for performance-defining products; |
• | increasing average retail sales prices, which we believe are driven by differentiated and feature-rich products with advanced technologies; |
• | continuing product cycle innovation, which we have observed often motivates consumers to upgrade and purchase new products for enhanced performance; and |
• | increased sales opportunities for high-end bikes and powered vehicles in international markets. |
• | our racing culture, including on-site technical race support of professional athletes, which provides us with unique real-time insights as to the evolving performance-defining product needs of those participating in challenging world-class events and is an integral part of our R&D efforts; |
• | ongoing research and development through a team of full-time engineers and numerous other technicians and employees who spend at least part of their time testing and using our products and helping develop engineering-based solutions to enhance our product offerings; |
• | feedback from professional athletes, race teams, enthusiasts and other consumers who use our products; |
• | strategic and collaborative relationships with OEM customers, which furthers our ability to extend technologies and applications across end-markets; and |
• | our integrated manufacturing facilities and performance testing center, which allow us to quickly move from concept to product. |
• | Live Valve, our proprietary semi-active, electronic suspension that processes data from multiple vehicle sensors to adjust the suspension virtually instantaneously to the demands of changing terrain. This technology is currently in use on Side-by-Sides, off-road capable, on-road trucks, and mountain bikes; |
• | 32, 34 and 36 Factory Series FLOAT FIT4, which reduces overall fork weight, provides external adjustability with our fourth-generation FOX Isolated Technology (FIT) closed-cartridge damper, and includes the self-adjusting negative chamber air spring for quieter operation and ease of adjustment; |
• | The GRIP2 fork damper, which is our next-evolution sealed cartridge FIT system, our highest performing gravity-focused damper. GRIP2 shares its roots with the original GRIP architecture, but has been enhanced with all-new technology: four-way adjustability, VVC high-speed rebound circuit, high-performance mid-valve, and overall friction-reducing treatments; |
• | X2 technology used in our Factory Series FLOAT and DH rear shocks, which allows the rider to independently tune high- and low-speed compression and high- and low-speed rebound; |
• | DPX2 rear shock technology that combines the character of our DPS damping and X2 damping circuits to provide a lightweight trail-tuned adjustable shock; |
• | Rhythm series fork products developed to address a lower price point offering without compromising proven FOX performance; |
• | PODIUM Internal Bypass, introduced into the Side-by-Side market, which through its internal bypass technology, allows the vehicle to be plush on small bumps and deliver excellent chassis control while providing progressive bottoming resistance with each increment of travel used; |
• | X2 technology used in our 2.5 PODIUM shocks for side-by-sides that feature high- and low-speed rebound adjustment, high- and low-speed compression adjustment, and a dual-rate spring for the rear shocks to allow drivers to tune for many different terrain types and driving styles; |
• | Race Face Vault Hub, a new 120-point high-engagement mountain bike hubset featuring tool-free end caps that simplify conversion among all major axle standards and is approved for e-bike applications; |
• | Race Face Next R31 Carbon Wheels featuring a single spoke length throughout and an offset rim design for improved spoke balance and strength; and |
• | Easton EC90 SL Crankset with Cinch Power Meter spindle, a versatile road bike crankset that allows quick conversion between 1x and 2x road and gravel chainring configurations. The Cinch Power Meter spindle, through a one-time connection to a smart phone, automatically works with ride-recording and power-measurement applications. |
• | failure to develop new products that are innovative, performance-oriented, and reliable; |
• | internal product quality control issues; |
• | product quality issues on the bikes and powered vehicles on which our products are installed; |
• | product recalls; |
• | high profile component failures (such as a component failure during a race on a mountain bike ridden by an athlete that we sponsor); |
• | negative publicity regarding our sponsored athletes; |
• | high profile injury or death to one of our sponsored athletes; |
• | inconsistent uses of our brand and our other intellectual property assets, as well as failure to protect our intellectual property; and |
• | changes in consumer trends and perceptions. |
• | difficulty in transporting materials internationally, including labor disputes at West Coast ports, which handle a large amount of our products; |
• | increased difficulty in protecting our intellectual property rights and trade secrets; |
• | changes in tax laws and the interpretation of those laws; |
• | exposure to local economic conditions; |
• | unexpected government action or changes in legal or regulatory requirements; |
• | geopolitical regional conflicts, terrorist activity, political unrest, civil strife, acts of war and other political uncertainty; |
• | changes in tariffs, quotas, trade barriers and other similar restrictions on sales; |
• | the effects of any anti-American sentiments on our brands or sales of our products; |
• | increased difficulty in ensuring compliance by employees, agents and contractors with our policies as well as with the laws of multiple jurisdictions, including but not limited to the U.S. Foreign Corrupt Practices Act, local international environmental, health and safety laws, and increasingly complex regulations relating to the conduct of international commerce; |
• | increased difficulty in controlling and monitoring foreign operations from the United States, including increased difficulty in identifying and recruiting qualified personnel for our foreign operations; and |
• | increased difficulty in staffing and managing foreign operations or international sales. |
• | pay dividends or make distributions to our stockholders or redeem our stock; |
• | incur additional indebtedness or permit additional encumbrances on our assets; and |
• | make acquisitions or complete mergers or sales of assets, or engage in new businesses. |
• | requiring us to dedicate a substantial portion of our cash flows from operations to payments on our debt; |
• | limiting our ability to obtain future financing for working capital, capital expenditures, acquisitions, debt obligations and other general corporate requirements; |
• | making us more vulnerable to adverse conditions in the general economy or our industry and to fluctuations in our operating results, including affecting our ability to comply with and maintain any financial tests and ratios required under our indebtedness; |
• | limiting our flexibility to engage in certain transactions or to plan for, or react to, changes in our business and industry; |
• | putting us at a disadvantage compared to competitors that have less relative and/or less restrictive debt; and |
• | subjecting us to additional restrictive financial and other covenants. |
• | earthquake, fire, flood, hurricane and other natural disasters; |
• | power loss, computer systems failure, internet and telecommunications or data network failure; and |
• | hackers, computer viruses, software bugs or glitches. |
• | the timing of new product releases or other significant announcements by us or our competitors; |
• | new advertising initiatives; |
• | fluctuations in raw materials and component costs; and |
• | changes in our practices with respect to building inventory. |
• | variations in our operating results or those of our competitors; |
• | new product or other significant announcements by us or our competitors; |
• | changes in our product mix; |
• | changes in consumer preferences; |
• | fluctuations in currency exchange rates; |
• | the gain or loss of significant customers; |
• | recruitment or departure of key personnel; |
• | changes in the estimates of our operating results or changes in recommendations by any securities analysts that elect to follow our common stock; |
• | changes in general economic conditions as well as conditions affecting our industry in particular; and |
• | sales of our common stock by us, our significant stockholders or our directors or executive officers. |
• | authorize the issuance of "blank check" preferred stock that could be issued by our Board of Directors to discourage a takeover attempt; |
• | establish a classified Board of Directors, as a result of which the successors to the directors whose terms have expired will be elected to serve from the time of election and qualification until the third annual meeting following their election; |
• | require that directors be removed from office only for cause; |
• | provide that vacancies on our Board of Directors, including newly created directorships, may be filled only by a majority vote of directors then in office; |
• | provide that no action be taken by stockholders by written consent; |
• | provide that special meetings of our stockholders may be called only by our Board of Directors, our Chairperson of the Board of Directors, our Lead Director (if we do not have a Chairperson or the Chairperson is disabled), our Chief Executive Officer or our President (in the absence of a Chief Executive Officer); |
• | require supermajority stockholder voting for our stockholders to effect certain amendments to our Charter Documents; and |
• | establish advance notice requirements for nominations for elections to our Board of Directors or for proposing other matters that can be acted upon by stockholders at stockholder meetings. |
United States | Other Countries | Total | ||||||
Leased facilities | 412,691 | 200,052 | 612,743 | |||||
Owned facilities | 233,759 | — | 233,759 | |||||
Total | 646,450 | 200,052 | 846,502 |
High | Low | ||||||
Year Ending December 29, 2017 | |||||||
Quarter ended March 31, 2017 | $ | 28.90 | $ | 25.45 | |||
Quarter ended June 30, 2017 | 35.60 | 26.70 | |||||
Quarter ended September 29, 2017 | 43.10 | 35.30 | |||||
Quarter ended December 29, 2017 | 44.20 | 36.85 | |||||
Year Ending December 28, 2018 | |||||||
Quarter ended March 30, 2018 | $ | 40.20 | $ | 34.35 | |||
Quarter ended June 29, 2018 | 47.40 | 33.25 | |||||
Quarter ended September 28, 2018 | 72.10 | 47.75 | |||||
Quarter ended December 28, 2018 | 75.17 | 50.66 |
Period | Total Number of Shares Purchased (1) | Weighted Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | ||||||
9/29 - 11/2 | 637 | $ | 53.73 | — | |||||
11/3 - 11/30 | 621 | 63.46 | — | ||||||
12/1 - 12/28 | — | — | — | ||||||
1,258 | $ | 58.53 | — | ||||||
(1) Includes shares acquired from holders of restricted stock unit awards and option exercises to satisfy tax withholding obligations. |
For the fiscal years ended | |||||||||||||||||||
(in thousands, except per share data) | |||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||
Sales | $ | 619,225 | $ | 475,633 | $ | 403,077 | $ | 366,798 | $ | 306,734 | |||||||||
Cost of sales (1) | 413,729 | 321,143 | 276,689 | 254,756 | 212,314 | ||||||||||||||
Gross profit | 205,496 | 154,490 | 126,388 | 112,042 | 94,420 | ||||||||||||||
Operating expenses: | |||||||||||||||||||
Sales and marketing (1) | 37,296 | 27,905 | 25,796 | 23,182 | 19,192 | ||||||||||||||
Research and development (1) | 25,847 | 20,178 | 18,459 | 17,001 | 13,642 | ||||||||||||||
General and administrative (1) | 41,756 | 34,933 | 27,693 | 21,053 | 17,683 | ||||||||||||||
Amortization of purchased intangibles | 6,065 | 2,986 | 2,988 | 8,525 | 6,424 | ||||||||||||||
Fair value adjustment of contingent consideration and acquisition-related compensation | — | 1,447 | 5,911 | 6,937 | 2,856 | ||||||||||||||
Total operating expenses | 110,964 | 87,449 | 80,847 | 76,698 | 59,797 | ||||||||||||||
Income from operations | 94,532 | 67,041 | 45,541 | 35,344 | 34,623 | ||||||||||||||
Other expense, net: | |||||||||||||||||||
Interest expense | 3,059 | 2,396 | 2,088 | 1,549 | 999 | ||||||||||||||
Other expense (income), net | 583 | 360 | 363 | (449 | ) | (693 | ) | ||||||||||||
Total other expense, net | 3,642 | 2,756 | 2,451 | 1,100 | 306 | ||||||||||||||
Income before income taxes | 90,890 | 64,285 | 43,090 | 34,244 | 34,317 | ||||||||||||||
Provision for income taxes | 5,523 | 21,102 | 7,415 | 9,290 | 6,631 | ||||||||||||||
Net income | 85,367 | 43,183 | 35,675 | 24,954 | 27,686 | ||||||||||||||
Less: net income attributable to non-controlling interest | 1,327 | 55 | — | — | — | ||||||||||||||
Net income attributable to FOX stockholders | $ | 84,040 | $ | 43,128 | $ | 35,675 | $ | 24,954 | $ | 27,686 | |||||||||
Earnings per share: | |||||||||||||||||||
Basic | $ | 2.22 | $ | 1.15 | $ | 0.97 | $ | 0.67 | $ | 0.75 | |||||||||
Diluted | $ | 2.16 | $ | 1.11 | $ | 0.94 | $ | 0.66 | $ | 0.73 | |||||||||
Weighted average shares used to compute earnings per share: | |||||||||||||||||||
Basic | 37,805 | 37,373 | 36,799 | 36,989 | 36,756 | ||||||||||||||
Diluted | 38,956 | 38,738 | 37,801 | 37,894 | 37,807 |
(1) Includes stock-based compensation as follows: | ||||||||||||||||||||
For the fiscal years ended | ||||||||||||||||||||
(in thousands) | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||
Cost of sales | $ | 482 | $ | 429 | $ | 139 | $ | 82 | $ | 43 | ||||||||||
Sales and marketing | 556 | 587 | 598 | 430 | 279 | |||||||||||||||
Research and development | 640 | 442 | 357 | 178 | 88 | |||||||||||||||
General and administrative | 5,644 | 7,269 | 5,129 | 4,217 | 3,634 | |||||||||||||||
Total | $ | 7,322 | $ | 8,727 | $ | 6,223 | $ | 4,907 | $ | 4,044 |
For the fiscal years ended | |||||||||||||||||||
(in thousands) | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||
Cash and cash equivalents | $ | 27,958 | $ | 35,947 | $ | 35,280 | $ | 6,944 | $ | 4,212 | |||||||||
Inventory | 107,140 | 84,841 | 71,243 | 68,202 | 59,191 | ||||||||||||||
Working capital | 135,162 | 116,702 | 95,876 | 57,971 | 48,056 | ||||||||||||||
Property, plant and equipment, net | 64,788 | 43,636 | 32,262 | 26,094 | 19,759 | ||||||||||||||
Total assets | 485,254 | 428,286 | 335,600 | 277,716 | 258,437 | ||||||||||||||
Total debt, including current portion (1) | 59,426 | 98,643 | 66,683 | 47,881 | 50,000 | ||||||||||||||
Total stockholders’ equity | 321,205 | 234,835 | 184,937 | 152,260 | 128,806 |
(1) | In 2014, in connection with our acquisitions, we entered into amendments to our credit facility, borrowing $80.0 million under a secured term loan. In 2016, we entered into the Second Amended and Restated Credit Facility, with a refinanced term loan principal balance of $75.0 million. The principal balance of the term loan was $59.4 million at December 28, 2018. |
• | bikes; and |
• | powered vehicles, including Side-by-Sides, certain on-road vehicles with off-road capabilities, off-road vehicles and trucks, ATVs, snowmobiles, specialty vehicles and applications, and motorcycles. |
• | Product sales: consist of sales of performance-defining products and systems to customers worldwide. Sales are measured based on the consideration specified in a contract with a customer. We recognize sales when it satisfies a performance obligation by transferring control of a product to a customer, generally at the time of shipment. Contracts are generally in the form of purchase orders and are governed by standard terms and conditions. For larger OEMs, we may also enter into master agreements; and |
• | Shipping and handling fees: consists of shipping and handling fees billed to customers. |
• | Rebates: consists of incentives we provide to customers based on sales of eligible products; and |
• | Sales returns allowances: consists of an estimate of our sales returns. This allowance is based upon estimates of the projected returns in future periods based on our experience with returns recorded in previous periods. Sales returns have not been significant to date. |
• | the costs to inspect and repair products; |
• | shipping costs associated with inbound freight. These costs are capitalized as part of inventory and included in cost of sales as the inventory is sold; |
• | royalty expenses, including payments to certain parties for our use of licensed technology incorporated into our products; |
• | freight expenses incurred for certain shipments to customers; |
• | warranty costs associated with the repair or replacement of products under warranty; and |
• | reductions in the cost of inventory to its net realizable value, if required, for estimated excess, obsolescence or impaired balances. |
• | sales and marketing; |
• | research and development; |
• | general and administrative; |
• | amortization of purchased intangibles; and |
• | fair value adjustment of contingent consideration and acquisition related compensation. |
For the years ended | ||||||||||||
December 28, | December 29, | December 30, | ||||||||||
(in thousands) | 2018 | 2017 | 2016 | |||||||||
Sales | $ | 619,225 | $ | 475,633 | $ | 403,077 | ||||||
Cost of sales | 413,729 | 321,143 | 276,689 | |||||||||
Gross profit | 205,496 | 154,490 | 126,388 | |||||||||
Operating expenses: | ||||||||||||
Sales and marketing | 37,296 | 27,905 | 25,796 | |||||||||
Research and development | 25,847 | 20,178 | 18,459 | |||||||||
General and administrative | 41,756 | 34,933 | 27,693 | |||||||||
Amortization of purchased intangibles | 6,065 | 2,986 | 2,988 | |||||||||
Fair value adjustment of contingent consideration and acquisition-related compensation | — | 1,447 | 5,911 | |||||||||
Total operating expenses | 110,964 | 87,449 | 80,847 | |||||||||
Income from operations | 94,532 | 67,041 | 45,541 | |||||||||
Other expense, net: | ||||||||||||
Interest expense | 3,059 | 2,396 | 2,088 | |||||||||
Other expense | 583 | 360 | 363 | |||||||||
Total other expense, net | 3,642 | 2,756 | 2,451 | |||||||||
Income before income taxes | 90,890 | 64,285 | 43,090 | |||||||||
Provision for income taxes | 5,523 | 21,102 | 7,415 | |||||||||
Net income | 85,367 | 43,183 | 35,675 | |||||||||
Less: net income attributable to non-controlling interest | 1,327 | 55 | — | |||||||||
Net income attributable to FOX stockholders | $ | 84,040 | $ | 43,128 | $ | 35,675 |
For the years ended | |||||||||
December 28, | December 29, | December 30, | |||||||
2018 | 2017 | 2016 | |||||||
Sales | 100.0 | % | 100.0 | % | 100.0 | % | |||
Cost of sales | 66.8 | 67.5 | 68.6 | ||||||
Gross profit | 33.2 | 32.5 | 31.4 | ||||||
Operating expenses: | |||||||||
Sales and marketing | 6.0 | 5.9 | 6.4 | ||||||
Research and development | 4.2 | 4.2 | 4.6 | ||||||
General and administrative | 6.7 | 7.3 | 6.9 | ||||||
Amortization of purchased intangibles | 1.0 | 0.6 | 0.7 | ||||||
Fair value adjustment of contingent consideration and acquisition-related compensation | — | 0.3 | 1.5 | ||||||
Total operating expenses | 17.9 | 18.3 | 20.1 | ||||||
Income from operations | 15.3 | 14.2 | 11.3 | ||||||
Other expense, net: | |||||||||
Interest expense | 0.5 | 0.5 | 0.5 | ||||||
Other expense | 0.1 | 0.1 | 0.1 | ||||||
Other expense, net | 0.6 | 0.6 | 0.6 | ||||||
Income before income taxes | 14.7 | 13.6 | 10.7 | ||||||
Provision for income taxes | 0.9 | 4.4 | 1.8 | ||||||
Net income | 13.8 | 9.2 | 8.9 | ||||||
Less: net income attributable to non-controlling interest | 0.2 | 0.1 | — | ||||||
Net income attributable to FOX stockholders | 13.6 | % | 9.1 | % | 8.9 | % |
(in millions) | 2018 | 2017 | Change ($) | Change (%) | |||||||||
Sales | $ | 619.2 | $ | 475.6 | $ | 143.6 | 30.2 | % |
(in millions) | 2018 | 2017 | Change ($) | Change (%) | |||||||||
Cost of sales | $ | 413.7 | $ | 321.1 | $ | 92.6 | 28.8 | % |
(in millions) | 2018 | 2017 | Change ($) | Change (%) | |||||||||
Operating expenses: | |||||||||||||
Sales and marketing | $ | 37.3 | $ | 27.9 | $ | 9.4 | 33.7 | % | |||||
Research and development | 25.8 | 20.2 | 5.6 | 27.7 | % | ||||||||
General and administrative | 41.8 | 34.9 | 6.9 | 19.8 | % | ||||||||
Amortization of purchased intangibles | 6.1 | 3.0 | 3.1 | 103.3 | % | ||||||||
Fair value adjustment of contingent consideration and acquisition related compensation | — | 1.4 | (1.4 | ) | (100.0 | )% | |||||||
Total operating expenses | $ | 111.0 | $ | 87.4 | $ | 23.6 | 27.0 | % |
(in millions) | 2018 | 2017 | Change ($) | Change (%) | |||||||||
Income from operations | $ | 94.5 | $ | 67.0 | $ | 27.5 | 41.0 | % |
(in millions) | 2018 | 2017 | Change ($) | Change (%) | |||||||||
Other expense, net: | |||||||||||||
Interest expense | $ | 3.1 | $ | 2.4 | $ | 0.7 | 29.2 | % | |||||
Other expense, net | 0.5 | 0.4 | 0.1 | 25.0 | % | ||||||||
Other expense, net | $ | 3.6 | $ | 2.8 | $ | 0.8 | 28.6 | % |
(in millions) | 2018 | 2017 | Change ($) | Change (%) | |||||||||
Provision for income taxes | $ | 5.5 | $ | 21.1 | $ | (15.6 | ) | (73.9 | )% |
(in millions) | 2018 | 2017 | Change ($) | Change (%) | |||||||||
Net income | $ | 85.4 | $ | 43.2 | $ | 42.2 | 97.7 | % |
(in millions) | 2017 | 2016 | Change ($) | Change (%) | |||||||||
Sales | $ | 475.6 | $ | 403.1 | $ | 72.5 | 18.0 | % |
(in millions) | 2017 | 2016 | Change ($) | Change (%) | |||||||||
Cost of sales | $ | 321.1 | $ | 276.7 | $ | 44.4 | 16.0 | % |
(in millions) | 2017 | 2016 | Change ($) | Change (%) | |||||||||
Operating expenses: | |||||||||||||
Sales and marketing | $ | 27.9 | $ | 25.8 | $ | 2.1 | 8.1 | % | |||||
Research and development | 20.2 | 18.5 | 1.7 | 9.2 | % | ||||||||
General and administrative | 34.9 | 27.7 | 7.2 | 26.0 | % | ||||||||
Amortization of purchased intangibles | 3.0 | 3.0 | — | — | % | ||||||||
Fair value adjustment of contingent consideration and acquisition related compensation | 1.4 | 5.9 | (4.5 | ) | (76.3 | )% | |||||||
Total operating expenses | $ | 87.4 | $ | 80.9 | $ | 6.5 | 8.0 | % |
(in millions) | 2017 | 2016 | Change ($) | Change (%) | |||||||||
Income from operations | $ | 67.0 | $ | 45.5 | $ | 21.5 | 47.3 | % |
(in millions) | 2017 | 2016 | Change ($) | Change (%) | |||||||||
Other expense, net: | |||||||||||||
Interest expense | $ | 2.4 | $ | 2.1 | $ | 0.3 | 14.3 | % | |||||
Other expense (income), net | 0.4 | 0.4 | — | — | % | ||||||||
Other expense, net | $ | 2.8 | $ | 2.5 | $ | 0.3 | 12.0 | % |
(in millions) | 2017 | 2016 | Change ($) | Change (%) | |||||||||
Provision for income taxes | $ | 21.1 | $ | 7.4 | $ | 13.7 | 185.1 | % |
(in millions) | 2017 | 2016 | Change ($) | Change (%) | |||||||||
Net income | $ | 43.2 | $ | 35.7 | $ | 7.5 | 21.0 | % |
For the years ended | |||||||||||
December 28, | December 29, | December 30, | |||||||||
(in thousands) | 2018 | 2017 | 2016 | ||||||||
Net cash provided by operating activities | $ | 65,392 | $ | 48,172 | $ | 38,845 | |||||
Net cash used in investing activities | (30,203 | ) | (70,456 | ) | (12,222 | ) | |||||
Net cash (used in) provided by financing activities | (43,431 | ) | 22,007 | 1,830 | |||||||
Effect of exchange rate changes on cash | 253 | 944 | (117 | ) | |||||||
(Decrease) increase in cash and cash equivalents | $ | (7,989 | ) | $ | 667 | $ | 28,336 |
Payments due by period | Total | Less than 1 year | 1-3 years | 4-5 years | More than 5 years | ||||||||||||||
Long-term borrowings | $ | 59,687 | $ | 7,031 | $ | 52,656 | $ | — | $ | — | |||||||||
Operating lease obligations | 19,233 | 5,781 | 8,591 | 2,784 | 2,077 | ||||||||||||||
Purchase obligations and other | 3,016 | 3,016 | — | — | — | ||||||||||||||
Total | $ | 81,936 | $ | 15,828 | $ | 61,247 | $ | 2,784 | $ | 2,077 |
(a) Financial Statements | |
Management’s Report on Internal Control Over Financial Reporting | |
Consolidated Balance Sheets as of December 28, 2018 and December 29, 2017 | |
Consolidated Statements of Income for the years ended December 28, 2018, December 29, 2017 and December 30, 2016 | |
Consolidated Statements of Comprehensive Income for the years ended December 28, 2018, December 29, 2017 and December 30, 2016 | |
Consolidated Statements of Stockholders' Equity for the years ended December 28, 2018, December 29, 2017 and December 30, 2016 | |
Consolidated Statements of Cash Flows for the years ended December 28, 2018, December 29, 2017 and December 30, 2016 | |
Notes to Consolidated Financial Statements | |
(b) Exhibits | |
See "Index to Exhibits" |
Incorporated by Reference | |||||
Exhibit Number | Exhibit Description | Form | File No. | Filing Date | Filed Herewith |
Amended and Restated Certificate of Incorporation | 10-Q | 001-36040 | September 19, 2013 | ||
Amended and Restated Bylaws | 10-Q | 001-36040 | September 19, 2013 | ||
Form of Common Stock Certificate. | S-1 | 333-189841 | July 8, 2013 | ||
Form of Indenture dated March 31, 2015 | S-3 | 333-203146 | March 31, 2015 | ||
Employment Agreement, dated July 22, 2013, by and between Fox Factory Holding Corp. and Larry L. Enterline. | S-1 | 333-189841 | July 25, 2013 | ||
Employment Agreement, dated July 22, 2013, by and between Fox Factory Holding Corp. and Zvi Glasman. | S-1 | 333-189841 | July 25, 2013 | ||
Employment Agreement, dated February 20, 2014, by and between Fox Factory Holding Corp. and Bill Katherman. | 8-K/A | 001-36040 | June 17, 2014 | ||
Employment Agreement, dated January 26, 2015, by and between Fox Factory Holding Corp. and Tom Wittenschlaeger. | 10-Q | 001-36040 | May 4, 2016 | ||
Employment Agreement, dated August 29, 2013, by and between Fox Factory Holding Corp. and Wes Allinger. | 10-Q | 001-36040 | May 4, 2016 | ||
Amendment, dated May 2, 2016, to the Employment Agreement, dated July 22, 2013, by and between Fox Factory Holding Corp. and Larry Enterline. | 10-Q | 001-36040 | August 3, 2016 | ||
Amendment, dated May 2, 2016, to the Employment Agreement, dated July 22, 2013, by and between Fox Factory Holding Corp. and Zvi Glasman. | 10-Q | 001-36040 | August 3, 2016 | ||
Amendment, dated May 2, 2016, to the Employment Agreement, dated February 20, 2014, by and between Fox Factory Holding Corp. and Bill Katherman. | 10-Q | 001-36040 | August 3, 2016 | ||
Amendment, dated May 2, 2016, to the Employment Agreement, dated January 26, 2015, by and between Fox Factory Holding Corp. and Tom Wittenschlaeger. | 10-Q | 001-36040 | August 3, 2016 | ||
Amendment, dated October 19, 2016, to the Employment Agreement, dated February 20, 2014, by and between Fox Factory Holding Corp. and Bill Katherman. | 8-K | 001-36040 | October 25, 2016 | ||
Amendment and Restated, dated May 1, 2018, to the Employment Agreement, dated August 29, 2013, by and between Fox Factory Holding Corp. and Wes Allinger. | 10-Q | 001-36040 | May 5, 2018 | ||
Amendment, dated June 26, 2018, to the Employment Agreement, dated January 26, 2015, by and between Fox Factory Holding Corp. and Tom Wittenschlaeger. | 8-K | 001-36040 | June 26, 2018 | ||
Amendment, dated January 1, 2019, to the Employment Agreement, dated January 26, 2015, by and between Fox Factory Holding Corp. and Tom Wittenschlaeger. | 8-K | 001-36040 | January 1, 2019 |
Employment Agreement, dated May 1, 2018, by and between Fox Factory Holding Corp. and Chris Tutton. | X | ||||
Employment Agreement, dated August 29, 2018, by and between Fox Factory Holding Corp. and Mike C. Dennison. | X | ||||
Information Sharing and Cooperation Agreement, dated August 13, 2013, by and between Compass Diversified Holdings, on its behalf and on behalf of its wholly-owned subsidiary, Compass Group Diversified Holdings LLC, and Fox Factory Holding Corp., on its behalf and on behalf of its wholly-owned subsidiary, Fox Factory, Inc. | 10-Q | 001-36040 | November 6, 2013 | ||
Non-Employee Director Compensation Policy. | S-1 | 333-189841 | July 25, 2013 | ||
Form of Indemnification Agreement between Fox Factory Holding Corp. and certain of its officers, directors and/or advisors. | 10-Q | 001-36040 | October 31, 2018 | ||
Form of Indemnification Agreement between Fox Factory Holding Corp. and Elias Sabo and certain advisors. | S-1 | 333-189841 | July 8, 2013 | ||
2008 Stock Option Plan, as amended. | S-1 | 333-189841 | July 8, 2013 | ||
2008 Non-Statutory Stock Option Plan, as amended. | S-1 | 333-189841 | August 2, 2013 | ||
2013 Omnibus Plan. | S-1 | 333-189841 | July 29, 2013 | ||
2013 Omnibus Plan as amended by the First Amendment, approved by stockholders on May 4, 2017. | 8-K | 001-36040 | May 8, 2017 | ||
Form of Restricted Stock Unit Award Agreement under 2013 Omnibus Plan. | S-1 | 333-189841 | July 25, 2013 | ||
Amendment to Restricted Stock Unit Award Agreement, by and between Fox Factory Holding Corp. and Joseph Hagin, dated January 11, 2017. | 10-Q | 001-36040 | May 3, 2017 | ||
Amendment to Restricted Stock Unit Award Agreement, by and between Fox Factory Holding Corp. and Carl Nichols, dated January 4, 2018. | 10-K | 001-36040 | February 27, 2018 | ||
Air Commercial Real Estate Association Standard Industrial / Commercial Single-Tenant Lease – Gross, dated October 31, 2011, by and between Fox Factory, Inc. and Sammie Rae Abitbol, LLC. | S-1 | 333-189841 | July 8, 2013 | ||
Air Commercial Real Estate Association Standard Industrial / Commercial Single-Tenant-Gross, dated March 24, 2010, by and between Fox Factory, Inc. and Scarborough Gilbert Partners, and related addenda. | S-1 | 333-189841 | July 8, 2013 | ||
Air Commercial Real Estate Association Standard Industrial/Commercial Multi-Tenant Lease - Net, dated April 19, 2012, by and between Fox Factory, Inc. and North Johnson Vernon Property, LLC, and related addendum. | S-1 | 333-189841 | July 8, 2013 | ||
Asset Purchase Agreement, by and between ST USA Holding Corp. and Sport Truck USA, Inc., dated March 5, 2014. | 8-K | 001-36040 | March 6, 2014 | ||
Asset Purchase Agreement, by and between Fox Factory, Inc., RFE Holding (US) Corp., RFE Holding (Canada) Corp., Fox Factory IP Holding Corp., 1021039 B.C. Ltd. and Easton Cycling (USA), Inc. dated December 5, 2014. | 8-K | 001-36040 | December 8, 2014 |
Side Letter Agreement to the Asset Purchase Agreement, by and between Fox Factory, Inc., RFE Holding (US) Corp., RFE Holding (Canada) Corp., Fox Factory IP Holding Corp., 1021039 B.C. Ltd. and Easton Cycling (USA), Inc., dated December 12, 2014. | 8-K | 001-36040 | December 15, 2014 | ||
Second Amendment to Asset Purchase Agreement by and between Fox Factory, Inc., RFE Holding (US) Corp., RFE Holding (Canada) Corp., Fox Factory IP Holding Corp., 1021039 B.C. Ltd. and Easton Cycling (USA), Inc., dated November 13, 2015. | 10-Q | 001-36040 | November 16, 2015 | ||
Asset Purchase and Contribution Agreement by and among FF US Acquisition Corp., FF US Holding Corp., Flagship, Inc. d/b/a Tuscany, and Michael Graber and Jeff Burttschell dated November 30, 2017. | 8-K | 001-36040 | December 4, 2017 | ||
Stock Repurchase Agreement, by and between Fox Factory Holding Corp. and Compass Group Diversified Holdings, LLC, dated March 9, 2016. | 8-K | 001-36040 | March 15, 2016 | ||
Second Amended and Restated Revolving Credit and Term Loan Agreement, dated May 11, 2016. | 8-K | 001-36040 | May 16, 2016 | ||
First Amendment to Second Amended and Restated Revolving Credit and Term Loan Agreement, dated August 11, 2016. | 10-Q | 001-36040 | November 2, 2016 | ||
Second Amendment to Second Amended and Restated Revolving Credit and Term Loan Agreement dated June 12, 2017. | 10-Q | 001-36040 | August 3, 2017 | ||
Third Amendment to Second Amended and Restated Revolving Credit and Term Loan Agreement dated November 30, 2017. | 8-K | 001-36040 | December 4, 2017 | ||
Fourth Amendment to Second Amended and Restated Revolving Credit and Term Loan Agreement dated November 14, 2018. | X | ||||
List of Subsidiaries. | X | ||||
Consent of Independent Registered Public Accounting Firm. | X | ||||
Power of Attorney (contained in signature page to this Annual Report on Form 10-K). | X | ||||
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended. | X | ||||
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended. | X | ||||
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended. | X | ||||
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended. | X | ||||
101.INS | XBRL Instance Document. | X | |||
101.SCH | XBRL Taxonomy Extension Schema. | X | |||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase. | X | |||
101.DEF | XBRL Taxonomy Extension Definition Linkbase. | X |
101.LAB | XBRL Taxonomy Extension Label Linkbase. | X | |||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase. | X |
* | In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release Nos. 33-8238 and 34-47986, Final Rule: Management's Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Annual Report on Form 10-K and will not be deemed "filed" for purposes of Section 18 of the Exchange Act. 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. |
FOX FACTORY HOLDING CORP. | ||
By: | /s/ Zvi Glasman | |
February 26, 2019 | Zvi Glasman, Chief Financial Officer and Treasurer | |
(Principal Financial and Accounting Officer & Duly Authorized Signatory) |
Signature | Title | Date | ||
/s/ Larry L. Enterline | Chief Executive Officer and Director | February 26, 2019 | ||
Larry L. Enterline | (Principal Executive Officer) | |||
/s/ Zvi Glasman | Chief Financial Officer and Treasurer | February 26, 2019 | ||
Zvi Glasman | (Principal Financial and Accounting Officer) | |||
/s/ Dudley Mendenhall | Chairman | February 26, 2019 | ||
Dudley Mendenhall | ||||
/s/ Michael Dennison | Director and President, Powered Vehicles Group | February 26, 2019 | ||
Michael Dennison | ||||
/s/ Tom Duncan | Director | February 26, 2019 | ||
Tom Duncan | ||||
/s/ Elizabeth A. Fetter | Director | February 26, 2019 | ||
Elizabeth A. Fetter | ||||
/s/ Ted Waitman | Director | February 26, 2019 | ||
Ted Waitman |
/s/ Larry L. Enterline |
Larry L. Enterline |
/s/ Zvi Glasman |
Zvi Glasman |
December 28, | December 29, | ||||||
2018 | 2017 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 27,958 | $ | 35,947 | |||
Accounts receivable (net of allowances of $600 and $676 at December 28, 2018 and December 29, 2017, respectively) | 78,882 | 61,060 | |||||
Inventory | 107,140 | 84,841 | |||||
Prepaids and other current assets | 17,967 | 18,055 | |||||
Total current assets | 231,947 | 199,903 | |||||
Property, plant and equipment, net | 64,788 | 43,636 | |||||
Deferred tax assets | 15,328 | 2,669 | |||||
Goodwill | 88,850 | 88,438 | |||||
Intangibles, net | 83,974 | 90,044 | |||||
Other assets | 367 | 551 | |||||
Total assets | $ | 485,254 | $ | 425,241 | |||
Liabilities and stockholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 55,086 | $ | 40,813 | |||
Accrued expenses | 33,607 | 29,563 | |||||
Reserve for uncertain tax positions | 1,169 | 7,787 | |||||
Current portion of long-term debt | 6,923 | 5,038 | |||||
Total current liabilities | 96,785 | 83,201 | |||||
Line of credit | — | 35,585 | |||||
Long-term debt, less current portion | 52,503 | 58,020 | |||||
Deferred rent | 479 | 645 | |||||
Total liabilities | 149,767 | 177,451 | |||||
Commitments and contingencies (Refer to Note 9 - Commitments and Contingencies) | |||||||
Redeemable non-controlling interest | 14,282 | 12,955 | |||||
Stockholders’ equity | |||||||
Preferred stock, $0.001 par value — 10,000 authorized and no shares issued or outstanding as of December 28, 2018 and December 29, 2017 | — | — | |||||
Common stock, $0.001 par value — 90,000 authorized; 38,881 shares issued and 37,991 outstanding as of December 28, 2018; 38,497 shares issued and 37,607 outstanding as of December 29, 2017 | 38 | 38 | |||||
Additional paid-in capital | 116,019 | 112,793 | |||||
Treasury stock, at cost; 890 common shares as of December 28, 2018 and December 29, 2017 | (13,754 | ) | (13,754 | ) | |||
Accumulated other comprehensive loss | (784 | ) | (168 | ) | |||
Retained earnings | 219,686 | 135,926 | |||||
Total stockholders’ equity | 321,205 | 234,835 | |||||
Total liabilities, redeemable non-controlling interest and stockholders’ equity | $ | 485,254 | $ | 425,241 |
For the years ended | ||||||||||||
December 28, | December 29, | December 30, | ||||||||||
2018 | 2017 | 2016 | ||||||||||
Sales | $ | 619,225 | $ | 475,633 | $ | 403,077 | ||||||
Cost of sales | 413,729 | 321,143 | 276,689 | |||||||||
Gross profit | 205,496 | 154,490 | 126,388 | |||||||||
Operating expenses: | ||||||||||||
Sales and marketing | 37,296 | 27,905 | 25,796 | |||||||||
Research and development | 25,847 | 20,178 | 18,459 | |||||||||
General and administrative | 41,756 | 34,933 | 27,693 | |||||||||
Amortization of purchased intangibles | 6,065 | 2,986 | 2,988 | |||||||||
Fair value adjustment of contingent consideration and acquisition-related compensation | — | 1,447 | 5,911 | |||||||||
Total operating expenses | 110,964 | 87,449 | 80,847 | |||||||||
Income from operations | 94,532 | 67,041 | 45,541 | |||||||||
Other expense, net: | ||||||||||||
Interest expense | 3,059 | 2,396 | 2,088 | |||||||||
Other expense | 583 | 360 | 363 | |||||||||
Other expense, net | 3,642 | 2,756 | 2,451 | |||||||||
Income before income taxes | 90,890 | 64,285 | 43,090 | |||||||||
Provision for income taxes | 5,523 | 21,102 | 7,415 | |||||||||
Net income | 85,367 | 43,183 | 35,675 | |||||||||
Less: net income attributable to non-controlling interest | 1,327 | 55 | — | |||||||||
Net income attributable to Fox stockholders | $ | 84,040 | $ | 43,128 | $ | 35,675 | ||||||
Earnings per share: | ||||||||||||
Basic | $ | 2.22 | $ | 1.15 | $ | 0.97 | ||||||
Diluted | $ | 2.16 | $ | 1.11 | $ | 0.94 | ||||||
Weighted average shares used to compute earnings per share: | ||||||||||||
Basic | 37,805 | 37,373 | 36,799 | |||||||||
Diluted | 38,956 | 38,738 | 37,801 |
For the years ended | |||||||||||
December 28, | December 29, | December 30, | |||||||||
2018 | 2017 | 2016 | |||||||||
Net income | $ | 85,367 | $ | 43,183 | $ | 35,675 | |||||
Other comprehensive (loss) income | |||||||||||
Foreign currency translation adjustments, net of tax effects | (616 | ) | 2,025 | (240 | ) | ||||||
Other comprehensive (loss) income | (616 | ) | 2,025 | (240 | ) | ||||||
Comprehensive income | 84,751 | 45,208 | 35,435 | ||||||||
Less: comprehensive income attributable to non-controlling interest | 1,327 | 55 | — | ||||||||
Comprehensive income attributable to Fox stockholders | $ | 83,424 | $ | 45,153 | $ | 35,435 |
Common Stock | Treasury | Additional paid-in capital | Accumulated other comprehensive (loss) income | Retained earnings | Total stockholders' equity | Redeemable non-controlling interest | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||
Balance- December 31, 2015 | 37,415 | $ | 37 | 390 | $ | (5,807 | ) | $ | 102,860 | $ | (1,953 | ) | $ | 57,123 | $ | 152,260 | $ | — | |||||||||||||
Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding | 366 | — | — | — | (1,034 | ) | — | — | (1,034 | ) | — | ||||||||||||||||||||
Repurchases of common stock | — | — | 500 | (7,947 | ) | — | — | — | (7,947 | ) | — | ||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | 6,223 | — | — | 6,223 | — | ||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | (240 | ) | — | (240 | ) | — | ||||||||||||||||||||
Net Income | — | — | — | — | — | — | 35,675 | 35,675 | — | ||||||||||||||||||||||
Balance- December 30, 2016 | 37,781 | $ | 37 | 890 | $ | (13,754 | ) | $ | 108,049 | $ | (2,193 | ) | $ | 92,798 | $ | 184,937 | $ | — | |||||||||||||
Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding | 716 | 1 | — | — | (3,983 | ) | — | — | (3,982 | ) | — | ||||||||||||||||||||
Acquisition of redeemable non-controlling interest | — | — | — | — | — | — | — | — | 12,900 | ||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | 8,727 | — | — | 8,727 | — | ||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | 2,025 | — | 2,025 | — | ||||||||||||||||||||||
Net Income | — | — | — | — | — | — | 43,128 | 43,128 | 55 | ||||||||||||||||||||||
Balance- December 29, 2017 | 38,497 | $ | 38 | 890 | $ | (13,754 | ) | $ | 112,793 | $ | (168 | ) | $ | 135,926 | $ | 234,835 | $ | 12,955 | |||||||||||||
Issuance of common stock under equity compensation plans, net of shares repurchased for income tax withholding | 384 | — | — | — | (4,096 | ) | — | — | (4,096 | ) | — | ||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | 7,322 | — | — | 7,322 | — | ||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | (616 | ) | — | (616 | ) | — | ||||||||||||||||||||
Adoption of new accounting standard, net of taxes | (280 | ) | (280 | ) | |||||||||||||||||||||||||||
Net Income | — | — | — | — | — | — | 84,040 | 84,040 | 1,327 | ||||||||||||||||||||||
Balance- December 28, 2018 | 38,881 | $ | 38 | 890 | $ | (13,754 | ) | $ | 116,019 | $ | (784 | ) | $ | 219,686 | $ | 321,205 | $ | 14,282 |
For the years ended | |||||||||||
December 28, | December 29, | December 30, | |||||||||
2018 | 2017 | 2016 | |||||||||
OPERATING ACTIVITIES: | |||||||||||
Net income | $ | 85,367 | $ | 43,183 | $ | 35,675 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 14,729 | 10,280 | 9,025 | ||||||||
Cost of goods on acquired inventory step up | — | 248 | 212 | ||||||||
Stock-based compensation | 7,322 | 8,727 | 6,223 | ||||||||
Deferred taxes and uncertain tax positions | (19,286 | ) | (1,160 | ) | (3,016 | ) | |||||
Change in fair value of contingent consideration | — | (150 | ) | (229 | ) | ||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | (19,034 | ) | 3,554 | (17,862 | ) | ||||||
Inventory | (22,998 | ) | (8,322 | ) | (2,991 | ) | |||||
Income taxes payable | 281 | 6,421 | 1,467 | ||||||||
Prepaids and other assets | (377 | ) | (6,378 | ) | (2,089 | ) | |||||
Accounts payable | 15,193 | 2,243 | 9,610 | ||||||||
Accrued expenses | 4,195 | (10,474 | ) | 2,820 | |||||||
Net cash provided by operating activities | 65,392 | 48,172 | 38,845 | ||||||||
INVESTING ACTIVITIES: | |||||||||||
Acquisition of businesses | — | (53,592 | ) | (198 | ) | ||||||
Purchases of property and equipment | (30,203 | ) | (16,864 | ) | (12,024 | ) | |||||
Net cash used in investing activities | (30,203 | ) | (70,456 | ) | (12,222 | ) | |||||
FINANCING ACTIVITIES: | |||||||||||
Proceeds from line of credit | 25,000 | 42,120 | 29,500 | ||||||||
Payments on line of credit | (60,585 | ) | (7,000 | ) | (12,500 | ) | |||||
Payment of contingent consideration liability | — | (5,382 | ) | (6,889 | ) | ||||||
Proceeds from issuance of debt, net of origination fees | — | — | 9,222 | ||||||||
Repayment of debt | (3,750 | ) | (3,750 | ) | (8,522 | ) | |||||
Cash from stock compensation program, net | (4,096 | ) | (3,981 | ) | (1,034 | ) | |||||
Repurchase of common stock | — | — | (7,947 | ) | |||||||
Net cash (used in) provided by financing activities | (43,431 | ) | 22,007 | 1,830 | |||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | 253 | 944 | (117 | ) | |||||||
CHANGE IN CASH AND CASH EQUIVALENTS | (7,989 | ) | 667 | 28,336 | |||||||
CASH AND CASH EQUIVALENTS—Beginning of year | 35,947 | 35,280 | 6,944 | ||||||||
CASH AND CASH EQUIVALENTS—End of year | $ | 27,958 | $ | 35,947 | $ | 35,280 | |||||
SUPPLEMENTAL CASH FLOW INFORMATION: | |||||||||||
Cash paid during the period for: | |||||||||||
Income taxes | $ | 24,610 | $ | 15,951 | $ | 8,880 | |||||
Cash paid for interest, net of capitalized interest | $ | 2,756 | $ | 2,012 | $ | 1,786 | |||||
Non-cash investing and financing activities: | |||||||||||
Refinancing of line of credit to term debt | $ | — | $ | — | $ | 18,500 | |||||
Non-controlling interests in acquired business | $ | — | $ | 12,900 | $ | — | |||||
Debt assumed in acquisition of Tuscany | $ | — | $ | 465 | $ | — |
December 28, | December 29, | ||
2018 | 2017 | ||
Customer A | 13% | 8% | |
Customer B | 12% | 14% | |
Customer C | 12% | 15% |
For the years ended | |||||||||||
Allowance for doubtful accounts: | 2018 | 2017 | 2016 | ||||||||
Balance, beginning of year | $ | 676 | $ | 397 | $ | 407 | |||||
Add: bad debt expense | 189 | 327 | 53 | ||||||||
Less: write-offs, net of recoveries | (265 | ) | (48 | ) | (63 | ) | |||||
Balance, end of year | $ | 600 | $ | 676 | $ | 397 |
Asset Classification | Estimated useful life |
Machine shop equipment | 10-15 years |
Manufacturing equipment | 5-10 years |
Information systems, office equipment and furniture | 3-5 years |
Internal use computer software | 10 years |
Transportation equipment | 5 years |
Buildings | 39 years |
For the years ended | |||||||||||
2018 | 2017 | 2016 | |||||||||
Power Vehicle Group | $ | 337,284 | $ | 230,255 | $ | 176,391 | |||||
Specialty Sports Group | 281,941 | 245,378 | 226,686 | ||||||||
Total sales | $ | 619,225 | $ | 475,633 | $ | 403,077 |
For the years ended | |||||||||||
2018 | 2017 | 2016 | |||||||||
OEM | $ | 368,580 | $ | 288,733 | $ | 243,816 | |||||
Aftermarket | 250,645 | 186,900 | 159,261 | ||||||||
Total sales | $ | 619,225 | $ | 475,633 | $ | 403,077 |
For the years ended | |||||||||||
2018 | 2017 | 2016 | |||||||||
North America | $ | 388,702 | $ | 280,860 | $ | 221,312 | |||||
Asia | 119,142 | 101,079 | 100,999 | ||||||||
Europe | 101,217 | 86,405 | 76,999 | ||||||||
Rest of the World | 10,164 | 7,289 | 3,767 | ||||||||
Total sales | $ | 619,225 | $ | 475,633 | $ | 403,077 |
December 28, | December 29, | ||||||
2018 | 2017 | ||||||
Raw materials | $ | 75,652 | $ | 51,371 | |||
Work-in-process | 5,880 | 1,233 | |||||
Finished goods | 25,608 | 32,237 | |||||
Total inventory | $ | 107,140 | $ | 84,841 |
December 28, | December 29, | ||||||
2018 | 2017 | ||||||
Machinery and manufacturing equipment | $ | 41,332 | $ | 33,664 | |||
Information systems, office equipment and furniture | 7,262 | 7,715 | |||||
Internal use computer software | 14,416 | 7,819 | |||||
Transportation equipment | 3,932 | 3,325 | |||||
Building and land | 18,978 | 8,811 | |||||
Leasehold improvements | 10,386 | 9,919 | |||||
Total | 96,306 | 71,253 | |||||
Less: accumulated depreciation and amortization | (31,518 | ) | (27,617 | ) | |||
Property, plant and equipment, net | $ | 64,788 | $ | 43,636 |
December 28, | December 29, | ||||||
2018 | 2017 | ||||||
United States | $ | 59,056 | $ | 38,450 | |||
International | 5,732 | 5,186 | |||||
Total long-lived assets | $ | 64,788 | $ | 43,636 |
Gross carrying amount | Accumulated amortization | Net carrying amount | Weighted average life (years) | ||||||||||
December 28, 2018 | |||||||||||||
Customer relationships | $ | 67,624 | $ | (24,134 | ) | $ | 43,490 | 11 | |||||
Core technology | 33,400 | (33,031 | ) | 369 | 8 | ||||||||
Patents | 1,389 | (1,344 | ) | 45 | 4 | ||||||||
Total | $ | 102,413 | $ | (58,509 | ) | 43,904 | |||||||
Trademarks and brands, not subject to amortization | 40,070 | ||||||||||||
Total | $ | 83,974 | |||||||||||
December 29, 2017 | |||||||||||||
Customer relationships | $ | 67,643 | $ | (18,324 | ) | $ | 49,319 | 11 | |||||
Core technology | 33,400 | (32,874 | ) | 526 | 8 | ||||||||
Patents | 1,389 | (1,260 | ) | 129 | 4 | ||||||||
Total | $ | 102,432 | $ | (52,458 | ) | 49,974 | |||||||
Trademarks and brands, not subject to amortization | 40,070 | ||||||||||||
Total | $ | 90,044 |
For the years ended | |||||||||||
2018 | 2017 | 2016 | |||||||||
Amortization of intangibles | $ | 6,065 | $ | 2,986 | $ | 2,988 |
Goodwill activity consisted of the following: | |||
Balance as of December 29, 2017 | $ | 88,438 | |
Purchase price adjustments (Refer to Note 15 - Acquisitions) | 440 | ||
Currency translation and other adjustments | (28 | ) | |
Balance as of December 28, 2018 | $ | 88,850 |
For fiscal year: | Amortization Expense | ||
2019 | $ | 5,925 | |
2020 | 5,236 | ||
2021 | 5,134 | ||
2022 | 5,010 | ||
2023 | 4,368 | ||
Thereafter | 18,231 | ||
Total expected future amortization | $ | 43,904 |
December 28, | December 29, | ||||||
2018 | 2017 | ||||||
Payroll and related expenses | $ | 15,870 | $ | 13,211 | |||
Warranty | 6,433 | 6,481 | |||||
Income tax payable | 6,691 | 6,772 | |||||
Other accrued expenses | 4,613 | 3,099 | |||||
Total | $ | 33,607 | $ | 29,563 |
For the years ended | |||||||||||
2018 | 2017 | 2016 | |||||||||
Beginning warranty liability | $ | 6,481 | $ | 4,593 | $ | 3,914 | |||||
Charge to cost of sales | 4,621 | 5,904 | 4,833 | ||||||||
Fair value of warranty assumed in acquisition | 200 | 1,016 | — | ||||||||
Costs incurred | (4,869 | ) | (5,032 | ) | (4,154 | ) | |||||
Ending warranty liability | $ | 6,433 | $ | 6,481 | $ | 4,593 |
December 28, | December 29, | ||||||
2018 | 2017 | ||||||
Amount outstanding | $ | — | $ | 35,000 | |||
Standby letter of credit | $ | 5,000 | $ | 5,000 | |||
Available borrowing capacity | $ | 95,000 | $ | 60,000 | |||
Maximum borrowing capacity | $ | 100,000 | $ | 100,000 | |||
Maturity date | May 11, 2021 |
For fiscal year: | |||
2019 | $ | 7,031 | |
2020 | 7,031 | ||
2021 | 45,625 | ||
Total term debt | 59,687 | ||
Debt issuance cost | (261 | ) | |
Long-term debt, net of issuance cost | 59,426 | ||
Less: current portion | (6,923 | ) | |
Long-term debt less current portion | $ | 52,503 |
For fiscal year: | Total future payments | |||
2019 | $ | 5,781 | ||
2020 | 4,619 | |||
2021 | 2,569 | |||
2022 | 1,403 | |||
Thereafter | 4,861 | |||
$ | 19,233 |
For the fiscal years ended | |||||||||||
2018 | 2017 | 2016 | |||||||||
Cost of sales | $ | 482 | $ | 429 | $ | 139 | |||||
Sales and marketing | 556 | 587 | 598 | ||||||||
Research and development | 640 | 442 | 357 | ||||||||
General and administrative | 5,644 | 7,269 | 5,129 | ||||||||
Total | $ | 7,322 | $ | 8,727 | $ | 6,223 |
Unvested RSUs | ||||||
Number of shares outstanding | Weighted-average grant date fair value | |||||
Unvested at December 31, 2015 | 773 | $ | 17.07 | |||
Granted | 341 | 15.84 | ||||
Canceled | (15 | ) | 17.83 | |||
Vested | (288 | ) | 17.16 | |||
Unvested at December 30, 2016 | 811 | 16.53 | ||||
Granted | 411 | 31.38 | ||||
Canceled | (55 | ) | 17.45 | |||
Vested | (367 | ) | 16.93 | |||
Unvested at December 29, 2017 | 800 | 23.91 | ||||
Granted | 223 | 37.07 | ||||
Canceled | (30 | ) | 25.16 | |||
Vested | (338 | ) | 21.98 | |||
Unvested at December 28, 2018 | 655 | $ | 29.34 |
Number of shares outstanding | Weighted-average exercise price | Weighted-average remaining contractual life (years) | Aggregate intrinsic value | |||||||||
Balance at December 31, 2015 | 1,643 | $ | 5.32 | 6 | $ | 18,414 | ||||||
Options exercised | (193 | ) | 5.30 | 2,767 | ||||||||
Balance at December 30, 2016 | 1,450 | 5.33 | 5 | 32,528 | ||||||||
Options exercised | (541 | ) | 5.51 | 13,588 | ||||||||
Options forfeited | (14 | ) | 6.20 | — | ||||||||
Options expired | (9 | ) | 6.38 | — | ||||||||
Balance at December 29, 2017 | 886 | 5.19 | 4 | 29,840 | ||||||||
Options exercised | (166 | ) | 5.25 | 9,384 | ||||||||
Balance at December 28, 2018 | 720 | 5.17 | 3 | 39,403 | ||||||||
Options vested and expected to vest - December 28, 2018 | 720 | 5.17 | 3 | 39,403 | ||||||||
Options exercisable - December 28, 2018 | 720 | $ | 5.17 | 3 | $ | 39,403 |
For the years ended | |||||||||||
2018 | 2017 | 2016 | |||||||||
Net income attributable to Fox stockholders | $ | 84,040 | $ | 43,128 | $ | 35,675 | |||||
Weighted average shares used to compute basic earnings per share | 37,805 | 37,373 | 36,799 | ||||||||
Dilutive effect of employee stock plans | 1,151 | 1,365 | 1,002 | ||||||||
Weighted average shares used to compute diluted earnings per share | 38,956 | 38,738 | 37,801 | ||||||||
Earnings per share: | |||||||||||
Basic | $ | 2.22 | $ | 1.15 | $ | 0.97 | |||||
Diluted | $ | 2.16 | $ | 1.11 | $ | 0.94 |
For the years ended | |||||||||||
2018 | 2017 | 2016 | |||||||||
Current: | |||||||||||
Federal | $ | 10,330 | $ | 13,483 | $ | 5,710 | |||||
State | 604 | 648 | (1,287 | ) | |||||||
Foreign | 7,248 | 8,148 | 6,008 | ||||||||
Total | 18,182 | 22,279 | 10,431 | ||||||||
Deferred: | |||||||||||
Federal | (11,462 | ) | (923 | ) | (1,729 | ) | |||||
State | (671 | ) | 387 | (1,156 | ) | ||||||
Foreign | (526 | ) | (641 | ) | (131 | ) | |||||
Total | (12,659 | ) | (1,177 | ) | (3,016 | ) | |||||
Provision for income taxes | $ | 5,523 | $ | 21,102 | $ | 7,415 |
For the years ended | |||||||||||
2018 | 2017 | 2016 | |||||||||
United States | $ | 63,138 | $ | 36,555 | $ | 22,348 | |||||
Foreign | 27,752 | 27,730 | 20,742 | ||||||||
$ | 90,890 | $ | 64,285 | $ | 43,090 |
For the years ended | ||||||||
2018 | 2017 | 2016 | ||||||
Tax at federal statutory rate | 21.0 | % | 35.0 | % | 35.0 | % | ||
State taxes, net of federal benefit | 1.8 | 2.0 | 1.0 | |||||
Change in liability for unrecognized tax benefits | (10.8 | ) | (1.7 | ) | (4.9 | ) | ||
Stock-based compensation | (3.8 | ) | (10.6 | ) | (2.0 | ) | ||
Foreign derived income benefit | (1.6 | ) | — | — | ||||
Research and development tax credit | (1.2 | ) | (2.2 | ) | (2.0 | ) | ||
Change in tax rates | (0.8 | ) | (3.8 | ) | — | |||
California business development tax credit | (0.8 | ) | — | (1.1 | ) | |||
Executive compensation deduction limitation | 2.2 | — | — | |||||
Foreign rate differential | 0.4 | (4.6 | ) | (9.4 | ) | |||
Valuation allowance on deferred tax assets | 0.4 | 9.4 | — | |||||
Tax on unremitted foreign earnings | 0.4 | 8.9 | — | |||||
Other | (1.1 | ) | 0.4 | 0.6 | ||||
Total provision | 6.1 | % | 32.8 | % | 17.2 | % |
December 28, | December 29, | ||||||
2018 | 2017 | ||||||
Deferred tax assets: | |||||||
Foreign tax credits, including amounts associated with accrued charges | $ | 23,920 | $ | 11,321 | |||
Inventory | 3,086 | 2,344 | |||||
Accrued liabilities | 2,815 | 1,649 | |||||
Research and development tax credits | 2,536 | 2,473 | |||||
Stock-based compensation | 1,067 | 1,718 | |||||
Other | 787 | 703 | |||||
Total deferred tax asset | 34,211 | 20,208 | |||||
Valuation allowance | (6,609 | ) | (6,336 | ) | |||
Net deferred tax asset | 27,602 | 13,872 | |||||
Deferred tax liabilities: | |||||||
Depreciation | (7,012 | ) | (4,496 | ) | |||
Accrued withholding tax on unremitted foreign dividends | (2,164 | ) | (2,179 | ) | |||
Intangible assets | (2,220 | ) | (3,545 | ) | |||
Other | (878 | ) | (983 | ) | |||
Total deferred tax liability | (12,274 | ) | (11,203 | ) | |||
Net deferred tax asset | $ | 15,328 | $ | 2,669 |
For the years ended | |||||||||||
2018 | 2017 | 2016 | |||||||||
Balance - beginning of period | $ | 8,154 | $ | 7,440 | $ | 8,924 | |||||
Increase related to current year tax positions | 457 | 460 | 1,828 | ||||||||
Increase related to prior year tax positions | 36 | 1,770 | 24 | ||||||||
Decrease related to prior year tax positions | (6,480 | ) | — | (1,216 | ) | ||||||
Decrease due to expiration of statute of limitations | (171 | ) | (1,516 | ) | (2,120 | ) | |||||
Balance - end of period | $ | 1,996 | $ | 8,154 | $ | 7,440 |
December 28, 2018 | December 29, 2017 | ||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||
Credit facility | $ | — | $ | 59,426 | $ | — | $ | 59,426 | $ | — | $ | 63,058 | $ | — | $ | 63,058 | |||||||||||||||
Non-controlling interest subject to put provisions | — | — | 14,282 | 14,282 | — | — | 12,955 | 12,955 | |||||||||||||||||||||||
Total liabilities measured at fair value | $ | — | $ | 59,426 | $ | 14,282 | $ | 73,708 | $ | — | $ | 63,058 | $ | 12,955 | $ | 76,013 |
Obligations (measured with level 3 inputs) | |||
Balance at December 29, 2017 | $ | 12,955 | |
Net income attributable to non-controlling interest | 1,327 | ||
Balance at December 28, 2018 | $ | 14,282 |
Acquisition consideration | |||
Cash consideration | $ | 53,350 | |
Settlement of pre-existing accounts | 242 | ||
Total consideration at closing | $ | 53,592 | |
Fair market values | |||
Other current and non-current assets | $ | 5,966 | |
Property, plant and equipment | 1,416 | ||
Customer relationships | 28,600 | ||
Trademarks and brand | 6,500 | ||
Goodwill | 30,392 | ||
Total assets acquired | 72,874 | ||
Accounts payable and accrued expenses | 3,329 | ||
Debt assumed in acquisition | 465 | ||
Deferred tax liability for tax free rollover of non-controlling interest | 2,588 | ||
Total liabilities assumed | 6,382 | ||
Redeemable non-controlling interest | 12,900 | ||
Purchase price allocation | $ | 53,592 |
Quarter Ended | |||||||||||||||||||||||||||||||
Dec 28, | Sep 28, | Jun 29, | Mar 30, | Dec 29, | Sep 29, | Jun 30, | Mar 31, | ||||||||||||||||||||||||
2018 | 2018 | 2018 | 2018 | 2017 | 2017 | 2017 | 2017 | ||||||||||||||||||||||||
Sales | $ | 156,810 | $ | 175,798 | $ | 156,825 | $ | 129,792 | $ | 121,093 | $ | 127,399 | $ | 120,811 | $ | 106,330 | |||||||||||||||
Gross profit | 50,953 | 60,486 | 52,413 | 41,644 | 39,122 | 42,597 | 39,056 | 33,714 | |||||||||||||||||||||||
Income from operations | 22,853 | 31,452 | 24,275 | 15,952 | 16,053 | 20,378 | 18,189 | 12,417 | |||||||||||||||||||||||
Net income attributable to Fox Stockholders | 20,135 | 24,312 | 18,369 | 21,224 | 2,802 | 16,072 | 13,726 | 10,528 | |||||||||||||||||||||||
Earnings per share: | |||||||||||||||||||||||||||||||
Basic | $ | 0.53 | $ | 0.64 | $ | 0.49 | $ | 0.56 | $ | 0.07 | $ | 0.43 | $ | 0.37 | $ | 0.28 | |||||||||||||||
Diluted | $ | 0.52 | $ | 0.62 | $ | 0.47 | $ | 0.55 | $ | 0.07 | $ | 0.41 | $ | 0.35 | $ | 0.27 |
Individual Rating | Rating Bonus (percent) |
6.00 - 6.49 | 5.00% |
6.50 - 6.99 | 7.00% |
7.00 - 7.49 | 8.50% |
7.50 - 7.99 (Target) | 10.00% |
8.00 - 8.49 | 11.50% |
8.50 - 8.99 | 13.00% |
9.00 + | 15.00% |
Individual Rating | Rating Bonus (percent) |
6.00 - 6.49 | 7.5% |
6.50 - 6.99 | 10.0% |
7.00 - 7.49 | 12.5% |
7.50 - 7.99 (Target) | 15.0% |
8.00 - 8.49 | 17.5% |
8.50 - 8.99 | 20.0% |
9.00 + | 22.5% |
Owner | Issuer | Class of Stock | No. of Shares | Certificate No. |
Fox Factory, Inc. | Fox Factory Switzerland GmbH | common | 65 | Nr. 1 |
Fox Factory, Inc. | Fox Factory GmbH | n/a | 16,250 | n/a |
Fox Factory, Inc. | RFE Holding (Canada) Corp. | common | 650,000 | 2 |
Company Name | State or Other Jurisdiction of Incorporation or Organization | Name under which Business is Conducted | ||
Fox Factory, Inc. | California | Fox Factory, Inc. | ||
ST USA Holding Corp. | Delaware | Sport Truck, USA | ||
FF US Holding Corp. | Delaware | FF US Holding Corp. | ||
FF US Acquisition Corp. | Delaware | Tuscany | ||
FF Indiana Acquisition Corp | Indiana | FF Indiana Acquisition Corp. | ||
FF US Holding LLC | Georgia | FF US Holding LLC | ||
RFE Holding (US) Corp. | Delaware | Race Face / Easton | ||
RFE Holding (Canada) Corp. | British Columbia, Canada | Race Face / Easton | ||
Fox Factory UK Limited | United Kingdom | Fox Factory UK Limited | ||
Fox Factory GmbH | Germany | Fox Factory GmbH | ||
Fox Factory Austria GmbH | Austria | Fox Factory Austria GmbH | ||
Fox Factory Switzerland GmbH | Switzerland | Fox Factory Switzerland GmbH LLC |
/s/ Larry L. Enterline |
Larry L. Enterline |
Principal Executive Officer |
Date: 2/26/2019 |
/s/ Zvi Glasman |
Zvi Glasman |
Principal Financial Officer and Treasurer |
Date: 2/26/2019 |
/s/ Larry L. Enterline | |
Larry L. Enterline | |
Chief Executive Officer | |
(Principal Executive Officer) | |
Date: 2/26/2019 |
/s/ Zvi Glasman | |
Zvi Glasman | |
Chief Financial Officer and Treasurer | |
(Principal Financial Officer and Treasurer) | |
Date: 2/26/2019 |
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Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 28, 2018 |
Feb. 24, 2019 |
Jun. 29, 2018 |
|
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 28, 2018 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | FOXF | ||
Entity Registrant Name | Fox Factory Holding Corp | ||
Entity Central Index Key | 0001424929 | ||
Current Fiscal Year End Date | --12-28 | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Common Stock, Shares Outstanding | 37,990,546 | ||
Entity Shell Company | false | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Public Float | $ 1,240,176,000 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Dec. 28, 2018 |
Dec. 29, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 600 | $ 676 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 90,000,000 | 90,000,000 |
Common stock, shares issued | 38,881,000 | 38,497,000 |
Common stock, shares outstanding | 37,991,000 | 37,607,000 |
Treasury stock, shares | 890,000 | 890,000 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 28, 2018 |
Dec. 29, 2017 |
Dec. 30, 2016 |
|
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 85,367 | $ 43,183 | $ 35,675 |
Other comprehensive (loss) income | |||
Foreign currency translation adjustments, net of tax effects | (616) | 2,025 | (240) |
Other comprehensive (loss) income | (616) | 2,025 | (240) |
Comprehensive income | 84,751 | 45,208 | 35,435 |
Less: comprehensive income attributable to non-controlling interest | 1,327 | 55 | 0 |
Comprehensive income attributable to Fox stockholders | $ 83,424 | $ 45,153 | $ 35,435 |
Description of the Business, Basis of Presentation and Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Description of the Business, Basis of Presentation and Summary of Significant Accounting Policies | Description of the Business, Basis of Presentation and Summary of Significant Accounting Policies Fox Factory Holding Corp. (the "Company") designs and manufactures performance-defining products primarily for bicycles ("bikes"), side-by-side vehicles ("Side-by-Sides"), on-road vehicles with off-road capabilities, off-road vehicles and trucks, all-terrain vehicles, or ATVs, snowmobiles, specialty vehicles and applications, and motorcycles. The Company is a direct supplier to leading power vehicle original equipment manufacturers ("OEMs") and provides aftermarket products to retailers, dealerships, and distributors. Additionally, the Company supplies top bicycle OEMs and their current contract manufacturers, and provides aftermarket products to retailers and distributors. 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. and its operating subsidiaries on a consolidated basis. Basis of Presentation - The accompanying consolidated financial statements have been prepared in accordance with United States of America ("U.S.") generally accepted accounting principles ("GAAP"). Change in Fiscal Year - In fiscal year 2016, the Company changed from a calendar year ending on December 31 to a 52-53 week fiscal year ending on the Friday nearest to December 31, effective beginning with the first quarter of 2016. Therefore, the financial results of certain future 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. The adoption of a 52-53 week year was not deemed a change in fiscal year for purposes of reporting subject to Rule 13a-10 or 15d-10; hence, no transition reports are required. For 2018, 2017 and 2016, the Company's fiscal year ended on December 28, 2018, December 29, 2017 and December 30, 2016, respectively. Principles of Consolidation - The consolidated financial statements include the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Use of Estimates - The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. These estimates are based on information available as of the date of the financial statements; therefore, actual results could differ from management’s estimates. Foreign Currency Translation and Transaction - The functional currency of the Company’s non-U.S. entities is the local currency of the respective operations. The Company translates the financial statements of its non-U.S. entities into U.S. Dollars each reporting period for purposes of consolidation. Assets and liabilities of the Company’s foreign subsidiaries are translated at the period-end currency exchange rates while sales and expenses are translated at the average currency exchange rates in effect for the period. The effects of these translation adjustments are a component of other comprehensive income. Foreign currency transaction losses of $420, $181, and $340 for the years ended December 28, 2018, December 29, 2017 and December 30, 2016, respectively, are included as a component of other income or expense. Cash and Cash Equivalents - Cash consists of cash maintained in a checking account. All highly liquid investments purchased with an original maturity date of 90 days or less at the date of purchase are considered to be cash equivalents. Accounts Receivable - Accounts receivable are unsecured customer obligations which generally require payment within various terms from the invoice date. The receivables are stated at the invoice amount. Financing terms vary by customer. Payments of accounts receivable are applied to the specific invoices identified on the customer’s remittance advice or if unspecified, generally to the earliest unpaid invoices. The carrying amount of accounts receivable is reduced by a valuation allowance that reflects management’s best estimate of amounts that may not be collected. All accounts or portions thereof deemed to be uncollectible or that may require an excessive collection cost are written off to the allowance for doubtful accounts. Concentration of Credit Risk - Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist primarily of cash and accounts receivable. As of December 28, 2018 the Company held $4,356 in cash at U.S. subsidiaries and $23,602 at subsidiaries outside the U.S.. The account balances may significantly exceed the insurance coverage provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial institutions with reputable credit and therefore bear minimal credit risk. The Company has not experienced any losses in its uninsured accounts. The Company mitigates its credit risk with respect to accounts receivable by performing ongoing credit evaluations and monitoring of its customers’ accounts receivable balances. The following customers accounted for 10% or more of the Company’s accounts receivable balance:
During the years ended December 28, 2018, December 29, 2017 and December 30, 2016, Customer C from the table above represented 8%, 10%, and 14% of sales, respectively. No other customers were individually significant in any of these periods. The Company depends on a limited number of vendors to supply component parts for its products. The Company purchased 30%, 35%, and 34% of its product components for the years ended December 28, 2018, December 29, 2017 and December 30, 2016, respectively, from ten vendors. As of December 28, 2018 and December 29, 2017, amounts due to these vendors represented 23% of accounts payable, respectively. Allowance for Doubtful Accounts - The Company records a provision for doubtful accounts based on historical experience and a detailed assessment of the collectability of its accounts receivable. In estimating the allowance for doubtful accounts, management considers, among other factors, the aging of the accounts receivable, historical write-offs, and the credit-worthiness of each customer. 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 doubtful accounts:
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 market value. Cost includes raw materials, as well as direct labor and manufacturing overhead for products we manufacture. Market value is based on current replacement cost for raw materials and on a net realizable value for finished goods. Adjustments to reduce the cost of inventory to its net realizable value are made, if required, for estimated excess, obsolescence or impaired balances. Property and Equipment - Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Maintenance and repairs are charged to expense as incurred, and improvements and betterments are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation and amortization are removed from the balance sheet and any resulting gain or loss is reflected in operations in the period realized. Leasehold improvements are amortized on a straight-line basis over the terms of the lease, or the useful lives of the assets, whichever is shorter. The value assigned to land associated with buildings we own, is not amortized. Depreciation and amortization periods for the Company’s property and equipment are as follows:
Internal Use Computer Software Costs - Costs incurred to purchase and develop computer software for internal use are capitalized during the application development and implementation stages. These software costs have been for enterprise-level business and finance software that is customized to meet the Company’s operational needs. Capitalized costs are included in property and equipment and are amortized on a straight-line basis over the estimated useful life of the software beginning when the software project is substantially complete and placed in service. The Company capitalized $6,597 in internal use computer software costs during the year ended December 28, 2018. Costs incurred during the preliminary project stage and costs for training, data conversion, and maintenance are expensed as incurred. Impairment of Long-lived Assets -The Company periodically reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset is impaired or the estimated useful lives are no longer appropriate. If indicators of impairment exist and the undiscounted projected cash flows associated with such assets are less than the carrying amount of the assets, an impairment loss is recorded to write the assets down to their estimated fair values. Fair value is estimated based on discounted future cash flows. No impairment charges were recorded during the years ended December 28, 2018, December 29, 2017 and December 30, 2016. Business Combinations - The Company accounts for acquisitions of entities that include inputs and processes and have the ability to create outputs as business combinations. The Company allocates the purchase price of the acquisition to the tangible assets acquired, liabilities assumed and identifiable intangible assets acquired based on their estimated fair values. The excess of the purchase price over those fair values is recorded as goodwill. Acquisition related expenses and restructuring costs are expensed as incurred. During the measurement period, the Company records adjustments to provisional amounts recorded for assets acquired and liabilities assumed with the corresponding offset to goodwill. After the measurement period, which could be up to one year after the transaction date, subsequent adjustments are recorded to the Company’s consolidated statements of income. Goodwill and Intangible Assets - Goodwill represents the excess of purchase price over the fair value of the net assets of businesses acquired. On an annual basis, the Company makes a qualitative assessment to determine if it is more likely than not that the fair value of the reporting unit is less than its carrying amount, including goodwill. If the Company determines that the fair value of the reporting unit is less than its carrying amount, it will perform a quantitative analysis; otherwise, no further evaluation is necessary. For the quantitative impairment assessment, the Company compares the fair value of the reporting unit to its carrying value, including goodwill. The Company determines the fair value of the reporting unit based on a weighting of income and market approaches. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired and no further testing is performed. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the Company will recognize a loss equal to the excess, limited to the total amount of goodwill allocated to that reporting unit. Impairments, if any, are charged directly to earnings. We completed our most recent annual impairment test in the third quarter of 2018 at which time we had a single reporting unit for purposes of assessing goodwill impairment. No impairment charges have been incurred to date. Intangible assets include customer relationships and the Company’s core technology, are subject to amortization over their respective useful lives, and are classified in intangibles, net in the accompanying consolidated balance sheet. These intangibles are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be fully recoverable. If facts and circumstances indicate that the carrying value might not be recoverable, projected undiscounted net cash flows associated with the related asset or group of assets over their estimated remaining useful lives is compared against their respective carrying amounts. If an asset is found to be impaired, the impairment charge will be measured as the amount by which the carrying amount of an entity exceeds its fair value. 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 28, 2018, December 29, 2017 and December 30, 2016. Self-Insurance - Since January 2015, the Company has been partially self-insured for its U.S. employee health and welfare benefits. The Company’s liability for self-insurance is based on claims filed and an estimate of claims incurred but not yet reported. The Company considers a number of factors, including historical claims information, when determining the amount of the accrual. Costs related to the administration of the plan and related claims are expensed as incurred. The Company has third-party insurance coverage to limit exposure for individually significant claims. The estimates for unpaid claims incurred as of December 28, 2018 and December 29, 2017 are $801 and $934 respectively, and are recorded within accrued expenses on the consolidated balance sheets. Revenue Recognition - Revenues are generated from the sale of performance-defining products and systems to customers worldwide. 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. Revenue is measured based on the consideration specified in a contract with a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a product to a customer, generally at the time of shipment. Contracts are generally in the form of purchase orders and are governed by standard terms and conditions. For larger OEMs, the Company may also enter into master agreements. 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 revenue 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. At December 28, 2018, the balance of deferred revenue related to pricing provisions was $188. These amounts are expected to be recognized over the next 12 months. Revenues exclude sales tax. 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. Shipping and Handling Fees and Costs - The Company includes shipping and handling fees billed to customers in sales. Shipping costs associated with inbound freight are capitalized as part of inventory and included in cost of sales as products are sold. Sales and Marketing - Sales and marketing expenses include costs related to sales, customer service and marketing personnel, including their wages, employee benefits and related stock-based compensation, and occupancy related expenses. Other significant sales and marketing expenses include race support and sponsorships of events and athletes, advertising and promotions related to trade shows, travel and entertainment, and promotional materials, products and sales offices costs. Research and Development - Research and development expenses consist primarily of salaries and personnel costs, including wages, employee benefits and related stock-based compensation for the Company’s engineering, research and development teams, occupancy related expenses, fees for third party consultants, service fees, and expenses for prototype tooling and materials, travel, and supplies. The Company expenses research and development costs as incurred. General and Administrative - General and administrative expenses include costs related to executive, finance, information technology, human resources and administrative personnel, including wages, employee benefits and related stock-based compensation expenses. 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. 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. To the extent shares are expected to vest, the stock based compensation cost is recognized on a straight-line basis over the requisite service period. The fair value of each stock option granted is estimated using the Black-Scholes option pricing model. The Company does not estimate forfeitures in recognizing stock based compensation expense. The fair value of the RSU’s is equal to the fair value of the Company’s common stock on the grant date of the award. Income Taxes - Income taxes are computed using the asset and liability method, under which deferred tax assets and liabilities are determined based on the difference 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. Operating loss and tax credit carryforwards are measured by applying currently enacted tax laws. Valuation allowances are provided when necessary to reduce net deferred tax assets to an amount that is more likely than not to be realized. The Company has elected to account for global intangible low-taxed income ("GILTI") in the year the tax is incurred, rather than recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years. The net GILTI inclusion for the year ended December 28, 2018 was partially offset by foreign tax credits associated with the income and resulted in a net tax of $357. 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. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments and which may not accurately anticipate actual outcomes. Advertising - Advertising costs are expensed as incurred and recognized as sales and marketing expenses on our Consolidated Statements of Income. Costs incurred for advertising totaled $902, $1,070, and $1,242 for the years ended December 28, 2018, December 29, 2017 and December 30, 2016, respectively. Warranties - The Company offers limited warranties on its products generally for one to four years. The Company recognizes estimated costs related to warranty activities as a component of cost of sales upon product shipment. The estimates are based upon historical product failure rates and historical costs incurred in correcting product failures. The recorded amount is adjusted from time to time for specifically identified warranty exposures. Actual warranty expenses are charged against the Company’s estimated warranty liability when incurred. Factors that affect the Company’s liability include the number of units, historical and anticipated rates of warranty claims, and the cost per claim. Segments - The Company has determined that it has a single operating and reportable segment. The Company considers operating segments to be components of the Company in which separate financial information is available that is evaluated regularly by the Company’s chief operating decision maker in deciding how to allocate resources and in assessing performance. The chief operating decision maker for the Company is the Chief Executive Officer. 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: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). The carrying amounts of the Company’s financial instruments, including cash, receivables, accounts payable, and accrued liabilities approximate their fair values due to their short-term nature. Amounts owed under the Company's credit facility approximate fair value due to the variable interest rate features embedded in both the line of credit and term debt. 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. Recent Accounting Pronouncements - In May 2014, the FASB and International Accounting Standards Board issued their converged standard on revenue recognition, ASU 2014-09, updated December 2016 with the release of ASU 2016-20. This standard outlines a single comprehensive model for companies to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods and services in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods and services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted this guidance as of the beginning of the first quarter of fiscal year 2018 using the modified retrospective implementation method. The Company applied the guidance to all open contracts at the date of initial application. Additionally, the Company used the practical expedient to omit the disclosure of remaining performance obligations for contracts with an original expected duration of one year or less. The primary impact of adopting the standard resulted from certain pricing provisions within contracts that provide the customer with a material right. Under the new standard, revenue attributed to such pricing provisions is deferred and recognized when the right is exercised by the customer. The Company recorded a cumulative effect adjustment of $368 gross and $279 net of taxes to the opening balance of retained earnings to reflect the cumulative effect of the adoption of the standard. In February 2016, the FASB issued ASU 2016-02, Leases, which will supersede the existing guidance for lease accounting. This ASU will require lessees to recognize leases with durations greater than 12 months on the balance sheet. This guidance is effective for fiscal years and interim periods within those years, beginning after December 15, 2018, and early adoption is permitted. The Company will adopt the new standard on December 29, 2018 with a cumulative-effect adjustment to the opening balance of retained earnings at that date with no restatement of comparative periods’ financial information ("current-period adjustment method"), as recently allowed by the FASB. Additionally, the Company will adopt practical expedients with respect to the assessment of embedded leases, lease classification, and initial indirect costs for expired and existing leases, and has not adopted the hindsight practical expedient. The Company is substantially complete with the process of identifying the appropriate changes to its accounting policies, business processes, and related internal controls to support the recognition and disclosure of this requirement. The Company estimates that the impact of recording the right-of-use operating lease assets and operating lease liabilities on the consolidated balance sheet will be $14,000. The Company does not expect that the adoption of ASU 2016-02 will have a material impact on its results of operations or cash flows. In June 2016, the FASB issue ASU 2016-13, Financial Instruments: Credit Losses, which adds an impairment model that is based on expected losses rather than incurred losses. Under this standard an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. This standard is effective for public companies for fiscal years beginning after December 15, 2019, including interim reporting periods within those years and early adoption permitted. The Company is currently assessing the impact of this guidance. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, which clarifies the presentation of certain transactions, including but not limited to contingent consideration payments made after a business combination and debt prepayment and extinguishment costs in the cash flow statement. This standard will be effective for fiscal years, and interim periods within those years, beginning the first quarter of fiscal year 2019. Early adoption is permitted. The Company is currently assessing the impact this guidance will have on its consolidated statement of cash flows. In October 2016, the FASB issued ASU 2016-16, Income Taxes: Intra-Entity Transfer of Assets Other Than Inventory, which improves the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. The Company adopted ASU 2016-16 effective in the first quarter of fiscal year 2018. The adoption of ASU 2016-16 did not have a material impact on the Company's consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations: Clarifying the Definition of a Business, which provides more guidance to an entity when they are assessing if transactions should be accounted for as acquisitions of assets or businesses. The clarification of the definition of a business impacts various areas of accounting such as acquisitions, disposals, goodwill, and consolidations. This standard was effective for fiscal years, and interim periods within those years, beginning the first quarter of fiscal year 2018. The Company adopted ASU 2017-01 effective in the first quarter of fiscal year 2018. The adoption of ASU 2017-01 did not have a material impact on the Company's consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, Improvements to Non-employee Share-Based Payment Accounting, which removes some of the unique requirements related to accounting for share-based payment awards issued to non-employees for non-financing transactions. The Company adopted ASU 2018-07 in the second quarter of fiscal year 2018. The adoption of ASU 2018-07 did not have a material impact on the Company's consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other: Internal-Use Software, which helps simplify how entities evaluate the accounting for costs paid by a customer in a cloud computing arrangement that is a service contract. This standard will be effective for fiscal years beginning after December 15, 2019 and early adoption is permitted. The Company is currently assessing the impact this guidance will have on its consolidated financial statements. Reclassifications - Certain balances have been reclassified in the December 29, 2017 consolidated balance sheet and the consolidated statement of cash flows on a basis consistent with the financial statements as of and for the period ended December 28, 2018. |
Revenues |
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Revenues | Revenues The following table summarizes total sales by product category:
The following table summarizes total sales by sales channel:
The following table summarizes total sales generated by geographic location of the customer:
Prior to December 29, 2017, the Company reported sales to U.S. customers on a standalone basis, while sales to customers in the rest of North America were included under the "Rest of the World" caption. The Company has determined that the markets in North America share common economic characteristics and as such has combined sales to all North American countries and reclassified our previously reported sales for the twelve month period ended December 30, 2016 for comparability. |
Inventory |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory | Inventory Inventory consisted of the following:
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Property, Plant and Equipment, net |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment, net | Property, Plant and Equipment, net Property, plant and equipment consisted of the following:
Depreciation expense was $8,143, $6,923, and $5,766 for the years ended December 28, 2018, December 29, 2017 and December 30, 2016, respectively, including $869, $565, and $254 of internal use software amortization for the years ended December 28, 2018, December 29, 2017 and December 30, 2016, respectively. The Company capitalized $6,597 in internal use computer software costs during the year ended December 28, 2018. The Company’s long-lived assets by geographic location are as follows:
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Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets Intangible assets, excluding goodwill, are comprised of the following:
Future amortization expense for finite-lived intangibles as of December 28, 2018 is as follows:
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Accrued Expenses |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses | Accrued Expenses Accrued expenses consisted of the following:
Activity related to warranties is as follows:
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Related Party Transactions |
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Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Fox Factory, Inc. has a triple-net building lease for its manufacturing and office facilities in Watsonville, California. The building is owned by a former member of our Board of Directors who retired on August 28, 2018. Payments made under this lease were $656, $715 and $837 for the years ended December 28, 2018, December 29, 2017 and December 30, 2016, respectively. The lease was amended effective April 2016 to extend the term through June 30, 2020, with monthly rental payments of $60, which are adjusted annually for a cost-of-living increase based upon the consumer price index. On September 28, 2018, the Company purchased Tuscany's facilities from certain non-controlling interest stockholders who are also employees of the Company. The total purchase price was $3,750. These properties were leased by the Company prior to being purchased. Rent expense under these leases was $257 and $29 for the years ended December 28, 2018 and December 29, 2017, respectively. |
Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Second Amended and Restated Credit Facility In August 2013, the Company entered into a credit facility with Sun Trust Bank and other named lenders which has been periodically amended and restated; the last restatement occurred on May 11, 2016 and was further amended on August 11, 2016, June 12, 2017, November 30, 2017 and November 14, 2018 (as most recently amended and restated and as further amended, the “Second Amended and Restated Credit Facility”). The Second Amended and Restated Credit Facility, which matures on May 11, 2021, provides a revolving line of credit and a maturing secured term loan with a refinanced principal balance of $75,000, as a result of a May 2016 amendment and restatement. The term loan is subject to quarterly amortization payments. The Second Amended and Restated Credit Facility provides for interest at either a rate based on the London Interbank Offered Rate, or LIBOR, plus a margin ranging from 1.50% to 2.50%, or based on the prime rate offered by SunTrust Bank plus a margin ranging from 0.50% to 1.50%. At December 28, 2018, the one-month LIBOR and prime rates were 2.52% and 5.50%, respectively. At December 28, 2018 our weighted average interest rate on outstanding borrowing was 4.06%. The Second Amended and Restated Credit Facility is secured by substantially all of the Company’s assets, restricts the Company's ability to make certain payments and engage in certain transactions, and also requires that the Company satisfy customary financial ratios. The Company was in compliance with the covenants as of December 28, 2018. Additionally, the existing credit facility permits up to $15,000 of the aggregate revolving commitment to be used by the Company for issuance of letters of credit. As of December 28, 2018, the Company utilized $5,000 in the form of a standby letter of credit in support of subsidiary operations. The letter of credit expires in November 2019. The following table summarizes the line of credit under the Second Amended and Restated Credit Facility:
As of December 28, 2018, future principal payments for the term loan, including the current portion, are summarized as follows:
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Commitments and Contingencies |
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Dec. 28, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Operating Leases - The Company has operating lease agreements for administrative, research and development, manufacturing and sales and marketing facilities and equipment that expire at various dates and in some cases contain renewal options and rent escalations based on inflation indexes. The Company recognizes rent expense on a straight-line basis over the lease term and records the difference between cash rent payments and the recognition of rent expense as a deferred rent liability. Rent expense was $6,445, $6,045, and $4,819 for the years ended December 28, 2018, December 29, 2017 and December 30, 2016, respectively. See Note 7 - Related Party Transactions of the Notes to Consolidated Financial Statements in this Annual Report for Form 10-K for additional information on related party operating leases. Approximate remaining future minimum lease payments under these operating leases as of December 28, 2018, are as follows:
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. While the outcome of these matters cannot be predicted with certainty, the Company does not believe that the outcome of any claims under indemnification arrangements will have a material effect on the Company’s results of operations, financial position or liquidity. Legal Proceedings - A lawsuit was filed on December 17, 2015 by SRAM Corporation (“SRAM”) in the U.S. District Court, Northern District of Illinois, against the Company’s wholly-owned subsidiary, RFE Canada Holding Corp. (“RFE Canada”). The lawsuit alleges patent infringement of U.S. Patent number 9,182,027 ("'027 Patent") and violation of the Lanham Act. SRAM filed a second lawsuit in the same court against RFE Canada on May 16, 2016, alleging patent infringement of U.S Patent number 9,291,250 ("'250 Patent"). The Company believes that the lawsuits are without merit and intends to vigorously defend itself. As such, the Company has filed, before the U. S. Patent and Trademark Appeals Board ("PTAB"), for Interparties Reviews ("IPR") of the '027 Patent and separately the same for the '250 Patent. In April 2018, the PTAB issued opinions in the ‘027 Patent petition cases stating that the Company has not shown the claims of the ‘027 Patent to be obvious. Regarding the PTAB ‘027 opinions, the Company has filed an Appeal to the Court of Appeals for the Federal Circuit. Regarding that appeal the Company has further moved the CAFC for remand of the ‘027 IPR to the PTAB. The PTAB has issued an opinion in the ‘250 Patent petition case stating that the Company has not shown the claims of the ‘250 Patent to be obvious. In a separate action the Company filed a lawsuit on January 29, 2016 in the U.S. District Court, Northern District of California against SRAM. That lawsuit alleges SRAM’s infringement of two separate Company owned patents, specifically U.S. Patent numbers 6,135,434 and 6,557,674. A second lawsuit was filed by the Company on July 1, 2016 in the U.S. District Court, Northern District of California against SRAM alleging infringement of the Company’s U.S. Patent numbers 8,226,172 and 8,974,009. These lawsuits have been moved to U.S. District Court, District of Colorado and are otherwise proceeding. The stay of the SRAM lawsuits against the Company have been lifted by the U.S. District Court, Northern District of Illinois. The Company filed and SRAM filed lawsuits are now moving forward in the respective courts. Due to the inherent uncertainties of litigation, the Company is not able to predict either the outcome or a range of reasonably possible losses, if any, at this time. Accordingly, no amounts have been recorded in the consolidated financial statements for the settlement of these matters. Were an unfavorable ruling to occur, or if factors indicate that a loss is probable and reasonably estimable, the Company's business, financial condition or results of operations could be materially and adversely affected. The Company is involved in other legal matters that arise in the ordinary course of business. Based on information currently available, management does not believe that the ultimate resolution of these matters will have a material adverse effect on the Company's financial condition, results of operations or cash flows. Other Commitments - On November 30, 2017, the Company acquired an 80% interest in Tuscany. The stockholders' agreement provides the Company with a call option (the "Call Option") to acquire the remaining 20% of Tuscany any time from November 30, 2019 through November 30, 2024 at a value which approximates fair market value. In addition, if the Call Option has not been exercised as of November 30, 2024, the non-controlling owners shall be entitled to exercise a put option (the "Put Option") on November 30, 2024 and for a 180 day period thereafter, which would require the Company to purchase all of the remaining shares held by the non-controlling owners at a price that approximates fair market value. See Note 15 - Acquisitions for additional information on this commitment. Other Contingencies - On June 21, 2018, the U.S. Supreme Court (the “Court”) decided South Dakota v. Wayfair, Inc., et al., holding that internet retailers do not have to maintain a physical presence in a state in order to be required to collect the state’s sales and use tax. Ultimately, the Court remanded the case to the South Dakota Supreme Court on the question of “whether some other principle in the Court’s Commerce Clause doctrine might invalidate the Act,” which may delay federal legislation on the issue. However, as a result of the Court’s decision, additional states may now begin requiring all remote sellers, primarily those engaged in e-commerce, to register, collect and remit sales and use taxes on transactions with in-state customers. Numerous states have either enacted legislation or informally indicated that they will not assert liability for uncollected taxes on a retroactive basis. Nevertheless, the Company believes that it is possible that it will incur a liability for uncollected sales tax on some portion of its e-commerce sales through December 28, 2018. Any retroactively imposed liability is not expected to be material to the Company’s results of operations or financial position because direct end-user sales in states where the Company is not registered comprise a small portion of total revenues. |
Stockholders' Equity |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders' Equity Secondary Stock Offerings and Share Repurchase Program In February 2016, the Company's Board of Directors authorized the Company's 2016 stock repurchase program (the "2016 Repurchase Program"), permitting repurchases of up to an aggregate of $40,000 in shares of common stock. The plan expired on December 31, 2017. The Company repurchased 890 shares for a total of $13,754 under both the 2016 Repurchase Program and the prior repurchase program of the Company, which expired on December 31, 2015. Shares of common stock repurchased under this program are accounted for as treasury stock under the cost method. In March 2016, Compass sold 2,500 shares of the Company's common stock at a price of $15.90 per share, less underwriting discounts and commissions, in a secondary public offering. The Company did not sell shares or receive any proceeds from the sales of shares by the selling stockholders. Concurrently, pursuant to the 2016 Repurchase Program and a stock repurchase agreement between Compass and the Company, the Company repurchased 500 shares of its common stock held by Compass for a total of $7,948. In August 2016, selling stockholders, including Compass, sold 4,025 shares of the Company's common stock at a price of $18.00 per share, less underwriting discounts and commissions, in a secondary public offering. The total shares sold include 525 shares, which were also sold by certain selling stockholders, in connection with the underwriters' option to purchase additional shares. The Company did not sell shares or receive any proceeds from the sales of shares by the selling stockholders. In November 2016, the Company closed another secondary offering, whereby the selling stockholders, including Compass, sold an additional 4,025 shares of the Company's common stock at a price of $20.51 per share, less underwriting discounts and commissions. The total shares sold include 525 shares, which were also sold by certain selling stockholders, in connection with the underwriters' option to purchase additional shares. The Company did not sell shares or receive any proceeds from the sales of shares by the selling stockholders. In March 2017, the Company closed another secondary offering, whereby the selling stockholders, including Compass, sold an additional 5,574 shares of the Company's common stock at a price of $26.65 per share, less underwriting discounts and commissions. The total shares sold included 466 shares, which were also sold by certain selling stockholders, in connection with the underwriters' option to purchase additional shares. The Company did not sell shares or receive any proceeds from the sales of shares by the selling stockholders. As a result of the March 2017 secondary offering, Compass no longer holds any equity interest in the Company. The Company incurred approximately $113 and $617 of expenses in connection with the secondary offerings during the fiscal years ended December 29, 2017 and December 30, 2016, respectively. The Company did not incur any expenses related to secondary offerings during the fiscal year ended December 28, 2018. Equity Incentive Plans The Company has outstanding awards under the following equity incentive plans: the 2008 Stock Option Plan (the "2008 Plan"), the 2008 Non-Statutory Stock Option Plan (the "2008 Non-Statutory Plan") and the 2013 Omnibus Plan (the "2013 Plan"). No further awards will be granted pursuant to the 2008 Plan or the 2008 Non-Statutory Plan. Under the 2013 Plan, the Company has the ability to issue incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, RSUs, performance units and/or performance shares. The equity incentive plans are administered by the Compensation Committee of the Board of Directors of the Company, which has the authority to determine the type of incentive award, as well as the terms and conditions of the awards. Options granted under the plans have vesting periods ranging from one to five years and expire no later than 10 years from the date of grant. RSUs generally vest over a four-year period with 25% vesting 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 28, 2018, there were 3,071 shares reserved for issuance under the Company's equity incentive plans and 1,697 shares available for grant under the 2013 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 years ended December 29, 2017 and December 30, 2016 was $8,727 and $6,223, respectively, of which $8,641 and $5,977, respectively, related to RSUs and $86 and $246, respectively, related to stock options. Compensation expense related to the Company's share-based awards for the fiscal year ended December 28, 2018 was $7,322, all of which related to RSUs. No compensation expense related to stock options was incurred during the fiscal year ended December 28, 2018. The following table summarizes the allocation of stock-based compensation in the accompanying consolidated statements of income:
Stock-based compensation expense capitalized to inventory was not material for the years ended December 28, 2018, December 29, 2017 and December 30, 2016. Restricted Stock Units The Company grants both time-based and performance-based stock awards, which also include a time-based vesting feature. Compensation expense for time-based stock awards is measured at the grant date based on the closing market price of the Company's common stock, and recognized ratably over the vesting period. For performance-based stock awards, compensation expense is measured based on estimates of the number of shares ultimately expected to vest at each reporting date based on management’s expectations regarding the relevant performance criteria. 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. The following table summarizes RSU activity:
The fair value of vested RSUs was $13,874, $12,587 and $5,122 for the years ended December 28, 2018, December 29, 2017 and December 30, 2016, respectively. As of December 28, 2018, the Company had approximately $13,466 of unrecognized stock-based compensation expense related to RSUs, which will be recognized over the remaining weighted-average vesting period of approximately 2.68 years. Stock Options The following table summarizes stock option activity:
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 28, 2018. As of December 28, 2018, stock-based compensation expense related to stock options has been fully recognized. During the years ended December 28, 2018, December 29, 2017 and December 30, 2016, 166, 541, and 193 shares of common stock, respectively, were issued due to the exercise of stock options, resulting in proceeds to the Company of approximately $875, $2,981, and $1,000, respectively. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | 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. 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. Potentially dilutive common shares include shares issuable upon the exercise of outstanding stock options and vesting of restricted stock units, which are reflected in diluted earnings per share by application of the treasury stock method. The following table presents the calculation of basic and diluted earnings per share:
The Company did not exclude any potentially dilutive shares from the calculation of diluted earnings per share for the years ended December 28, 2018, December 29, 2017 and December 30, 2016, as none of these shares would have been antidilutive. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes Provision for Income Taxes The components of income tax expense are as follows:
The Company's income before provision for income taxes was subject to taxes in the following jurisdictions for the following periods:
The following table presents a reconciliation of the statutory federal rate and the Company’s effective tax rate for the periods presented:
The Tax Cuts and Jobs Act (the "TCJA") was enacted on December 22, 2017. The TCJA reduced the US federal corporate tax rate from 35% to 21%, required companies to pay a one-time transition tax on unremitted earnings of certain foreign subsidiaries that were previously tax deferred, created a new minimum tax on certain foreign earnings, and provided incentives for U.S. companies to sell and license goods and services abroad, among other changes. In 2017 we recorded provisional amounts for certain enactment-date effects of the Act by applying the guidance of the SEC's Staff Accounting Bulletin 118 ("SAB 118") because we had not yet completed our enactment-date accounting for these effects. Effective January 1, 2016, the Company sold the net assets of its Taiwan branch operations and its shares of Fox Factory IP Holding Corp. to Fox Factory Switzerland GmbH. The Company’s Taiwan operations were as a result, organized as a branch of the Swiss entity (together, "Fox Switzerland"). Fox Switzerland generates earnings that prior to the enactment of TCJA, were not subject to payment of U.S. income taxes or accrual of deferred tax expense because the Company asserted that such earnings were permanently invested outside the U.S. The unremitted earnings of Fox Switzerland through 2017 became subject to U.S. tax as a result of the one-time transition tax, which approximated $3,706. As a result of the change in U.S. taxation, the Company no longer considers the unremitted earnings of Fox Switzerland to be permanently reinvested, and as such recorded a deferred withholding tax liability of approximately $2,026 in 2017. In 2018, the Company restructured its foreign operations. The new structure provides operational and treasury management efficiencies, while permitting relief from dividend withholding on profits earned in 2018 forward. SAB 118 Measurement Period As permitted by SAB 118, the Company made reasonable estimates of the effects the TCJA where uncertainty existed, recognizing provisional amounts in the provision for income taxes for the year ended December 29, 2017 for all items for which it was able to determine a reasonable estimate. In cases where a reasonable estimate was not possible, including the remeasurement of deferred tax assets and liabilities and the one-time transition tax, the Company continued to apply its existing accounting under ASC 740, Income Taxes, and the provisions of the tax laws that were in effect immediately prior to the enactment. The impact of the TCJA differed from the 2017 estimates during the one-year measurement period permitted by SAB 118 due to, among other things, further refinement of the Company's calculations, changes in interpretations and assumptions the Company made, and guidance that has been issued. The Company completed its accounting for the enactment-date income tax effects of the TCJA in 2018, recording net adjustments of $264, or 0.3% of pretax income. However, the Company's estimates may continue to be affected as interpretations of the law through regulations and as common practices emerge. Deferred Tax Assets and Liabilities: As of December 29, 2017, the Company remeasured its U.S. deferred tax assets and liabilities that give rise to future tax deductions based on the enacted tax rates in effect for the periods in which the deductions are expected to be taken, recognizing a provisional benefit of $2,448. In August 2018, the U.S. Internal Revenue Service ("IRS") issued a notice (the "IRS Notice") regarding the provisionally accounted for grandfathering provisions on limitations of executive compensation. The IRS Notice is expected to be incorporated into final clarifying regulations that have yet to be proposed. In 2018, the Company reduced its deferred tax asset by $552 for pre-2018 stock-based compensation expense, the deductibility of which is uncertain based on the guidance in the IRS Notice. One-Time Transition Tax: The one-time transition tax was based on the total post-1986 earnings and profits on which we previously deferred U.S. income taxes under U.S. law. We recorded a provisional amount for our one-time transition tax liability of $3,706 at December 29, 2017. The calculation was finalized in 2018, considering additional information, and did not differ materially from the 2017 estimate. The Company has obtained tax incentives in Switzerland that are effective on a formal basis through March 2019, and indefinitely on a statutory basis, as long as the Company's operations meet specified criteria. The effect of the tax incentive was not material to the Company's income tax provision for the three years ended December 28, 2018, December 29, 2017 and December 30, 2016. During the year ended December 28, 2018, the Company met certain in-state growth requirements in order to earn the final three tranches of a four-year, $1,700 tax credit from the State of California for a benefit of $950, or $751 net of federal income tax. The Company did not recognize any benefit for the year ended December 29, 2017. The Company recognized a benefit of $750, or $488 net of federal income tax for the year ended December 30, 2016. Deferred Income Taxes
As of December 28, 2018, the Company had foreign tax credits of $23,920 which begin to expire in 2025, unless previously utilized, and foreign net operating loss carryforwards of $1,931, of which $1,796 begin to expire in 2025 if not utilized and $135 which do not expire. The Company also had federal and state research and development credits of approximately $846 and $2,577. The federal research and development credits begin to expire in 2037 unless previously utilized, and the state research credits do not expire. As of December 28, 2018, the Company assessed the realizability of deferred tax assets and evaluated the need for a valuation allowance for deferred tax assets for each jurisdiction based on the framework of ASC 740. As a result of TCJA, the Company believes that it is more likely than not that a portion of its foreign tax credits will not be realizable, and as such, provided an allowance of $6,031 as of December 29, 2017. For the year ended December 28, 2018, the valuation allowance increased by $256, primarily as a result of an adjustment to foreign tax credits utilized for the TCJA on-time transition tax. The valuation allowance for foreign tax credits was $6,287 as of December 28, 2018. It is reasonably possible that the Company could record a material adjustment to the valuation allowance in the next twelve months as management assesses the progress and outcome of its restructuring activities. Additionally, based on available evidence, it was concluded on a more likely than not basis that deferred tax assets of the Company's Canadian subsidiary and Austrian branch are not realizable. Accordingly, a valuation allowance of $322 has been recorded to offset the deferred tax assets in these jurisdictions. Unrecognized Tax Benefits
As of December 28, 2018, the Company had $1,996 of unrecognized tax benefits, of which approximately $1,478, if recognized, would favorably impact the effective tax rate. The Company regularly engages in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. In 2018, the Company received a no change letter from the Internal Revenue Service ("IRS") related to the audit of the Company's 2015 federal tax return. Additionally, the IRS and the Company entered into a closing agreement that resolved the uncertainty about the deductibility of amortization and depreciation arising from the acquisition of the Company in 2008 for all open tax years. The favorable conclusion resulted in a decrease in the unrecognized tax benefits of $6,198, of which $5,648 favorably impacted the effective tax rate. Including the reversal of the amounts presented net of deferred tax assets and accrued interest and penalties, the favorable conclusion resulted in a benefit of $9,838 to the provision for income tax for the year ended December 28, 2018. The deductibility of acquisition related amortization and depreciation for state tax purposes remains uncertain. The Company believes that it is reasonably possible that unrecognized tax benefits at December 28, 2018 could be reduced by an additional $582 in the next twelve months as a result of expiration of statute of limitations. As of December 28, 2018 and December 29, 2017, the Company had approximately $73 and $311, respectively, of cumulative interest and penalties related to the uncertain tax positions, and has elected to treat interest and penalties as a component of income tax expense. The Company's 2016 forward federal tax returns, state tax returns from 2014 and forward, and foreign tax returns from 2016 and forward are subject to examination by tax authorities. The Company is not currently under examination by tax authorities in any jurisdiction. |
Fair Value Measurement and Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurement and Financial Instruments | Fair Value Measurement and Financial Instruments The FASB's Accounting Standards Codification 820, "Fair Value Measurements and Disclosures" requires the valuation of assets and liabilities required or permitted to be either recorded or disclosed at fair value based on hierarchy of available inputs as follows: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). The following table presents the Company's hierarchy for its assets and liabilities measured at fair value on a recurring basis as of the following periods:
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 28, 2018, and December 29, 2017. As of December 28, 2018 and December 29, 2017, the carrying amount of the principal under the Company’s Second Amended and Restated Credit Facility approximates fair value because it has a variable interest rate that reflects market changes in interest rates and changes in the Company’s net leverage ratio. As of December 28, 2018, the Company used Level 2 inputs to determine the fair value of its Second Amended and Restated Credit Facility. The Company has potential obligations to purchase the non-controlling interests held by third parties in the Tuscany subsidiary. These obligations are in the form of put provisions and are exercisable at the third-party owners' discretion within the specified periods outlined in the put provision within the Tuscany stockholders' agreement (see Note 15 - Acquisitions of the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K). If these put provisions were exercised, the Company would be required to purchase the third-party owners' non-controlling interests at the appraised fair value. The initial non-controlling interest value was implicit in the purchase price and is revalued each quarter, with the adjustment being recorded directly as a component of retained earnings. The methodology the Company uses to estimate the fair value of the non-controlling interests subject to these put provisions is based on an average multiple of earnings before income taxes, depreciation and amortization ("EBITDA"), taking into consideration historical earnings and other factors. The carrying value of the non-controlling interest as of December 28, 2018 has been adjusted to reflect the valuation floor, which represents the sum of the initial valuation and the cumulative net earnings attributable to the non-controlling interest. The estimated fair values of the non-controlling interests subject to put provisions can fluctuate and the implicit multiple of earnings at which these non-controlling interest obligations may ultimately be settled could vary significantly from our future estimates depending upon market conditions. The following table provides a reconciliation of the beginning and ending balances for the Company's obligations measured at fair value using Level 3 inputs:
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Retirement Plan |
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Retirement Benefits [Abstract] | |
Retirement Plan | Retirement Plan The Company established a 401(k) plan to provide tax deferred salary deductions for all eligible employees. Participants may make voluntary contributions to the 401(k) plan, limited by certain IRS restrictions. The Company made matching contributions of $850, $437, and $373 for each of the years ended December 28, 2018, December 29, 2017 and December 30, 2016, respectively. |
Acquisitions |
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Acquisitions | Acquisitions Tuscany On November 30, 2017, the Company acquired an 80% interest in Tuscany, a designer, manufacturer and distributor of premium aftermarket powered vehicle performance packages in an asset purchase accounted for as a business combination, pursuant to ASC 805. In connection with the acquisition, the Company paid $53,350 in cash financed through a combination of its existing credit facility and cash on hand. This purchase included $242 in intercompany accounts payable, resulting in a total purchase price of $53,592. The stockholders' agreement executed in association with the acquisition provides the Company with a call option to acquire the remaining 20% of Tuscany any time from November 30, 2019 through November 30, 2024 at a value which approximates fair market value as defined in the purchase agreement. In addition, if the call option has not been exercised as of November 30, 2024, the non-controlling owners shall be entitled to exercise a put option on November 30, 2024 and for a 180 day period thereafter, which would require the Company to purchase all of the remaining shares held by the non-controlling owners at a price that approximates fair market value as defined in the purchase agreement. In accordance with ASC 805, the Company recognized a non-controlling interest in Tuscany and measured the non-controlling interest at fair value on the acquisition date. The Company concluded that the put feature embedded in the agreement causes the non-controlling interest to be redeemable, pursuant to ASC 480, because the put option requires cash settlement. Therefore, the Company has classified the non-controlling interest as temporary (mezzanine) equity in the consolidated balance sheets. The purchase price of Tuscany is allocated to the assets acquired and liabilities assumed based on their estimated respective fair values as of November 30, 2017, with the excess purchase price allocated to goodwill. During the year ended, December 28, 2018, the Company finalized the allocation of the purchase price and recorded adjustments to Goodwill of $440 related to the completion of the Company's validation of working capital, intangible valuation procedures, and analysis of opening warranty provisions. Goodwill represents the value of synergies from combining operations Tuscany and the Company, as well as intangibles that do not qualify for separate recognition. Intangibles and goodwill related to the Company's 80% interest are deductible for tax purposes. The Company incurred $0.9 million of transaction costs in conjunction with the Tuscany acquisition for the year ended December 29, 2017, which is included in general and administrative expense in the accompanying consolidated statement of income. The Company’s allocation of the purchase price to the net tangible and intangible assets acquired and liabilities assumed is as follows:
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Quarterly Financial Data (Unaudited) | Selected Quarterly Financial Data (Unaudited) Selected summarized quarterly financial information for 2018 and 2017 is as follows:
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Description of the Business, Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||
Basis of Presentation | Basis of Presentation - The accompanying consolidated financial statements have been prepared in accordance with United States of America ("U.S.") generally accepted accounting principles ("GAAP"). |
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Change in Fiscal Year | Change in Fiscal Year - In fiscal year 2016, the Company changed from a calendar year ending on December 31 to a 52-53 week fiscal year ending on the Friday nearest to December 31, effective beginning with the first quarter of 2016. Therefore, the financial results of certain future 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. The adoption of a 52-53 week year was not deemed a change in fiscal year for purposes of reporting subject to Rule 13a-10 or 15d-10; hence, no transition reports are required. For 2018, 2017 and 2016, the Company's fiscal year ended on December 28, 2018, December 29, 2017 and December 30, 2016, respectively. |
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Principles of Consolidation | Principles of Consolidation - The consolidated financial statements include the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. |
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Use of Estimates | Use of Estimates - The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. These estimates are based on information available as of the date of the financial statements; therefore, actual results could differ from management’s estimates. |
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Foreign Currency Translation and Transaction | Foreign Currency Translation and Transaction - The functional currency of the Company’s non-U.S. entities is the local currency of the respective operations. The Company translates the financial statements of its non-U.S. entities into U.S. Dollars each reporting period for purposes of consolidation. Assets and liabilities of the Company’s foreign subsidiaries are translated at the period-end currency exchange rates while sales and expenses are translated at the average currency exchange rates in effect for the period. The effects of these translation adjustments are a component of other comprehensive income. |
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Cash and Cash Equivalents | Cash and Cash Equivalents - Cash consists of cash maintained in a checking account. All highly liquid investments purchased with an original maturity date of 90 days or less at the date of purchase are considered to be cash equivalents. |
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Accounts Receivable | Accounts Receivable - Accounts receivable are unsecured customer obligations which generally require payment within various terms from the invoice date. The receivables are stated at the invoice amount. Financing terms vary by customer. Payments of accounts receivable are applied to the specific invoices identified on the customer’s remittance advice or if unspecified, generally to the earliest unpaid invoices. The carrying amount of accounts receivable is reduced by a valuation allowance that reflects management’s best estimate of amounts that may not be collected. All accounts or portions thereof deemed to be uncollectible or that may require an excessive collection cost are written off to the allowance for doubtful accounts. |
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Concentration of Credit Risk | Concentration of Credit Risk - Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist primarily of cash and accounts receivable. As of December 28, 2018 the Company held $4,356 in cash at U.S. subsidiaries and $23,602 at subsidiaries outside the U.S.. The account balances may significantly exceed the insurance coverage provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial institutions with reputable credit and therefore bear minimal credit risk. The Company has not experienced any losses in its uninsured accounts. The Company mitigates its credit risk with respect to accounts receivable by performing ongoing credit evaluations and monitoring of its customers’ accounts receivable balances. |
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Allowance for Doubtful Accounts | Allowance for Doubtful Accounts - The Company records a provision for doubtful accounts based on historical experience and a detailed assessment of the collectability of its accounts receivable. In estimating the allowance for doubtful accounts, management considers, among other factors, the aging of the accounts receivable, historical write-offs, and the credit-worthiness of each customer. 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. |
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Inventories | 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 market value. Cost includes raw materials, as well as direct labor and manufacturing overhead for products we manufacture. Market value is based on current replacement cost for raw materials and on a net realizable value for finished goods. Adjustments to reduce the cost of inventory to its net realizable value are made, if required, for estimated excess, obsolescence or impaired balances. |
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Property and Equipment | Property and Equipment - Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Maintenance and repairs are charged to expense as incurred, and improvements and betterments are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation and amortization are removed from the balance sheet and any resulting gain or loss is reflected in operations in the period realized. Leasehold improvements are amortized on a straight-line basis over the terms of the lease, or the useful lives of the assets, whichever is shorter. The value assigned to land associated with buildings we own, is not amortized. Depreciation and amortization periods for the Company’s property and equipment are as follows:
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Internal Use Computer Software Costs | Internal Use Computer Software Costs - Costs incurred to purchase and develop computer software for internal use are capitalized during the application development and implementation stages. These software costs have been for enterprise-level business and finance software that is customized to meet the Company’s operational needs. Capitalized costs are included in property and equipment and are amortized on a straight-line basis over the estimated useful life of the software beginning when the software project is substantially complete and placed in service. The Company capitalized $6,597 in internal use computer software costs during the year ended December 28, 2018. Costs incurred during the preliminary project stage and costs for training, data conversion, and maintenance are expensed as incurred. |
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Impairment of Long-lived Assets | Impairment of Long-lived Assets -The Company periodically reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset is impaired or the estimated useful lives are no longer appropriate. If indicators of impairment exist and the undiscounted projected cash flows associated with such assets are less than the carrying amount of the assets, an impairment loss is recorded to write the assets down to their estimated fair values. Fair value is estimated based on discounted future cash flows. |
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Business Combinations | Business Combinations - The Company accounts for acquisitions of entities that include inputs and processes and have the ability to create outputs as business combinations. The Company allocates the purchase price of the acquisition to the tangible assets acquired, liabilities assumed and identifiable intangible assets acquired based on their estimated fair values. The excess of the purchase price over those fair values is recorded as goodwill. Acquisition related expenses and restructuring costs are expensed as incurred. During the measurement period, the Company records adjustments to provisional amounts recorded for assets acquired and liabilities assumed with the corresponding offset to goodwill. After the measurement period, which could be up to one year after the transaction date, subsequent adjustments are recorded to the Company’s consolidated statements of income. |
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Goodwill and Intangible Assets | Goodwill and Intangible Assets - Goodwill represents the excess of purchase price over the fair value of the net assets of businesses acquired. On an annual basis, the Company makes a qualitative assessment to determine if it is more likely than not that the fair value of the reporting unit is less than its carrying amount, including goodwill. If the Company determines that the fair value of the reporting unit is less than its carrying amount, it will perform a quantitative analysis; otherwise, no further evaluation is necessary. For the quantitative impairment assessment, the Company compares the fair value of the reporting unit to its carrying value, including goodwill. The Company determines the fair value of the reporting unit based on a weighting of income and market approaches. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired and no further testing is performed. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the Company will recognize a loss equal to the excess, limited to the total amount of goodwill allocated to that reporting unit. Impairments, if any, are charged directly to earnings. We completed our most recent annual impairment test in the third quarter of 2018 at which time we had a single reporting unit for purposes of assessing goodwill impairment. No impairment charges have been incurred to date. Intangible assets include customer relationships and the Company’s core technology, are subject to amortization over their respective useful lives, and are classified in intangibles, net in the accompanying consolidated balance sheet. These intangibles are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be fully recoverable. If facts and circumstances indicate that the carrying value might not be recoverable, projected undiscounted net cash flows associated with the related asset or group of assets over their estimated remaining useful lives is compared against their respective carrying amounts. If an asset is found to be impaired, the impairment charge will be measured as the amount by which the carrying amount of an entity exceeds its fair value. Trademarks and brands are considered to be indefinite life intangibles, and are not amortized but are subject to testing for impairment annually. |
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Self Insurance | Self-Insurance - Since January 2015, the Company has been partially self-insured for its U.S. employee health and welfare benefits. The Company’s liability for self-insurance is based on claims filed and an estimate of claims incurred but not yet reported. The Company considers a number of factors, including historical claims information, when determining the amount of the accrual. Costs related to the administration of the plan and related claims are expensed as incurred. The Company has third-party insurance coverage to limit exposure for individually significant claims. |
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Revenue Recognition | 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. Revenue is measured based on the consideration specified in a contract with a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a product to a customer, generally at the time of shipment. Contracts are generally in the form of purchase orders and are governed by standard terms and conditions. For larger OEMs, the Company may also enter into master agreements. 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 revenue 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. At December 28, 2018, the balance of deferred revenue related to pricing provisions was $188. These amounts are expected to be recognized over the next 12 months. Revenues exclude sales tax. |
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Cost of Sales | 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. |
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Shipping and Handling Fees and Costs | Shipping and Handling Fees and Costs - The Company includes shipping and handling fees billed to customers in sales. Shipping costs associated with inbound freight are capitalized as part of inventory and included in cost of sales as products are sold. |
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Sales and Marketing | Sales and Marketing - Sales and marketing expenses include costs related to sales, customer service and marketing personnel, including their wages, employee benefits and related stock-based compensation, and occupancy related expenses. Other significant sales and marketing expenses include race support and sponsorships of events and athletes, advertising and promotions related to trade shows, travel and entertainment, and promotional materials, products and sales offices costs. |
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Research and Development | Research and Development - Research and development expenses consist primarily of salaries and personnel costs, including wages, employee benefits and related stock-based compensation for the Company’s engineering, research and development teams, occupancy related expenses, fees for third party consultants, service fees, and expenses for prototype tooling and materials, travel, and supplies. The Company expenses research and development costs as incurred. |
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General and Administrative | General and Administrative - General and administrative expenses include costs related to executive, finance, information technology, human resources and administrative personnel, including wages, employee benefits and related stock-based compensation expenses. 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. |
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Stock-Based Compensation | 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. 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. To the extent shares are expected to vest, the stock based compensation cost is recognized on a straight-line basis over the requisite service period. The fair value of each stock option granted is estimated using the Black-Scholes option pricing model. The Company does not estimate forfeitures in recognizing stock based compensation expense. The fair value of the RSU’s is equal to the fair value of the Company’s common stock on the grant date of the award. |
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Income Taxes | Income Taxes - Income taxes are computed using the asset and liability method, under which deferred tax assets and liabilities are determined based on the difference 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. Operating loss and tax credit carryforwards are measured by applying currently enacted tax laws. Valuation allowances are provided when necessary to reduce net deferred tax assets to an amount that is more likely than not to be realized. The Company has elected to account for global intangible low-taxed income ("GILTI") in the year the tax is incurred, rather than recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years. The net GILTI inclusion for the year ended December 28, 2018 was partially offset by foreign tax credits associated with the income and resulted in a net tax of $357. 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. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments and which may not accurately anticipate actual outcomes. |
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Advertising | Advertising - Advertising costs are expensed as incurred and recognized as sales and marketing expenses on our Consolidated Statements of Income. |
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Warranties | Warranties - The Company offers limited warranties on its products generally for one to four years. The Company recognizes estimated costs related to warranty activities as a component of cost of sales upon product shipment. The estimates are based upon historical product failure rates and historical costs incurred in correcting product failures. The recorded amount is adjusted from time to time for specifically identified warranty exposures. Actual warranty expenses are charged against the Company’s estimated warranty liability when incurred. Factors that affect the Company’s liability include the number of units, historical and anticipated rates of warranty claims, and the cost per claim. |
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Segments | Segments - The Company has determined that it has a single operating and reportable segment. The Company considers operating segments to be components of the Company in which separate financial information is available that is evaluated regularly by the Company’s chief operating decision maker in deciding how to allocate resources and in assessing performance. The chief operating decision maker for the Company is the Chief Executive Officer. The Chief Executive Officer reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. |
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Fair Value Measurements and Financial Instruments | 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: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). The carrying amounts of the Company’s financial instruments, including cash, receivables, accounts payable, and accrued liabilities approximate their fair values due to their short-term nature. Amounts owed under the Company's credit facility approximate fair value due to the variable interest rate features embedded in both the line of credit and term debt. |
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Certain Significant Risks and Uncertainties | 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. |
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Recent Accounting Pronouncements | Recent Accounting Pronouncements - In May 2014, the FASB and International Accounting Standards Board issued their converged standard on revenue recognition, ASU 2014-09, updated December 2016 with the release of ASU 2016-20. This standard outlines a single comprehensive model for companies to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods and services in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods and services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted this guidance as of the beginning of the first quarter of fiscal year 2018 using the modified retrospective implementation method. The Company applied the guidance to all open contracts at the date of initial application. Additionally, the Company used the practical expedient to omit the disclosure of remaining performance obligations for contracts with an original expected duration of one year or less. The primary impact of adopting the standard resulted from certain pricing provisions within contracts that provide the customer with a material right. Under the new standard, revenue attributed to such pricing provisions is deferred and recognized when the right is exercised by the customer. The Company recorded a cumulative effect adjustment of $368 gross and $279 net of taxes to the opening balance of retained earnings to reflect the cumulative effect of the adoption of the standard. In February 2016, the FASB issued ASU 2016-02, Leases, which will supersede the existing guidance for lease accounting. This ASU will require lessees to recognize leases with durations greater than 12 months on the balance sheet. This guidance is effective for fiscal years and interim periods within those years, beginning after December 15, 2018, and early adoption is permitted. The Company will adopt the new standard on December 29, 2018 with a cumulative-effect adjustment to the opening balance of retained earnings at that date with no restatement of comparative periods’ financial information ("current-period adjustment method"), as recently allowed by the FASB. Additionally, the Company will adopt practical expedients with respect to the assessment of embedded leases, lease classification, and initial indirect costs for expired and existing leases, and has not adopted the hindsight practical expedient. The Company is substantially complete with the process of identifying the appropriate changes to its accounting policies, business processes, and related internal controls to support the recognition and disclosure of this requirement. The Company estimates that the impact of recording the right-of-use operating lease assets and operating lease liabilities on the consolidated balance sheet will be $14,000. The Company does not expect that the adoption of ASU 2016-02 will have a material impact on its results of operations or cash flows. In June 2016, the FASB issue ASU 2016-13, Financial Instruments: Credit Losses, which adds an impairment model that is based on expected losses rather than incurred losses. Under this standard an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. This standard is effective for public companies for fiscal years beginning after December 15, 2019, including interim reporting periods within those years and early adoption permitted. The Company is currently assessing the impact of this guidance. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, which clarifies the presentation of certain transactions, including but not limited to contingent consideration payments made after a business combination and debt prepayment and extinguishment costs in the cash flow statement. This standard will be effective for fiscal years, and interim periods within those years, beginning the first quarter of fiscal year 2019. Early adoption is permitted. The Company is currently assessing the impact this guidance will have on its consolidated statement of cash flows. In October 2016, the FASB issued ASU 2016-16, Income Taxes: Intra-Entity Transfer of Assets Other Than Inventory, which improves the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. The Company adopted ASU 2016-16 effective in the first quarter of fiscal year 2018. The adoption of ASU 2016-16 did not have a material impact on the Company's consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations: Clarifying the Definition of a Business, which provides more guidance to an entity when they are assessing if transactions should be accounted for as acquisitions of assets or businesses. The clarification of the definition of a business impacts various areas of accounting such as acquisitions, disposals, goodwill, and consolidations. This standard was effective for fiscal years, and interim periods within those years, beginning the first quarter of fiscal year 2018. The Company adopted ASU 2017-01 effective in the first quarter of fiscal year 2018. The adoption of ASU 2017-01 did not have a material impact on the Company's consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, Improvements to Non-employee Share-Based Payment Accounting, which removes some of the unique requirements related to accounting for share-based payment awards issued to non-employees for non-financing transactions. The Company adopted ASU 2018-07 in the second quarter of fiscal year 2018. The adoption of ASU 2018-07 did not have a material impact on the Company's consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other: Internal-Use Software, which helps simplify how entities evaluate the accounting for costs paid by a customer in a cloud computing arrangement that is a service contract. This standard will be effective for fiscal years beginning after December 15, 2019 and early adoption is permitted. The Company is currently assessing the impact this guidance will have on its consolidated financial statements. |
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Reclassifications | Reclassifications - Certain balances have been reclassified in the December 29, 2017 consolidated balance sheet and the consolidated statement of cash flows on a basis consistent with the financial statements as of and for the period ended December 28, 2018. |
Description of the Business, Basis of Presentation and Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedules of Concentration of Risk, by Risk Factor | The following customers accounted for 10% or more of the Company’s accounts receivable balance:
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Schedule of Allowance for Doubtful Accounts | The following table presents the activity in the allowance for doubtful accounts:
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Schedule of Depreciation and Amortization Periods | Depreciation and amortization periods for the Company’s property and equipment are as follows:
Property, plant and equipment consisted of the following:
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Revenues (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenues | The following table summarizes total sales by product category:
The following table summarizes total sales by sales channel:
The following table summarizes total sales generated by geographic location of the customer:
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Inventory (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory | Inventory consisted of the following:
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Property, Plant and Equipment, net (Tables) |
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Property, Plant and Equipment | Depreciation and amortization periods for the Company’s property and equipment are as follows:
Property, plant and equipment consisted of the following:
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Goodwill and Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets Excluding Goodwill | Intangible assets, excluding goodwill, are comprised of the following:
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Schedule of Finite-Lived Intangible Assets, Amortization Expense |
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Schedule of Goodwill |
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Future amortization expense for finite-lived intangibles as of December 28, 2018 is as follows:
|
Accrued Expenses (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses | Accrued expenses consisted of the following:
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Activity Related to Warranties | Activity related to warranties is as follows:
|
Debt (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Amended and Restated Credit Facility | The following table summarizes the line of credit under the Second Amended and Restated Credit Facility:
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Schedule of Future Principal Payments | As of December 28, 2018, future principal payments for the term loan, including the current portion, are summarized as follows:
|
Commitments and Contingencies (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 28, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Payments for Operating Leases | Approximate remaining future minimum lease payments under these operating leases as of December 28, 2018, are as follows:
|
Stockholders' Equity (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs | The following table summarizes the allocation of stock-based compensation in the accompanying consolidated statements of income:
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Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity | The following table summarizes RSU activity:
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Schedule of Share-based Compensation, Stock Options, Activity | The following table summarizes stock option activity:
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Earnings Per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Calculation of Basic and Diluted Earnings Per Share | The following table presents the calculation of basic and diluted earnings per share:
|
Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Income Tax Expense | The components of income tax expense are as follows:
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Schedule of Income before Income Tax, Domestic and Foreign | The Company's income before provision for income taxes was subject to taxes in the following jurisdictions for the following periods:
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Schedule of Effective Income Tax Rate Reconciliation | The following table presents a reconciliation of the statutory federal rate and the Company’s effective tax rate for the periods presented:
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Schedule of Deferred Tax Assets and Liabilities | Deferred Income Taxes
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Schedule of Unrecognized Tax Benefits Roll Forward | Unrecognized Tax Benefits
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Fair Value Measurement and Financial Instruments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities Measured at Fair Value on Recurring Basis | The following table presents the Company's hierarchy for its assets and liabilities measured at fair value on a recurring basis as of the following periods:
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Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The following table provides a reconciliation of the beginning and ending balances for the Company's obligations measured at fair value using Level 3 inputs:
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Acquisitions (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allocation of Purchase Price to Assets Acquired and Liabilities Assumed | The Company’s allocation of the purchase price to the net tangible and intangible assets acquired and liabilities assumed is as follows:
|
Selected Quarterly Financial Data (Unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Quarterly Financial Information | Selected summarized quarterly financial information for 2018 and 2017 is as follows:
|
Description of the Business, Basis of Presentation and Summary of Significant Accounting Policies - Customers Accounted for 10% or More of Accounts Receivable Balance (Details) - Accounts Receivable |
12 Months Ended | |
---|---|---|
Dec. 28, 2018 |
Dec. 29, 2017 |
|
Customer A | ||
Concentration Risk [Line Items] | ||
Concentration risk, accounts receivable percentage | 13.00% | 8.00% |
Customer B | ||
Concentration Risk [Line Items] | ||
Concentration risk, accounts receivable percentage | 12.00% | 14.00% |
Customer C | ||
Concentration Risk [Line Items] | ||
Concentration risk, accounts receivable percentage | 12.00% | 15.00% |
Description of the Business, Basis of Presentation and Summary of Significant Accounting Policies - Activity in Allowance For Doubtful Accounts (Details) - Allowance for Doubtful Accounts - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 28, 2018 |
Dec. 29, 2017 |
Dec. 30, 2016 |
|
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance, beginning of year | $ 676 | $ 397 | $ 407 |
Add: bad debt expense | 189 | 327 | 53 |
Less: write-offs, net of recoveries | (265) | (48) | (63) |
Balance, end of year | $ 600 | $ 676 | $ 397 |
Revenues - Sales by Product Category (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 28, 2018 |
Sep. 28, 2018 |
Jun. 29, 2018 |
Mar. 30, 2018 |
Dec. 29, 2017 |
Sep. 29, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 28, 2018 |
Dec. 29, 2017 |
Dec. 30, 2016 |
|
Disaggregation of Revenue [Line Items] | |||||||||||
Sales | $ 156,810 | $ 175,798 | $ 156,825 | $ 129,792 | $ 121,093 | $ 127,399 | $ 120,811 | $ 106,330 | $ 619,225 | $ 475,633 | $ 403,077 |
Powered Vehicles | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Sales | 337,284 | 230,255 | 176,391 | ||||||||
Specialty Sports | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Sales | $ 281,941 | $ 245,378 | $ 226,686 |
Revenues - Sales by Sales Channel (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 28, 2018 |
Sep. 28, 2018 |
Jun. 29, 2018 |
Mar. 30, 2018 |
Dec. 29, 2017 |
Sep. 29, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 28, 2018 |
Dec. 29, 2017 |
Dec. 30, 2016 |
|
Disaggregation of Revenue [Line Items] | |||||||||||
Sales | $ 156,810 | $ 175,798 | $ 156,825 | $ 129,792 | $ 121,093 | $ 127,399 | $ 120,811 | $ 106,330 | $ 619,225 | $ 475,633 | $ 403,077 |
OEM | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Sales | 368,580 | 288,733 | 243,816 | ||||||||
Aftermarket | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Sales | $ 250,645 | $ 186,900 | $ 159,261 |
Revenues - Sales by Geographic Location (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 28, 2018 |
Sep. 28, 2018 |
Jun. 29, 2018 |
Mar. 30, 2018 |
Dec. 29, 2017 |
Sep. 29, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 28, 2018 |
Dec. 29, 2017 |
Dec. 30, 2016 |
|
Disaggregation of Revenue [Line Items] | |||||||||||
Sales | $ 156,810 | $ 175,798 | $ 156,825 | $ 129,792 | $ 121,093 | $ 127,399 | $ 120,811 | $ 106,330 | $ 619,225 | $ 475,633 | $ 403,077 |
North America | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Sales | 388,702 | 280,860 | 221,312 | ||||||||
Asia | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Sales | 119,142 | 101,079 | 100,999 | ||||||||
Europe | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Sales | 101,217 | 86,405 | 76,999 | ||||||||
Rest of the world | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Sales | $ 10,164 | $ 7,289 | $ 3,767 |
Inventory (Details) - USD ($) $ in Thousands |
Dec. 28, 2018 |
Dec. 29, 2017 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 75,652 | $ 51,371 |
Work-in-process | 5,880 | 1,233 |
Finished goods | 25,608 | 32,237 |
Total inventory | $ 107,140 | $ 84,841 |
Property, Plant and Equipment, net - Additional Information (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 28, 2018 |
Dec. 29, 2017 |
Dec. 30, 2016 |
|
Property, Plant and Equipment [Abstract] | |||
Depreciation expense | $ 8,143 | $ 6,923 | $ 5,766 |
Amortization of internal use software | 869 | $ 565 | $ 254 |
Internal use computer software costs capitalized | $ 6,597 |
Property, Plant and Equipment, net - Long-lived Assets by Geographic Location (Details) - USD ($) $ in Thousands |
Dec. 28, 2018 |
Dec. 29, 2017 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Long-lived assets | $ 64,788 | $ 43,636 |
United States | ||
Property, Plant and Equipment [Line Items] | ||
Long-lived assets | 59,056 | 38,450 |
International | ||
Property, Plant and Equipment [Line Items] | ||
Long-lived assets | $ 5,732 | $ 5,186 |
Goodwill and Intangible Assets - Amortization of Intangibles (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 28, 2018 |
Dec. 29, 2017 |
Dec. 30, 2016 |
|
Finite-Lived Intangible Assets, Net [Abstract] | |||
Amortization of intangibles | $ 6,065 | $ 2,986 | $ 2,988 |
Goodwill and Intangible Assets - Goodwill Rollforward Activity (Details) $ in Thousands |
12 Months Ended |
---|---|
Dec. 28, 2018
USD ($)
| |
Finite-lived Intangible Assets [Roll Forward] | |
Balance as of December 29, 2017 | $ 88,438 |
Purchase price adjustments (Refer to Note 15 - Acquisitions) | 440 |
Currency translation and other adjustments | (28) |
Balance as of December 28, 2018 | $ 88,850 |
Goodwill and Intangible Assets - Future Amortization Expense (Details) - USD ($) $ in Thousands |
Dec. 28, 2018 |
Dec. 29, 2017 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2019 | $ 5,925 | |
2020 | 5,236 | |
2021 | 5,134 | |
2022 | 5,010 | |
2023 | 4,368 | |
Thereafter | 18,231 | |
Net carrying amount | $ 43,904 | $ 49,974 |
Accrued Expenses - Components (Details) - USD ($) $ in Thousands |
Dec. 28, 2018 |
Dec. 29, 2017 |
Dec. 30, 2016 |
Dec. 31, 2015 |
---|---|---|---|---|
Payables and Accruals [Abstract] | ||||
Payroll and related expenses | $ 15,870 | $ 13,211 | ||
Warranty | 6,433 | 6,481 | $ 4,593 | $ 3,914 |
Income tax payable | 6,691 | 6,772 | ||
Other accrued expenses | 4,613 | 3,099 | ||
Total | $ 33,607 | $ 29,563 |
Accrued Expenses - Activity Related to Warranties (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 28, 2018 |
Dec. 29, 2017 |
Dec. 30, 2016 |
|
Movement in Standard Product Warranty Accrual [Roll Forward] | |||
Beginning warranty liability | $ 6,481 | $ 4,593 | $ 3,914 |
Charge to cost of sales | 4,621 | 5,904 | 4,833 |
Fair value of warranty assumed in acquisition | 200 | 1,016 | 0 |
Costs incurred | (4,869) | (5,032) | (4,154) |
Ending warranty liability | $ 6,433 | $ 6,481 | $ 4,593 |
Related Party Transactions (Details) - USD ($) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Sep. 28, 2018 |
Dec. 28, 2018 |
Dec. 29, 2017 |
Dec. 30, 2016 |
|
Related Party Transaction [Line Items] | ||||
Rent expense | $ 6,445 | $ 6,045 | $ 4,819 | |
Minority Shareholder | Related Party Transactions | ||||
Related Party Transaction [Line Items] | ||||
Rent expense | 656 | 715 | $ 837 | |
Monthly rental payments | 60 | |||
Beneficial Owner | Employees | Purchase of Properties | ||||
Related Party Transaction [Line Items] | ||||
Amount of related party transaction | $ 3,750 | |||
Beneficial Owner | Employees | Rental of Buildings | ||||
Related Party Transaction [Line Items] | ||||
Expenses from transactions with related party | $ 257 | $ 29 |
Debt - Summary of Amended and Restated Credit Facility (Details) - USD ($) $ in Thousands |
Dec. 28, 2018 |
Dec. 29, 2017 |
---|---|---|
Debt Disclosure [Abstract] | ||
Amount outstanding | $ 0 | $ 35,000 |
Standby letter of credit | 5,000 | 5,000 |
Available borrowing capacity | 95,000 | 60,000 |
Maximum borrowing capacity | $ 100,000 | $ 100,000 |
Debt - Future Payments for Long-term Debt (Details) - USD ($) $ in Thousands |
Dec. 28, 2018 |
Dec. 29, 2017 |
---|---|---|
For fiscal year: | ||
2019 | $ 7,031 | |
2020 | 7,031 | |
2021 | 45,625 | |
Total term debt | 59,687 | |
Debt issuance cost | (261) | |
Long-term debt, net of issuance cost | 59,426 | |
Less: current portion | (6,923) | $ (5,038) |
Long-term debt less current portion | $ 52,503 | $ 58,020 |
Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Nov. 30, 2017 |
Dec. 28, 2018 |
Dec. 29, 2017 |
Dec. 30, 2016 |
|
Commitments and Contingencies Disclosure [Abstract] | ||||
Rent expense | $ 6,445 | $ 6,045 | $ 4,819 | |
Tuscany | ||||
Business Acquisition [Line Items] | ||||
Ownership interest acquired (as a percent) | 80.00% | |||
Call option to acquire remaining interest (as a percent) | 20.00% | |||
Period to exercise put option | 180 days |
Commitments and Contingencies - Future Minimum Lease Payments under Operating Leases (Details) $ in Thousands |
Dec. 28, 2018
USD ($)
|
---|---|
For fiscal year: | |
2019 | $ 5,781 |
2020 | 4,619 |
2021 | 2,569 |
2022 | 1,403 |
Thereafter | 4,861 |
Total future payments | $ 19,233 |
Stockholders' Equity - Equity Incentive Plans (Details) shares in Thousands |
12 Months Ended |
---|---|
Dec. 28, 2018
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares reserved for future issuance | 3,071 |
Number of shares available for grant | 1,697 |
Stock Option | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting period | 4 years |
Award expiration period | 10 years |
Award vesting percentage | 25.00% |
Stock Option | Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting period | 1 year |
Stock Option | Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting period | 5 years |
Stockholders' Equity - Stock-Based Compensation (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 28, 2018 |
Dec. 29, 2017 |
Dec. 30, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Allocation of stock-based compensation | $ 7,322,000 | $ 8,727,000 | $ 6,223,000 |
RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Allocation of stock-based compensation | 7,322,000 | 8,641,000 | 5,977,000 |
Stock Option | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Allocation of stock-based compensation | $ 0 | $ 86,000 | $ 246,000 |
Stockholders' Equity - Summary of Unvested RSUs Activity (Details) - RSUs - $ / shares shares in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 28, 2018 |
Dec. 29, 2017 |
Dec. 30, 2016 |
|
Number of shares outstanding | |||
Unvested outstanding, beginning balance (in shares) | 800 | 811 | 773 |
Granted (in shares) | 223 | 411 | 341 |
Canceled (in shares) | (30) | (55) | (15) |
Vested (in shares) | (338) | (367) | (288) |
Unvested outstanding, ending balance (in shares) | 655 | 800 | 811 |
Weighted-average grant date fair value | |||
Unvested outstanding, beginning balance (in dollars per share) | $ 23.91 | $ 16.53 | $ 17.07 |
Granted (in dollars per share) | 37.07 | 31.38 | 15.84 |
Canceled (in dollars per share) | 25.16 | 17.45 | 17.83 |
Vested (in dollars per share) | 21.98 | 16.93 | 17.16 |
Unvested outstanding, ending balance (in dollars per share) | $ 29.34 | $ 23.91 | $ 16.53 |
Stockholders' Equity - Restricted Stock Units (Details) - RSUs - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 28, 2018 |
Dec. 29, 2017 |
Dec. 30, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Fair value of vested awards | $ 13,874 | $ 12,587 | $ 5,122 |
Unrecognized stock-based compensation expense | $ 13,466 | ||
Period for recognition of unrecognized stock-based compensation expense | 2 years 8 months 5 days |
Stockholders' Equity - Stock Options (Details) - USD ($) shares in Thousands, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 28, 2018 |
Dec. 29, 2017 |
Dec. 30, 2016 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
Shares issued due to exercise of stock options | 166 | 541 | 193 |
Proceeds from exercise of stock options | $ 875 | $ 2,981 | $ 1,000 |
Earnings Per Share - Calculation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 28, 2018 |
Sep. 28, 2018 |
Jun. 29, 2018 |
Mar. 30, 2018 |
Dec. 29, 2017 |
Sep. 29, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 28, 2018 |
Dec. 29, 2017 |
Dec. 30, 2016 |
|
Earnings Per Share [Abstract] | |||||||||||
Net income attributable to Fox stockholders | $ 20,135 | $ 24,312 | $ 18,369 | $ 21,224 | $ 2,802 | $ 16,072 | $ 13,726 | $ 10,528 | $ 84,040 | $ 43,128 | $ 35,675 |
Weighted average shares used to compute basic earnings per share (in shares) | 37,805 | 37,373 | 36,799 | ||||||||
Dilutive effect of employee stock plans (in shares) | 1,151 | 1,365 | 1,002 | ||||||||
Weighted average shares used to compute diluted earnings per share (in shares) | 38,956 | 38,738 | 37,801 | ||||||||
Basic (in dollars per share) | $ 0.53 | $ 0.64 | $ 0.49 | $ 0.56 | $ 0.07 | $ 0.43 | $ 0.37 | $ 0.28 | $ 2.22 | $ 1.15 | $ 0.97 |
Diluted (in dollars per share) | $ 0.52 | $ 0.62 | $ 0.47 | $ 0.55 | $ 0.07 | $ 0.41 | $ 0.35 | $ 0.27 | $ 2.16 | $ 1.11 | $ 0.94 |
Earnings Per Share - Additional Information (Details) - shares |
12 Months Ended | ||
---|---|---|---|
Dec. 28, 2018 |
Dec. 29, 2017 |
Dec. 30, 2016 |
|
Earnings Per Share [Abstract] | |||
Anti-dilutive shares excluded from calculation of diluted earnings per share | 0 | 0 | 0 |
Income Taxes - Components of Income Tax Expense (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 28, 2018 |
Dec. 29, 2017 |
Dec. 30, 2016 |
|
Current: | |||
Federal | $ 10,330 | $ 13,483 | $ 5,710 |
State | 604 | 648 | (1,287) |
Foreign | 7,248 | 8,148 | 6,008 |
Total current | 18,182 | 22,279 | 10,431 |
Deferred: | |||
Federal | (11,462) | (923) | (1,729) |
State | (671) | 387 | (1,156) |
Foreign | (526) | (641) | (131) |
Total deferred | (12,659) | (1,177) | (3,016) |
Total provision | $ 5,523 | $ 21,102 | $ 7,415 |
Income Taxes - Income Before Provision by Jurisdiction (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 28, 2018 |
Dec. 29, 2017 |
Dec. 30, 2016 |
|
Income Tax Disclosure [Abstract] | |||
United States | $ 63,138 | $ 36,555 | $ 22,348 |
Foreign | 27,752 | 27,730 | 20,742 |
Income before income taxes | $ 90,890 | $ 64,285 | $ 43,090 |
Income Taxes - Reconciliation of Statutory Federal Rate and Effective Tax Rate (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 28, 2018 |
Dec. 29, 2017 |
Dec. 30, 2016 |
|
Effective Income Tax Rate Continuing Operations Tax Rate Reconciliation [Abstract] | |||
Tax at federal statutory rate | 21.00% | 35.00% | 35.00% |
State taxes, net of federal benefit | 1.80% | 2.00% | 1.00% |
Change in liability for unrecognized tax benefits | (10.80%) | (1.70%) | (4.90%) |
Stock-based compensation | (3.80%) | (10.60%) | (2.00%) |
Foreign derived income benefit | (1.60%) | 0.00% | 0.00% |
Research and development tax credit | (1.20%) | (2.20%) | (2.00%) |
Change in tax rates | (0.80%) | (3.80%) | 0.00% |
California business development tax credit | (0.80%) | (0.00%) | (1.10%) |
Executive compensation deduction limitation | 2.20% | 0.00% | 0.00% |
Foreign rate differential | 0.40% | (4.60%) | (9.40%) |
Valuation allowance on deferred tax assets | 0.40% | 9.40% | 0.00% |
Tax on unremitted foreign earnings | 0.40% | 8.90% | 0.00% |
Other | (1.10%) | 0.40% | 0.60% |
Total provision | 6.10% | 32.80% | 17.20% |
Income Taxes - Significant Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands |
Dec. 28, 2018 |
Dec. 29, 2017 |
---|---|---|
Deferred tax assets: | ||
Foreign tax credits, including amounts associated with accrued charges | $ 23,920 | $ 11,321 |
Inventory | 3,086 | 2,344 |
Accrued liabilities | 2,815 | 1,649 |
Research and development tax credits | 2,536 | 2,473 |
Stock-based compensation | 1,067 | 1,718 |
Other | 787 | 703 |
Total deferred tax asset | 34,211 | 20,208 |
Valuation allowance | (6,609) | (6,336) |
Net deferred tax asset | 27,602 | 13,872 |
Deferred tax liabilities: | ||
Depreciation | (7,012) | (4,496) |
Accrued withholding tax on unremitted foreign dividends | (2,164) | (2,179) |
Intangible assets | (2,220) | (3,545) |
Other | (878) | (983) |
Total deferred tax liability | (12,274) | (11,203) |
Net deferred tax asset | $ 15,328 | $ 2,669 |
Income Taxes - Unrecognized Tax Benefit - Activity (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 28, 2018 |
Dec. 29, 2017 |
Dec. 30, 2016 |
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Balance - beginning of period | $ 8,154 | $ 7,440 | $ 8,924 |
Increase related to current year tax positions | 457 | 460 | 1,828 |
Increase related to prior year tax positions | 36 | 1,770 | 24 |
Decrease related to prior year tax positions | (6,480) | 0 | (1,216) |
Decrease due to expiration of statute of limitations | (171) | (1,516) | (2,120) |
Balance - end of period | $ 1,996 | $ 8,154 | $ 7,440 |
Fair Value Measurement and Financial Instruments - Hierarchy of Assets and Liabilities at Fair Value (Details) - USD ($) $ in Thousands |
Dec. 28, 2018 |
Dec. 29, 2017 |
Dec. 30, 2016 |
---|---|---|---|
Liabilities: | |||
Credit facility | $ 59,426 | $ 63,058 | |
Redeemable non-controlling interest | 14,282 | 12,955 | $ 0 |
Total liabilities measured at fair value | 73,708 | 76,013 | |
Level 1 | |||
Liabilities: | |||
Credit facility | 0 | 0 | |
Redeemable non-controlling interest | 0 | 0 | |
Total liabilities measured at fair value | 0 | 0 | |
Level 2 | |||
Liabilities: | |||
Credit facility | 59,426 | 63,058 | |
Redeemable non-controlling interest | 0 | 0 | |
Total liabilities measured at fair value | 59,426 | 63,058 | |
Level 3 | |||
Liabilities: | |||
Credit facility | 0 | 0 | |
Redeemable non-controlling interest | 14,282 | 12,955 | |
Total liabilities measured at fair value | $ 14,282 | $ 12,955 |
Fair Value Measurement and Financial Instruments - Level 3 Roll Forward (Details) $ in Thousands |
12 Months Ended |
---|---|
Dec. 28, 2018
USD ($)
| |
Obligations (measured with level 3 inputs) | |
Balance at December 29, 2017 | $ 12,955 |
Net income attributable to non-controlling interest | 1,327 |
Balance at December 28, 2018 | $ 14,282 |
Retirement Plan (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 28, 2018 |
Dec. 29, 2017 |
Dec. 30, 2016 |
|
Retirement Benefits [Abstract] | |||
Matching contribution made under the plan | $ 850 | $ 437 | $ 373 |
Acquisitions - Additional Information (Details) - Tuscany - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Nov. 30, 2017 |
Dec. 29, 2017 |
|
Business Acquisition [Line Items] | ||
Ownership interest acquired (as a percent) | 80.00% | |
Cash consideration | $ 53,350 | |
Settlement of pre-existing accounts | 242 | |
Total consideration at closing | $ 53,592 | |
Call option to acquire remaining interest (as a percent) | 20.00% | |
Period to exercise put option | 180 days | |
Transaction costs | $ 900 |
Acquisitions - Allocation of Purchase Price (Details) - USD ($) $ in Thousands |
Nov. 30, 2017 |
Dec. 28, 2018 |
Dec. 29, 2017 |
---|---|---|---|
Fair market values | |||
Goodwill | $ 88,850 | $ 88,438 | |
Tuscany | |||
Acquisition consideration | |||
Cash consideration | $ 53,350 | ||
Settlement of pre-existing accounts | 242 | ||
Total consideration at closing | 53,592 | ||
Fair market values | |||
Other current and non-current assets | 5,966 | ||
Property, plant and equipment | 1,416 | ||
Customer relationships | 28,600 | ||
Trademarks and brand | 6,500 | ||
Goodwill | 30,392 | ||
Total assets acquired | 72,874 | ||
Accounts payable and accrued expenses | 3,329 | ||
Debt assumed in acquisition | 465 | ||
Deferred tax liability for tax free rollover of non-controlling interest | 2,588 | ||
Total liabilities assumed | 6,382 | ||
Redeemable non-controlling interest | 12,900 | ||
Purchase price allocation | $ 53,592 |
Selected Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 28, 2018 |
Sep. 28, 2018 |
Jun. 29, 2018 |
Mar. 30, 2018 |
Dec. 29, 2017 |
Sep. 29, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 28, 2018 |
Dec. 29, 2017 |
Dec. 30, 2016 |
|
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Sales | $ 156,810 | $ 175,798 | $ 156,825 | $ 129,792 | $ 121,093 | $ 127,399 | $ 120,811 | $ 106,330 | $ 619,225 | $ 475,633 | $ 403,077 |
Gross profit | 50,953 | 60,486 | 52,413 | 41,644 | 39,122 | 42,597 | 39,056 | 33,714 | 205,496 | 154,490 | 126,388 |
Income from operations | 22,853 | 31,452 | 24,275 | 15,952 | 16,053 | 20,378 | 18,189 | 12,417 | 94,532 | 67,041 | 45,541 |
Net income attributable to Fox Stockholders | $ 20,135 | $ 24,312 | $ 18,369 | $ 21,224 | $ 2,802 | $ 16,072 | $ 13,726 | $ 10,528 | $ 84,040 | $ 43,128 | $ 35,675 |
Earnings per share: | |||||||||||
Basic (in dollars per share) | $ 0.53 | $ 0.64 | $ 0.49 | $ 0.56 | $ 0.07 | $ 0.43 | $ 0.37 | $ 0.28 | $ 2.22 | $ 1.15 | $ 0.97 |
Diluted (in dollars per share) | $ 0.52 | $ 0.62 | $ 0.47 | $ 0.55 | $ 0.07 | $ 0.41 | $ 0.35 | $ 0.27 | $ 2.16 | $ 1.11 | $ 0.94 |
Label | Element | Value |
---|---|---|
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (280,000) |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (280,000) |
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