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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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26-1647258
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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915 Disc Drive
Scotts Valley, CA
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95066
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(Address of Principal Executive Offices)
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(Zip Code)
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Page
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Unaudited Condensed Consolidated Balance Sheets as of March 30, 2018 and December 29, 2017
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|
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Unaudited Condensed Consolidated Statements of Income for the Three Months Ended March 30, 2018 and March 31, 2017
|
|
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Unaudited Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 30, 2018 and March 31, 2017
|
|
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Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 30, 2018 and March 31, 2017
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|
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Notes to Unaudited Condensed Consolidated Financial Statements
|
|
|
|
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||
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As of
|
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As of
|
||||
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March 30,
|
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December 29,
|
||||
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2018
|
|
2017
|
||||
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|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
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$
|
22,233
|
|
|
$
|
35,947
|
|
Accounts receivable (net of allowances of $770 and $676 at March 30, 2018 and December 29, 2017, respectively)
|
56,816
|
|
|
61,060
|
|
||
Inventory
|
91,256
|
|
|
84,841
|
|
||
Prepaids and other current assets
|
24,114
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|
|
21,100
|
|
||
Total current assets
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194,419
|
|
|
202,948
|
|
||
Property, plant and equipment, net
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45,746
|
|
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43,636
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|
||
Deferred tax assets
|
6,243
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|
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2,669
|
|
||
Goodwill
|
88,442
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|
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88,438
|
|
||
Intangibles, net
|
88,480
|
|
|
90,044
|
|
||
Other assets
|
484
|
|
|
551
|
|
||
Total assets
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$
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423,814
|
|
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$
|
428,286
|
|
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
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46,962
|
|
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$
|
40,813
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Accrued expenses
|
25,546
|
|
|
32,608
|
|
||
Reserve for uncertain tax positions
|
1,427
|
|
|
7,787
|
|
||
Current portion of long-term debt
|
5,509
|
|
|
5,038
|
|
||
Total current liabilities
|
79,444
|
|
|
86,246
|
|
||
Line of credit
|
17,020
|
|
|
35,585
|
|
||
Long-term debt, less current portion
|
56,642
|
|
|
58,020
|
|
||
Deferred rent
|
603
|
|
|
645
|
|
||
Total liabilities
|
153,709
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|
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180,496
|
|
||
Commitments and contingencies (Refer to
Note 7 - Commitments and Contingencies
)
|
|
|
|
||||
Redeemable non-controlling interest
|
14,192
|
|
|
12,955
|
|
||
Stockholders’ equity
|
|
|
|
||||
Preferred stock, $0.001 par value — 10,000 authorized and no shares issued or outstanding as of March 30, 2018 and December 29, 2017
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—
|
|
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—
|
|
||
Common stock, $0.001 par value — 90,000 authorized; 38,546 shares issued and 37,656 outstanding as of March 30, 2018; 38,497 shares issued and 37,607 outstanding as of December 29, 2017
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38
|
|
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38
|
|
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Additional paid-in capital
|
112,453
|
|
|
112,793
|
|
||
Treasury stock, at cost; 890 common shares as of March 30, 2018 and December 29, 2017
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(13,754
|
)
|
|
(13,754
|
)
|
||
Accumulated other comprehensive income (loss)
|
307
|
|
|
(168
|
)
|
||
Retained earnings
|
156,869
|
|
|
135,926
|
|
||
Total stockholders’ equity
|
255,913
|
|
|
234,835
|
|
||
Total liabilities, redeemable non-controlling interest and stockholders’ equity
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$
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423,814
|
|
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$
|
428,286
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|
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For the three months ended
|
||||||
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March 30,
|
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March 31,
|
||||
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2018
|
|
2017
|
||||
Sales
|
$
|
129,792
|
|
|
$
|
106,330
|
|
Cost of sales
|
88,148
|
|
|
72,616
|
|
||
Gross profit
|
41,644
|
|
|
33,714
|
|
||
Operating expenses:
|
|
|
|
||||
Sales and marketing
|
8,734
|
|
|
6,592
|
|
||
Research and development
|
6,197
|
|
|
4,482
|
|
||
General and administrative
|
9,193
|
|
|
8,081
|
|
||
Amortization of purchased intangibles
|
1,568
|
|
|
695
|
|
||
Fair value adjustment of contingent consideration and acquisition related compensation
|
—
|
|
|
1,447
|
|
||
Total operating expenses
|
25,692
|
|
|
21,297
|
|
||
Income from operations
|
15,952
|
|
|
12,417
|
|
||
Other expense, net:
|
|
|
|
||||
Interest expense
|
798
|
|
|
588
|
|
||
Other expense
|
283
|
|
|
545
|
|
||
Other expense, net
|
1,081
|
|
|
1,133
|
|
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Income before income taxes
|
14,871
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|
|
11,284
|
|
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(Benefit of) provision for income taxes
|
(6,579
|
)
|
|
756
|
|
||
Net income
|
21,450
|
|
|
10,528
|
|
||
Less: net income attributable to non-controlling interest
|
(226
|
)
|
|
—
|
|
||
Net income attributable to FOX stockholders
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$
|
21,224
|
|
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$
|
10,528
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Earnings per share:
|
|
|
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||||
Basic
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$
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0.56
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|
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$
|
0.28
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Diluted
|
$
|
0.55
|
|
|
$
|
0.27
|
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Weighted average shares used to compute earnings per share:
|
|
|
|
||||
Basic
|
37,625
|
|
|
37,135
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|
||
Diluted
|
38,835
|
|
|
38,562
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|
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For the three months ended
|
||||||
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March 30,
|
|
March 31,
|
||||
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2018
|
|
2017
|
||||
Net income
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$
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21,450
|
|
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$
|
10,528
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Other comprehensive income
|
|
|
|
||||
Foreign currency translation adjustments, net of tax effects
|
471
|
|
|
1,252
|
|
||
Other comprehensive income
|
471
|
|
|
1,252
|
|
||
Comprehensive income
|
21,921
|
|
|
11,780
|
|
||
Comprehensive income attributable to non-controlling interest
|
226
|
|
|
—
|
|
||
Comprehensive income attributable to FOX stockholders
|
$
|
21,695
|
|
|
$
|
11,780
|
|
|
For the three months ended
|
||||||
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March 30, 2018
|
|
March 31, 2017
|
||||
OPERATING ACTIVITIES:
|
|
|
|
||||
Net income
|
$
|
21,450
|
|
|
$
|
10,528
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
3,506
|
|
|
2,405
|
|
||
Stock-based compensation
|
2,046
|
|
|
1,909
|
|
||
Deferred taxes and uncertain tax positions
|
(9,912
|
)
|
|
(2,399
|
)
|
||
Change in fair value of contingent consideration
|
—
|
|
|
(150
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
4,713
|
|
|
12,480
|
|
||
Inventory
|
(6,030
|
)
|
|
(7,499
|
)
|
||
Income taxes payable
|
(3,407
|
)
|
|
(1,793
|
)
|
||
Prepaids and other assets
|
(3,027
|
)
|
|
(411
|
)
|
||
Accounts payable
|
5,737
|
|
|
3,535
|
|
||
Accrued expenses
|
(4,111
|
)
|
|
(9,396
|
)
|
||
Net cash provided by operating activities
|
10,965
|
|
|
9,209
|
|
||
INVESTING ACTIVITIES:
|
|
|
|
||||
Purchases of property and equipment
|
(3,975
|
)
|
|
(2,726
|
)
|
||
Purchase of intangible assets
|
—
|
|
|
(54
|
)
|
||
Net cash used in investing activities
|
(3,975
|
)
|
|
(2,780
|
)
|
||
FINANCING ACTIVITIES:
|
|
|
|
||||
Payments on line of credit
|
(18,565
|
)
|
|
—
|
|
||
Repayment of debt
|
(938
|
)
|
|
(937
|
)
|
||
(Repurchases from) proceeds from stock compensation program, net
|
(1,375
|
)
|
|
1,878
|
|
||
Net cash (used in) provided by financing activities
|
(20,878
|
)
|
|
941
|
|
||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
|
174
|
|
|
341
|
|
||
|
|
|
|
||||
CHANGE IN CASH AND CASH EQUIVALENTS
|
(13,714
|
)
|
|
7,711
|
|
||
CASH AND CASH EQUIVALENTS—Beginning of period
|
35,947
|
|
|
35,280
|
|
||
CASH AND CASH EQUIVALENTS—End of period
|
$
|
22,233
|
|
|
$
|
42,991
|
|
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
||||
Cash paid during the period for:
|
|
|
|
||||
Income taxes
|
$
|
6,730
|
|
|
$
|
4,937
|
|
Interest
|
$
|
853
|
|
|
$
|
512
|
|
|
For the three months ended
|
||||||
|
March 30, 2018
|
|
March 31, 2017
|
||||
Bike products
|
$
|
57,659
|
|
|
$
|
52,275
|
|
Power Vehicle products
|
72,133
|
|
|
54,055
|
|
||
Total sales
|
$
|
129,792
|
|
|
$
|
106,330
|
|
|
For the three months ended
|
||||||
|
March 30, 2018
|
|
March 31, 2017
|
||||
OEM
|
$
|
72,764
|
|
|
$
|
60,648
|
|
Aftermarket
|
57,028
|
|
|
45,682
|
|
||
Total sales
|
$
|
129,792
|
|
|
$
|
106,330
|
|
|
For the three months ended
|
||||||
|
March 30, 2018
|
|
March 31, 2017
|
||||
North America
|
$
|
83,168
|
|
|
$
|
63,805
|
|
Asia
|
21,203
|
|
|
20,352
|
|
||
Europe
|
23,916
|
|
|
20,453
|
|
||
Rest of the world
|
1,505
|
|
|
1,720
|
|
||
Total sales
|
$
|
129,792
|
|
|
$
|
106,330
|
|
|
March 30,
|
|
December 29,
|
||||
|
2018
|
|
2017
|
||||
Raw materials
|
$
|
57,639
|
|
|
$
|
51,371
|
|
Work-in-process
|
5,353
|
|
|
1,233
|
|
||
Finished goods
|
28,264
|
|
|
32,237
|
|
||
Total inventory
|
$
|
91,256
|
|
|
$
|
84,841
|
|
|
March 30,
|
|
December 29,
|
||||
|
2018
|
|
2017
|
||||
Machinery and manufacturing equipment
|
$
|
33,227
|
|
|
$
|
33,664
|
|
Information systems, office equipment and furniture
|
8,150
|
|
|
7,715
|
|
||
Internal use software
|
9,456
|
|
|
7,819
|
|
||
Transportation equipment
|
3,726
|
|
|
3,325
|
|
||
Building and land
|
8,811
|
|
|
8,811
|
|
||
Leasehold improvements
|
11,245
|
|
|
9,919
|
|
||
Total
|
74,615
|
|
|
71,253
|
|
||
Less: accumulated depreciation and amortization
|
(28,869
|
)
|
|
(27,617
|
)
|
||
Property, plant and equipment, net
|
$
|
45,746
|
|
|
$
|
43,636
|
|
|
As of March 30,
|
|
As of
December 29, |
||||
|
2018
|
|
2017
|
||||
United States
|
$
|
40,684
|
|
|
$
|
38,450
|
|
International
|
5,062
|
|
|
5,186
|
|
||
Total long-lived assets
|
$
|
45,746
|
|
|
$
|
43,636
|
|
|
March 30,
|
|
December 29,
|
||||
|
2018
|
|
2017
|
||||
Payroll and related expenses
|
$
|
8,324
|
|
|
$
|
13,211
|
|
Warranty
|
6,596
|
|
|
6,481
|
|
||
Income tax payable
|
2,970
|
|
|
6,562
|
|
||
Other accrued expenses
|
7,656
|
|
|
6,354
|
|
||
Total
|
$
|
25,546
|
|
|
$
|
32,608
|
|
|
For the three months ended
|
||||||
|
March 30, 2018
|
|
March 31, 2017
|
||||
Beginning warranty liability
|
$
|
6,481
|
|
|
$
|
4,593
|
|
Charge to cost of sales
|
1,289
|
|
|
1,279
|
|
||
Costs incurred
|
(1,174
|
)
|
|
(865
|
)
|
||
Ending warranty liability
|
$
|
6,596
|
|
|
$
|
5,007
|
|
|
March 30,
|
|
December 29,
|
||||
|
2018
|
|
2017
|
||||
Amount outstanding
|
$
|
16,500
|
|
|
$
|
35,000
|
|
Standby letter of credit
|
$
|
5,000
|
|
|
$
|
5,000
|
|
Available borrowing capacity
|
$
|
78,500
|
|
|
$
|
60,000
|
|
Maximum borrowing capacity
|
$
|
100,000
|
|
|
$
|
100,000
|
|
Maturity date
|
May 11, 2021
|
For fiscal year:
|
|
||
2018 (remaining nine months)
|
$
|
4,219
|
|
2019
|
5,625
|
|
|
2020
|
7,031
|
|
|
2021
|
45,625
|
|
|
Total term debt
|
62,500
|
|
|
Debt issuance cost
|
(349
|
)
|
|
Long-term debt, net of issuance cost
|
62,151
|
|
|
Less: current portion
|
(5,509
|
)
|
|
Long-term debt less current portion
|
$
|
56,642
|
|
|
March 30, 2018
|
|
December 29, 2017
|
||||||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Credit facility
|
$
|
—
|
|
|
$
|
62,151
|
|
|
$
|
—
|
|
|
$
|
62,151
|
|
|
$
|
—
|
|
|
$
|
63,058
|
|
|
$
|
—
|
|
|
$
|
63,058
|
|
Non-controlling interest subject to put provisions
|
—
|
|
|
—
|
|
|
14,192
|
|
|
14,192
|
|
|
—
|
|
|
—
|
|
|
12,955
|
|
|
12,955
|
|
||||||||
Total liabilities measured at fair value
|
$
|
—
|
|
|
$
|
62,151
|
|
|
$
|
14,192
|
|
|
$
|
76,343
|
|
|
$
|
—
|
|
|
$
|
63,058
|
|
|
$
|
12,955
|
|
|
$
|
76,013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable Non-Controlling Interest (level 3 measurement)
|
||
Balance at December 29, 2017
|
$
|
12,955
|
|
Net income attributable to non-controlling interest
|
226
|
|
|
Change in fair value
|
1,011
|
|
|
Balance at March 30, 2018
|
$
|
14,192
|
|
|
For the three months ended
|
||||||
|
March 30, 2018
|
|
March 31, 2017
|
||||
Cost of sales
|
$
|
101
|
|
|
$
|
33
|
|
Sales and marketing
|
161
|
|
|
148
|
|
||
Research and development
|
142
|
|
|
112
|
|
||
General and administrative
|
1,642
|
|
|
1,616
|
|
||
Total
|
$
|
2,046
|
|
|
$
|
1,909
|
|
|
Unvested RSUs
|
|||||
|
Number of shares outstanding
|
|
Weighted-average grant date fair value
|
|||
Unvested at December 29, 2017
|
800
|
|
|
$
|
23.91
|
|
Canceled
|
(5
|
)
|
|
$
|
14.41
|
|
Vested
|
(85
|
)
|
|
$
|
27.09
|
|
Unvested at March 30, 2018
|
710
|
|
|
$
|
23.60
|
|
|
For the three months ended
|
||||||
|
March 30, 2018
|
|
March 31, 2017
|
||||
Provision for income taxes
|
$
|
(6,579
|
)
|
|
$
|
756
|
|
Effective tax rates
|
(44.2
|
)%
|
|
6.7
|
%
|
|
For the three months ended
|
||||||
|
March 30, 2018
|
|
March 31, 2017
|
||||
Net income attributable to FOX stockholders
|
$
|
21,224
|
|
|
$
|
10,528
|
|
Weighted average shares used to compute basic EPS
|
37,625
|
|
|
37,135
|
|
||
Dilutive effect of employee stock plans
|
1,210
|
|
|
1,427
|
|
||
Weighted average shares used to compute diluted EPS
|
38,835
|
|
|
38,562
|
|
||
EPS:
|
|
|
|
||||
Basic
|
$
|
0.56
|
|
|
$
|
0.28
|
|
Diluted
|
$
|
0.55
|
|
|
$
|
0.27
|
|
•
|
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 high-end suspension and ride dynamics products;
|
•
|
the loss of key personnel, management and skilled engineers;
|
•
|
our ability to successfully identify, evaluate and manage potential 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 U.S. 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;
|
•
|
product recalls and product liability claims; and
|
•
|
future economic or market conditions.
|
|
For the three months ended
|
||||||
(in thousands)
|
March 30, 2018
|
|
March 31, 2017
|
||||
Sales
|
$
|
129,792
|
|
|
$
|
106,330
|
|
Cost of sales
|
88,148
|
|
|
72,616
|
|
||
Gross profit
|
41,644
|
|
|
33,714
|
|
||
Operating expenses:
|
|
|
|
||||
Sales and marketing
|
8,734
|
|
|
6,592
|
|
||
Research and development
|
6,197
|
|
|
4,482
|
|
||
General and administrative
|
9,193
|
|
|
8,081
|
|
||
Amortization of purchased intangibles
|
1,568
|
|
|
695
|
|
||
Fair value adjustment of contingent consideration and acquisition related compensation
|
—
|
|
|
1,447
|
|
||
Total operating expenses
|
25,692
|
|
|
21,297
|
|
||
Income from operations
|
15,952
|
|
|
12,417
|
|
||
Other expense, net:
|
|
|
|
||||
Interest expense
|
798
|
|
|
588
|
|
||
Other expense
|
283
|
|
|
545
|
|
||
Other expense, net
|
1,081
|
|
|
1,133
|
|
||
Income before income taxes
|
14,871
|
|
|
11,284
|
|
||
(Benefit of) provision for income taxes
|
(6,579
|
)
|
|
756
|
|
||
Net income
|
21,450
|
|
|
10,528
|
|
||
Less: net income attributable to non-controlling interest
|
(226
|
)
|
|
—
|
|
||
Net income attributable to FOX stockholders
|
$
|
21,224
|
|
|
$
|
10,528
|
|
|
For the three months ended
|
||||
|
March 30, 2018
|
|
March 31, 2017
|
||
Sales
|
100.0
|
%
|
|
100.0
|
%
|
Cost of sales
|
67.9
|
|
|
68.3
|
|
Gross profit
|
32.1
|
|
|
31.7
|
|
Operating expenses:
|
|
|
|
||
Sales and marketing
|
6.7
|
|
|
6.2
|
|
Research and development
|
4.8
|
|
|
4.2
|
|
General and administrative
|
7.1
|
|
|
7.6
|
|
Amortization of purchased intangibles
|
1.2
|
|
|
0.7
|
|
Fair value adjustment of contingent consideration and acquisition related compensation
|
—
|
|
|
1.4
|
|
Total operating expenses
|
19.8
|
|
|
20.1
|
|
Income from operations
|
12.3
|
|
|
11.6
|
|
Other expense, net:
|
|
|
|
||
Interest expense
|
0.6
|
|
|
0.6
|
|
Other expense
|
0.2
|
|
|
0.5
|
|
Other expense, net
|
0.8
|
|
|
1.1
|
|
Income before income taxes
|
11.5
|
|
|
10.5
|
|
(Benefit of) provision for income taxes
|
(5.1
|
)
|
|
0.7
|
|
Net income
|
16.6
|
%
|
|
9.8
|
%
|
Less: net income attributable to non-controlling interest
|
(0.2
|
)%
|
|
—
|
%
|
Net income attributable to FOX Stockholders
|
16.4
|
%
|
|
9.8
|
%
|
|
For the three months ended
|
|
|
|
|
|||||||||
(in millions)
|
March 30, 2018
|
|
March 31, 2017
|
|
Change ($)
|
|
Change (%)
|
|||||||
Bike products
|
$
|
57.7
|
|
|
$
|
52.3
|
|
|
$
|
5.4
|
|
|
10.3
|
%
|
Power vehicle products
|
72.1
|
|
|
54.0
|
|
|
18.1
|
|
|
33.5
|
%
|
|||
Total sales
|
$
|
129.8
|
|
|
$
|
106.3
|
|
|
$
|
23.5
|
|
|
22.1
|
%
|
|
For the three months ended
|
|
|
|
|
|||||||||
(in millions)
|
March 30, 2018
|
|
March 31, 2017
|
|
Change ($)
|
|
Change (%)
|
|||||||
Cost of sales
|
$
|
88.1
|
|
|
$
|
72.6
|
|
|
$
|
15.5
|
|
|
21.3
|
%
|
|
For the three months ended
|
|
|
|
|
|||||||||
(in millions)
|
March 30, 2018
|
|
March 31, 2017
|
|
Change ($)
|
|
Change (%)
|
|||||||
Operating expenses:
|
|
|
|
|
|
|
|
|||||||
Sales and marketing
|
$
|
8.7
|
|
|
$
|
6.6
|
|
|
$
|
2.1
|
|
|
31.8
|
%
|
Research and development
|
6.2
|
|
|
4.5
|
|
|
1.7
|
|
|
37.8
|
|
|||
General and administrative
|
9.2
|
|
|
8.1
|
|
|
1.1
|
|
|
13.6
|
|
|||
Amortization of purchased intangibles
|
1.6
|
|
|
0.7
|
|
|
0.9
|
|
|
128.6
|
|
|||
Fair value adjustment of contingent consideration and acquisition related compensation
|
—
|
|
|
1.4
|
|
|
(1.4
|
)
|
|
(100.0
|
)
|
|||
Total operating expenses
|
$
|
25.7
|
|
|
$
|
21.3
|
|
|
$
|
4.4
|
|
|
20.7
|
%
|
|
For the three months ended
|
|
|
|
|
|||||||||
(in millions)
|
March 30, 2018
|
|
March 31, 2017
|
|
Change ($)
|
|
Change (%)
|
|||||||
Income from operations
|
$
|
16.0
|
|
|
$
|
12.4
|
|
|
$
|
3.6
|
|
|
29.0
|
%
|
|
For the three months ended
|
|
|
|
|
|||||||||
(in millions)
|
March 30, 2018
|
|
March 31, 2017
|
|
Change ($)
|
|
Change (%)
|
|||||||
Other expense, net:
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
$
|
0.8
|
|
|
$
|
0.6
|
|
|
$
|
0.2
|
|
|
33.3
|
%
|
Other expense
|
0.3
|
|
|
0.5
|
|
|
(0.2
|
)
|
|
(40.0
|
)
|
|||
Other expense, net
|
$
|
1.1
|
|
|
$
|
1.1
|
|
|
$
|
—
|
|
|
—
|
%
|
|
For the three months ended
|
|
|
|
|
|||||||||
(in millions)
|
March 30, 2018
|
|
March 31, 2017
|
|
Change ($)
|
|
Change (%)
|
|||||||
(Benefit of) provision for income taxes
|
$
|
(6.6
|
)
|
|
$
|
0.8
|
|
|
$
|
(7.4
|
)
|
|
(925.0
|
)%
|
|
For the three months ended
|
|
|
|
|
|||||||||
(in millions)
|
March 30, 2018
|
|
March 31, 2017
|
|
Change ($)
|
|
Change (%)
|
|||||||
Net income
|
$
|
21.5
|
|
|
$
|
10.5
|
|
|
$
|
11.0
|
|
|
104.8
|
%
|
|
For the three months ended
|
||||||
(in thousands)
|
March 30, 2018
|
|
March 31, 2017
|
||||
Net cash provided by operating activities
|
$
|
10,965
|
|
|
$
|
9,209
|
|
Net cash used in investing activities
|
(3,975
|
)
|
|
(2,780
|
)
|
||
Net cash (used in) provided by financing activities
|
(20,878
|
)
|
|
941
|
|
||
Effect of exchange rate changes on cash
|
174
|
|
|
341
|
|
||
(Decrease) increase in cash and cash equivalents
|
$
|
(13,714
|
)
|
|
$
|
7,711
|
|
•
|
failure to develop new products that are innovative, performance 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.
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employment Agreement, dated May 1, 2018, by and between Fox Factory, Inc. and Wes Allinger
|
|
|
|
X
|
|
|
|
|
|
|
|
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended, 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 amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended
|
|
|
|
X
|
|
|
|
|
|
|
|
Certification of Principal Executive Officer and 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 No. 34-47986, the certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Form 10-Q 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.
|
|
FOX FACTORY HOLDING CORP.
|
|
|
|
|
|
By:
|
/s/ Zvi Glasman
|
May 2, 2018
|
|
Zvi Glasman, Chief Financial Officer and Treasurer
|
|
|
(Principal Financial and Accounting Officer)
|
1.
|
Employment
. The Company shall employ Executive, and Executive hereby accepts employment with the Company (or, as applicable, a Subsidiary of the Company), upon the terms and conditions set forth in this Agreement for the period beginning on the date hereof and ending as provided in paragraph 4 hereof. The employment relationship between Executive and the Company and any Subsidiary shall at all times be “at-will.” This means that the employment relationship is at the “will” of Executive and the Company and either Executive or the Company may elect to terminate the employment relationship at any time, for no particular reason or cause, upon notice to the other (including, if applicable, any notice required by Section 4(a) (v) or (vi) below), without further obligation to one another except as provided herein.
|
2.
|
Position and Duties
.
|
a.
|
Executive shall serve as the Executive Vice President, Cycling Business Unit, Specialty Sports Group of the Company (such “Group” being also referred to herein as the ”Group”) and shall have the normal duties, responsibilities, functions and authority customarily associated with such position and such other duties and responsibilities as may be assigned from time to time to Executive by the President, Specialty Sports Group, the Company’s Chief Executive Officer, Board of Directors (the “
Board
”) and Executive Committee of the Board (the “
Executive Committee
”) to expand or limit such duties, responsibilities, functions and authority and to overrule actions of officers of the Company.
|
b.
|
Executive shall report to the Company’s President, Specialty Sports Group and Executive shall devote Executive’s full-time energies and attention to the business and affairs of the Company and its Subsidiaries. Executive shall perform Executive’s duties, responsibilities and functions to the Company and its Subsidiaries hereunder in a diligent, trustworthy, professional, ethical and efficient manner and shall comply with the policies and procedures of the Company and its Subsidiaries and will cooperate fully with the Board in the advancement of the best interests of the Company. So long as Executive is employed by the Company or any Subsidiary, Executive shall not, except as provided herein or without the prior written consent of the Board, render to any other person, corporation, firm, company, joint venture or other entity any services of any kind for compensation, or engage in any other activity, that would compete with the Company or its Subsidiaries, and/or interfere with the performance of Executive’s duties for the Company and its Subsidiaries. Notwithstanding, Executive may engage in charitable, civic, fraternal and trade association activities that do not interfere materially with Executive’s obligations to the Company or any Subsidiary. Further, nothing in this Agreement shall limit Executive’s ability to: (i) serve as a member of any board of directors for any non-profit organization, so long as such membership does not interfere materially or conflict with Executive’s obligations to the Company or any Subsidiary; or (ii) as otherwise agreed by the Board in writing. Executive represents and warrants that Executive does not now, and will not during the Term of employment hereunder, have any financial interest in any competitor, supplier or customer of the Company or its Subsidiaries; provided that passive ownership (i.e., Executive does not directly or indirectly participate in the business or management of the applicable entity) of less than 5% of the stock of a publicly-held corporation whose stock is traded on a national securities exchange shall not be deemed to be a financial interest in a competitor, supplier or customer of the Company or its Subsidiaries.
|
c.
|
For purposes of this Agreement, “
Subsidiary
” shall mean any corporation or other entity of which the securities or other ownership interests having the voting power to elect a majority of the board of directors or other governing body are, now or hereafter, owned directly or indirectly by the Company.
|
d.
|
For purposes of this Agreement, “
Section 409A
” shall mean Section 409A of the Internal Revenue Code of 1986, as amended, and the final regulations issued thereunder.
|
3.
|
Compensation and Benefits
.
|
a.
|
Base Salary
. Executive’s base salary shall be $280,000 per annum (the “
Base Salary
”), to be paid in accordance with the Company’s customary payroll practices. The Base Salary will be reviewed on an annual basis by the Compensation Committee of the Board (the “Compensation Committee") and may be increased (or decreased as part of substantially similar reductions applicable to all executives) from time to time, at the discretion of the Compensation Committee.
|
b.
|
Performance Bonus (40.0% Target)
. Beginning with the fiscal year ending December 28, 2018, Executive will be eligible to receive a bonus (the “
Performance Bonus
”) based on three levels: minimum, target and maximum. The bonus for Executive at each level will be comprised of an objective component based on the achievement of (i) Company EBITDA targets (the “Company
EBITDA Bonus
”) and (ii) the EBITDA targets of the Group (the “
Group EBITDA Bonus
”), and (iii) a discretionary component based on the achievement of individual performance objectives (the “
Individual Performance Rating Criteria
”) established by the Chief Executive Officer (the “
Rating Bonus
”). The term “Executive’s Base Salary” means Executive’s actual Base Salary, exclusive of any other compensation received by Executive regardless of form, in effect as of the date the Performance Bonus is calculated. The term “
EBITDA
” means the earnings before interest, taxes, depreciation and amortization of the Company on a consolidated basis, calculated in accordance with generally accepted accounting principles utilized in determining the Target EBITDA (as defined below) and applied on a consistent basis (or in the case of determining the Group’s EBITDA, the portion of EBITDA attributable to the Group and calculated in accordance with the generally accepted accounting principles used in determining Group Target EBITDA (as defined below) and applied on a consistent basis). Furthermore, non-operating income, currency translation impact, gains and losses attributable to the disposal of Company and/or its Subsidiaries’ assets, and stock compensation expenses shall be excluded from the calculation of EBITDA in accordance with generally accepted accounting principles. Additionally, from time to time the Compensation Committee, in its sole discretion, may elect to exclude other non-recurring expenses from the calculation of EBITDA. All determinations of EBITDA shall be derived from the Company’s annual audited financial statements and determined by the Compensation Committee, whose determination shall be conclusive and final. Each Performance Bonus under this Section 3(b) shall be paid in cash, in a lump sum, within the same calendar year in which the Company receives its audited financials for such fiscal year.
|
i.
|
Minimum Target
. If, for a particular year, the Company’s EBITDA for the year is less than Target EBITDA (as defined below) but equals or exceeds 90% of Target EBITDA, then Executive’s EBITDA Bonus shall be equal to the product of (A) 6.0% plus the product of .60% times each full one percentage point positive variance to 90% of Target EBITDA, times (B) Executive’s Base Salary. For example, if actual EBITDA is 97.6% of Target EBITDA, then Executive’s EBITDA Bonus shall be equal to 10.2% times Executive’s Base Salary (6.0% + (.60% x 7) = 10.2%). For clarity, if EBITDA is under 90% of Target EBITDA, then Executive shall not receive any bonus based on EBITDA.
|
ii.
|
Target Level
. If, for a particular year, the Company’s EBITDA for the year is more than Target EBITDA but less than 110% of Target EBITDA, then Executive’s EBITDA Bonus shall be equal to the product of (A) 12.0% plus the product of .60% times each full one percentage point positive variance to Target EBITDA, times (B) Executive’s Base Salary. For example, if actual EBITDA is 107.6% of Target EBITDA, then Executive’s EBITDA Bonus shall be equal to 16.2% times Executive’s Base Salary (12.0% + (.60% x 7) = 16.2%).
|
iii.
|
Maximum Target
. If, for a particular year, the Company’s EBITDA for the year equals or exceeds 110% of Target EBITDA, then Executive’s EBITDA Bonus shall be equal to (A) 18.0% times (B) Executive’s Base Salary.
|
iv.
|
Group Minimum Target
. If, for a particular year, the Group’s EBITDA for the year is less than the Group Target EBITDA but equals or exceeds 90% of the Group Target EBITDA, then Executive’s Group EBITDA Bonus shall be equal to the product of (i) 10.0% plus the product of 1.0% times each full one percentage point positive variance to 90% of the Group Target EBITDA, times (ii) Executive’s Base Salary. For example, if the Group’s actual EBITDA is 97.6% of the Group Target EBITDA, then Executive’s Group EBITDA Bonus shall be equal to 17.0% times Executive’s Base Salary (10.0% + (1.0% x 7) = 17.0%). For clarity, if the Group’s EBITDA is under 90% of the Group’s Target EBITDA, then Executive shall not receive any bonus based on the Group EBITDA.
|
v.
|
Group Target Level
. If, for a particular year, the Group’s EBITDA for the year is more than the Group Target EBITDA but less than 110% of the Group Target EBITDA, then Executive’s Group EBITDA Bonus shall be equal to the product of (i) 20.0% plus the product of 1.0% times each full one percentage point positive variance to the Group Target EBITDA, times (ii) Executive’s Base Salary. For example, if the Group’s actual EBITDA is 107.6% of the Group Target EBITDA, then Executive’s Group EBITDA Bonus shall be equal to 27.0% times Executive’s Base Salary (20.0% + (1.0% x 7) = 27.0%).
|
vi.
|
Group Maximum Target
. If, for a particular year, the Group’s EBITDA for the year equals or exceeds 110% of the Group Target EBITDA, then Executive’s Group EBITDA Bonus shall be equal to (i) 30.0% times (ii) Executive’s Base Salary.
|
vii.
|
Rating Bonus
. If, for a particular year, the Company’s EBITDA for the year equals or exceeds 90% of Target EBITDA (for clarity, if EBITDA is under 90% then Rating Bonus will not be considered or awarded), then if the Compensation Committee determines, in its sole discretion, that Executive achieved an Individual Rating Criteria as set forth in the chart below, then the Compensation Committee shall further determine the corresponding Rating Bonus percentage based on the chart below. For example, if the Compensation Committee so determines that Executive’s achievement of the Individual Rating Criteria was a 6.00, then Executive’s Rating Bonus shall be equal to 4.0% of the Executive’s Base Salary. If the Compensation Committee so determines that Executive’s achievement of the Individual Rating Criteria was a 7.50, then Executive’s Rating Bonus shall be equal to 8.0% of the Executive’s Base Salary. If the Compensation Committee so determines that Executive’s achievement of the Individual Rating Criteria was a 9.00, then Executive’s Rating Bonus shall be equal to 12.0% of the Executive’s Base Salary. The Compensation Committee may, in its sole discretion, determine that Executive’s Rating Bonus exceed that indicated by Executive’s Individual Rating Criteria.
|
Individual Rating
|
Rating Bonus (percent)
|
6.00 - 6.49
|
4%
|
6.50 - 6.99
|
6%
|
7.00 - 7.49
|
7%
|
7.50 - 7.99 (Target)
|
8%
|
8.00 - 8.49
|
9%
|
8.50 - 8.99
|
10%
|
9.00 +
|
12%
|
viii.
|
Definitions of Company Target EBITDA and Group Target EBITDA
. For purposes of this Agreement, "Company
Target EBITDA
" means, for each fiscal year, the EBITDA set forth in the operating budget of the Company, as approved by the Board, for the particular year and "
Group Target EBITDA
" means, for each fiscal year, the
Specialty Sports Group
EBITDA set forth in the operating budget of the Company, as approved by the Board, for the particular year.
|
ix.
|
2018 Performance Bonus Pro-Rated
. Executive’s Performance Bonus shall be pro-rated for the fiscal year ending December 28, 2018 by multiplying (A) the bonus Executive would otherwise have received if Executive had been an employee for the entire fiscal year by (B) a fraction, the numerator of which is the number of days from (and including) the Effective Date through (and including) December 28, 2018, and the denominator of which is 365. To clarify for the 2018 Fiscal Year, if Executive is employed through December 28, 2018 (FY 2018 End), Executive’s total 2018 Performance Bonus will be calculated as follows: 33.0% of the Executive’s Performance Bonus will be calculated under Executive’s prior Agreement and 67.0% of the Executive’s Performance Bonus will be calculated under the current Agreement. This is for the 2018 Fiscal Year only.
|
x.
|
Continued Employment Requirement
. In order to encourage and reward longevity, except as otherwise specifically provided in Section 4(b)(ii) hereof, Executive shall not be entitled to any Performance Bonus unless Executive is employed by the Company on the day on which the Company actually pays performance bonuses to its executives.
|
c.
|
Employee Benefits
. Executive shall be included, to the extent eligible under the terms and conditions, as such terms and conditions may be established or changed from time to time by the Board in its sole discretion, in any
|
d.
|
Discretionary Paid Time Off (DTO)
. Executive shall be entitled to participate in the Company’s Discretionary Paid Time Off (DTO) Policy. Executive may take paid time off each fiscal year in accordance with the policies of the Company in effect for its executive officers from time to time. Executive shall take discretionary paid time off at such time or times as shall be approved by the Company, which approval shall not be withheld unreasonably.
|
e.
|
Business Expenses
. The Company shall reimburse Executive for all reasonable business expenses incurred by Executive in the course of performing Executive’s duties and responsibilities under this Agreement which are consistent with the Company’s policies in effect from time to time with respect to travel, entertainment and other business expenses, subject to the Company’s requirements with respect to reporting and documentation of such expenses.
|
f.
|
Payroll Withholdings
. From each payment to Executive of Base Salary and bonus, if any, the Company will report, withhold and pay to the proper governmental authorities any and all amounts required by law to be withheld for federal, state and local income and employment taxes, and any and all other amounts required by law to be reported and/or withheld from Executive’s wages. The Company will also deduct from Executive’s salary payments those sums authorized by Executive in writing and approved by the Company. The Company will make those payments and contributions, such as unemployment insurance premiums, workers’ compensation insurance premiums, the employer’s portion of state disability insurance premiums, and the employer’s portion of federal employment taxes, which are required by law to be made by the Company.
|
g.
|
Equity
. Executive will be eligible to receive awards of stock options, restricted stock or other equity awards pursuant to any plans or arrangements the Company may have in effect from time to time. The Board or any authorized committee will determine in its discretion whether Executive will be granted any such equity awards and the terms of any such award in accordance with the terms of any applicable plan or arrangement that may be in effect from time to time. The foregoing notwithstanding, all future equity plans and arrangements will: (i) provide participant with the right to “net tax settlement” of restricted share units, (ii) provide participant with the right to “net exercise” of Executive’s vested stock options (whenever exercised), and (iii) include Board approved automatic “net exercise” of Executive’s unexercised stock options on their expiration date to prevent the expiration of stock options due to restrictions placed on the Executive’s trading in Company stock or other circumstances that prevent the Executive from financing stock option exercises using other available methods.
|
4.
|
Termination of Employment
.
|
a.
|
Termination
. This Agreement and the employment of Executive by the Company and any Subsidiary may be terminated at any time as follows:
|
i.
|
By mutual agreement of the parties;
|
ii.
|
By the Company if Executive dies or becomes Disabled
. For purposes of this Agreement, “
Disabled
” shall mean any mental or physical illness or disability that renders Executive unable to perform the essential functions of Executive’s position for a period of 90 consecutive days or 180 days during any twelve month period with or without reasonable accommodation;
|
iii.
|
By the Company for Cause
. For purposes of this Agreement, “
Cause
” shall mean with respect to Executive, one or more of the following: (A) willful or grossly negligent violation of any law which causes material injury to the business of the Company (or any Subsidiary) or entry of a plea of
nolo contendere
(or similar plea) to a charge of such an offense, (B) conduct causing the Company or any of its Subsidiaries significant public disgrace or disrepute, (C) any act or omission aiding or abetting a competitor, supplier or customer of the Company or any of its Subsidiaries to the material disadvantage or detriment of the Company and its Subsidiaries, (D) Executive’s willful violation of Executive’s fiduciary duties to the Company or any Subsidiary, including the duty of loyalty and the corporate opportunity doctrine, (E) commission of, or the act of fraud, dishonesty, misappropriation or
|
iv.
|
By the Company without Cause;
|
v.
|
By Executive for Good Reason
. For purposes of this Agreement, “Good Reason” means Executive’s resignation from employment at any time within ninety (90) days following the expiration of any Company cure period (discussed below) following the occurrence of one or more of the following: (A) a reduction in Executive’s Base Salary below the amount on the date hereof (other than a substantially similar reduction applicable to all executives), (B) the Company requiring, without Executive’s consent, that Executive relocate Executive’s principal place of business outside a 30-mile radius from the location where Executive is employed as of the Effective Date or such other location as consented to by Executive, (C) material breach by the Company of this Agreement, or (D) without Executive’s consent, a material reduction in Executive’s duties or responsibilities such that Executive is no longer playing the role of an Executive Vice President (or at least an equivalent position). Under this Agreement, Executive will not be able to resign for Good Reason without first providing the Company with written notice of the acts or omissions constituting the grounds for “Good Reason” within ninety (90) days of the initial existence of the grounds for “Good Reason” and, if such grounds are curable, a reasonable cure period of not less than thirty (30) days following the date of such notice; or
|
vi.
|
By Executive, voluntarily, at any time; provided that Executive agrees to give the Company not less than 90 days written notice of Executive’s resignation unless such notice period is waived by the Company.
|
b.
|
Consequences of Termination
. Executive shall be entitled to the following compensation in the event of termination of Executive’s employment pursuant to the terms of paragraph 4(a):
|
i.
|
Following any termination under paragraphs 4(a)(i), (ii), (iii) or (vi), Executive (or in the event of Executive’s death, Executive’s estate) shall be entitled to receive, immediately upon termination by the Company for Cause or based on mutual agreement, or within thirty (30) days of the date of termination based on death, Disability, or resignation by Executive without Good Reason, a lump sum payment in cash in an amount equal to Executive’s accrued and unpaid Base Salary
plus
any authorized business expenses incurred and un-reimbursed as of the date of termination or death. In addition, in the event of Executive’s cessation of employment because he has become Disabled, or due to his death, in addition to any bonus payable pursuant to Section 10(c) below, Executive shall receive a pro rata payment of Executive’s 3(b) Performance Bonus (taking into account the provisions of Section 3(b)(ix)), such pro rata 3(b) Bonus payment being calculated as the product of that fiscal year’s 3(b) Bonus multiplied by a fraction, the numerator of which is the number of days Executive is employed with the Company in the fiscal year in which Executive’s termination from employment occurs and the denominator of which is 365 days, and such bonus payment, if any, shall be made in a cash lump sum within the same calendar year in which the Company receives its audited financials for such fiscal year.
|
ii.
|
Following any termination under paragraphs 4(a)(iv) or (v) (and despite his subsequent death), Executive (or, in the event of Executive’s death, Executive’s estate) shall be entitled to receive (A) immediately upon termination by the Company without Cause, or within fifteen (15) days of the date of termination by Executive for Good Reason, a lump sum payment in cash in an amount equal to Executive’s accrued and unpaid Base Salary
plus
any authorized business expenses incurred and un-reimbursed as of the date of termination, (B) severance (“
Severance
”) in an amount equal to: Executive’s per annum Base Salary as of the date of termination, unless Executive’s Base Salary was reduced in violation of paragraph 4(a)(v)(A), in which case it shall be an amount equal to Executive’s per annum Base Salary as in effect prior to such reduction, provided such amount is greater than Executive’s Base
|
iii.
|
Notwithstanding anything in this Agreement to the contrary, Severance shall
not
be paid nor begun prior to the eighth (8th) day following the return by Executive to the Company of an executed release as described in the immediately following sentence (the “
Release
”) and only if such Release is returned to the Company prior to the sixtieth (60th) day immediately following the Executive’s “separation from service” (within the meaning of Section 409A). Any “Release” shall provide, in effect, that Executive thereby releases and waives, for Executive and Executive’s heirs, executors, administrators and assigns, all claims against the Company and its Subsidiaries, and their respective officers, directors, employees, agents, shareholders, future shareholders, affiliates, divisions, successors, predecessors, representatives, attorneys, and assigns, and any persons acting with them (“
Releasees
”), from all claims (including claims for attorneys’ fees and costs), demands and causes of action, known or unknown, which Executive may have or claim to have against any Releasee, arising out of, or in any way relating to, Executive’s employment, or the termination of Executive’s employment, with the Company (including its Subsidiaries and affiliates), whether based on any act or omission to act or otherwise.
|
iv.
|
Subject to Executive’s timely execution of a release, any payment under paragraphs 4(b)(i) and (ii) shall be made in accordance with the Company’s normal payroll, or other applicable payment, practices, and, other than the payment of such amounts, the Company’s obligation to make any further payments of any kind or provide benefits, other than extended health coverage under 4(b)(ii), to Executive shall cease and terminate upon Executive’s date of termination.
|
c.
|
Resignation Upon Termination
. Upon termination of Executive’s employment for any reason, Executive agrees and covenants that Executive shall immediately tender a resignation to the Company for any position held by Executive as a member of the Company’s and each of its Subsidiaries’ Boards of Directors and any committee thereof.
|
d.
|
Suspension of 409A Payments
. Any payment or benefit under this Agreement that Company reasonably determines is subject to Section 409A(a)(2)(B)(i) of the Internal Revenue Code shall be delayed to the extent
|
e.
|
All payments to be made to Executive upon a termination of employment may only be made upon a Separation from Service of Executive or a Change of Control Event. For purposes of Section 409A, (i) each payment made under this Agreement shall be treated as a separate payment; (ii) Executive may not, directly or indirectly, designate the calendar year of payment; and (iii) no acceleration of the time and form of payment of any nonqualified deferred compensation to Executive or any portion thereof, shall be permitted except in relation to a Change of Control Event.
|
5.
|
Confidential Information
.
|
a.
|
Executive acknowledges that the continued success of the Company and its Subsidiaries and affiliates, depends upon the use and protection of a large body of confidential and proprietary information. All of such confidential and proprietary information now existing or to be developed in the future will be referred to in this Agreement as “
Confidential Information
.” Confidential Information will be interpreted as broadly as possible to include all information of any sort (whether merely remembered or embodied in a tangible or intangible form) that is (i) related to the Company’s or its Subsidiaries’ or affiliates’ current or potential business or is disclosed to the Company or its Subsidiaries by any third party pursuant to a confidentiality agreement and (ii) is not generally or publicly known. Confidential Information includes, without specific limitation, information, observations and data obtained by Executive during the course of Executive’s performance of the services under this Agreement, information concerning acquisition opportunities in or reasonably related to the Company’s or its Subsidiaries’ or affiliates’ business or industry of which Executive becomes aware during the Employment Period, the persons or entities that are current, former or prospective suppliers or customers of any one or more of them during Executive’s course of performance of services under this Agreement, as well as development, transition and transformation plans, methodologies and methods of doing business, strategic marketing, product development and business expansion plans, including plans regarding planned and potential sales and financial projections, employee lists and telephone numbers, locations of sales representatives, product designs and specifications, including any future or proposed products, manufacturing techniques and information, integration processes and financial information and forecasts. Therefore, Executive agrees that Executive shall not at any time, directly or indirectly, (i) disclose or permit the disclosure of any Confidential Information to any person or firm other than Company (or its Subsidiaries) or any person or firm to which such disclosure would be protected by a confidentiality agreement with the Company (or its Subsidiaries), or (ii) use or permit the use of any Confidential Information except in the ordinary course of performance of Executive’s duties. Executive agrees to deliver to the Company at the end of the Employment Period, or at any other time the Company may request in writing, all memoranda, notes, plans, records, reports and other documents relating to the business of the Company or its Subsidiaries or affiliates (including, without limitation, all Confidential Information), whether on paper or in any other form or medium, and all copies thereof that Executive may then possess or have under Executive’s control.
|
b.
|
During Executive’s employment with the Company, Executive shall not use or disclose any confidential information or trade secrets, if any, of any former employers or any other person to whom Executive has an obligation of confidentiality, and shall not bring onto the premises of the Company or its Subsidiaries or affiliates any unpublished documents or any property belonging to any former employer or any other person to whom
|
c.
|
The obligations of Executive provided in this paragraph 5 shall last, as to any Confidential Information, for so long as that Confidential Information has proprietary value, whether during Executive’s employment or after the termination thereof.
|
6.
|
Intellectual Property, Inventions and Patents
.
|
a.
|
Executive acknowledges that all discoveries, concepts, ideas, inventions, innovations, improvements, developments, methods, designs, analyses, drawings, reports, patent applications, copyrightable works, mask works and moral rights (in each case, whether or not including any Confidential Information) and all registrations or applications related thereto, all other proprietary information and all similar or related information (whether or not patentable or trademarkable) which (i)(A) are developed using the equipment, supplies, facilities or trade secrets of the Company or its Subsidiaries, or (B) relate to the Company’s or its Subsidiaries’ actual or demonstrably anticipated business, research and development or existing or future products or services, or (C) result from work performed by Executive for the Company or its Subsidiaries, and (ii) which are conceived, developed or made by Executive (whether solely or jointly with others) while employed by or as a result of Executive’s employment with the Company and/or its Subsidiaries, whether before or after the date of this Agreement (“
Work Product
”), belong to the Company or such Subsidiary. Executive shall promptly disclose such Work Product to the Board and, at the Company’s expense, perform all actions reasonably requested by the Board (whether during or after the Employment Period) to establish, confirm and perfect such ownership in the Company or its Subsidiaries, as applicable (including, without limitation, assignments, consents, powers of attorney, waivers of rights, including moral rights, and other instruments). Executive acknowledges that all original works of authorship protected by copyright included in the Work Product are “works made for hire” as defined in the United States Copyright Act, 17 U.S.C. §101.
|
b.
|
As further consideration for the Company’s entering into this Agreement, Executive hereby assigns to the Company all right, title and interest Executive owns or at any time may have to the Work Product (whether during the Employment Period or after the termination of the Employment Period), and to any and all other Work Product in which Executive may have any right, title, or interest or which was at any time used in the business of the Company and its Subsidiaries or its affiliates. At any time, whether during the Employment Period or after the termination of the Employment Period, upon reasonable request of the Company, Executive shall fully cooperate with and assist the Company to protect the Company’s (and its Subsidiaries’) right to and interest in the Work Product in any and all countries of the world, and, upon reasonable request of the Company, shall execute all documents and instruments and do all things that may be required in connection therewith. If Executive is involuntarily terminated, Executive’s subsequent cooperation with the Company will be coordinated, at the Company’s expense, with Executive’s then employment commitments.
|
7.
|
Non-Solicitation
. In further consideration of the compensation to be paid to Executive hereunder, Executive acknowledges that during the course of Executive’s employment with the Company and its Subsidiaries (including its predecessors) Executive has and shall become familiar with the Company’s (and its Subsidiaries) trade secrets and with other Confidential Information concerning the Company and its Subsidiaries and affiliates and that Executive’s services have been and shall be of special, unique and extraordinary value to the Company and its Subsidiaries and affiliates, and, therefore, Executive agrees (i) that, from the date of this Agreement and for two years after the termination of Executive’s employment for any reason, Executive shall not directly or indirectly solicit or induce, attempt to solicit or induce or assist any person soliciting or inducing any employee of the Company or any Subsidiary to leave the employ of the Company or such Subsidiary, or in any way interfere with the relationship between the Company or any Subsidiary and any employee thereof, and (ii) that, from the date of this Agreement until one year after the termination of Executive’s employment for any reason, Executive shall not make any negative or disparaging statements or communications about the Company, its Subsidiaries or affiliates, or any of their respective directors, officers, employees or stockholders.
|
8.
|
Severability; Remedies
.
|
a.
|
Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any action in any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction to the extent required to be enforceable under applicable law. If, at the time of enforcement of paragraph 7, a court shall hold that the restrictions stated therein are unreasonable under circumstances then existing, the parties agree such restrictions are divisible and shall be reduced to the extent required to be enforceable under applicable law. Executive acknowledges that the restrictions contained in paragraph 7 are reasonable and that Executive has reviewed this Agreement with Executive’s legal counsel.
|
b.
|
In the event of the breach or a threatened breach by Executive of any of the provisions of paragraphs 5, 6, or 7, the Company (and its Subsidiaries) would suffer irreparable harm, and in addition and supplementary to other rights and remedies existing in its favor, the Company (and its Subsidiaries) shall be entitled to specific performance and/or injunctive or other equitable relief from a court of competent jurisdiction in order to enforce or prevent any violations of the provisions thereof (without posting a bond or other security). Nothing herein shall be construed as prohibiting the Company (and its Subsidiaries) from pursuing any other remedies available to them, at law or in equity, for any breach or threatened breach of this Agreement (including, any of the provisions of paragraphs 5, 6 or 7) by Executive, including recovery of damages from Executive and forfeiture of any and all Severance.
|
9.
|
Executive’s Representations
. Executive hereby represents and warrants to the Company that (a) the execution, delivery and performance of this Agreement by Executive do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which Executive is bound, (b) Executive is not a party to or bound by any employment agreement, noncompete agreement or confidentiality agreement with any other person or entity and (c) upon the execution and delivery of this Agreement by the Company, this Agreement shall be a legal, valid and binding obligation of Executive, enforceable in accordance with its terms. Executive hereby acknowledges and represents that Executive has consulted with independent legal counsel regarding Executive’s rights and obligations under this Agreement and that Executive fully understands the terms and conditions contained herein.
|
10.
|
Miscellaneous
.
|
a.
|
Survival
. Paragraphs 4 through 10 shall survive and continue in full force and effect notwithstanding the termination of Executive’s employment and this Agreement.
|
b.
|
Notices
. Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, sent by reputable overnight courier service or mailed by first class mail, return receipt requested, to the recipient at the address below indicated:
|
c.
|
Termination of Prior Agreement/Complete Agreement
. This Agreement, those documents expressly referred to herein and other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. Upon the Effective Date, Executive’s prior Employment Agreement with the Company (together with all amendments thereto, collectively the “
Terminated Agreement
”) shall be automatically terminated without further action by the parties; provided, however, that Executive shall be entitled to receive his Performance Bonus under the Terminated Agreement when and if his Performance Bonus would have otherwise been payable, but pro-rated for the fiscal year ending December 28, 2018, by multiplying (A) the bonus Executive would otherwise have received if he had been an employee for the entire fiscal year by (B) a fraction, the numerator of which is the number of days from (and including) December 30, 2017 until the Effective Date (but excluding the Effective Date), and the denominator of which is 365. For the avoidance of doubt, the termination of the Terminated Agreement will not create any severance or other obligations to Executive.
|
d.
|
No Strict Construction
. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.
|
e.
|
Counterparts
. This Agreement may be executed in separate counterparts (including by means of facsimile or portable document format (PDF)), each of which is deemed to be an original and all of which taken together constitute one and the same agreement.
|
f.
|
Successors and Assigns
. Subject to the limitations stated herein and in the 2013 Omnibus Plan, this Agreement will be binding upon and inure to the benefit of the Company and any successor to the Company, including without limitation any persons acquiring directly or indirectly all or substantially all of the business or assets or interests of the Company whether by purchase, merger, consolidation, reorganization or otherwise (and such successor shall thereafter be deemed the “Company” for purposes of this Agreement). This Agreement will inure to the benefit of and be enforceable by Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees and legatees, but will not otherwise be assignable, transferable or delegable by Executive. This Agreement is personal in nature and neither of the parties hereto shall, without the consent of the other, assign, transfer or delegate this Agreement or any rights or obligations hereunder except as otherwise expressly provided in this paragraph 10(f).
|
g.
|
Choice of Law
. All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of California, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of California or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of California.
|
h.
|
Amendment and Waiver
. The provisions of this Agreement may be amended or waived only with the prior written consent of the Company (as approved by the Board) and Executive, and no course of conduct or course of dealing or failure or delay by any party hereto in enforcing or exercising any of the provisions of this Agreement (including, without limitation, the Company’s right to terminate Executive’s employment with or without Cause) shall affect the validity, binding effect or enforceability of this Agreement or be deemed to be an implied waiver of any provision of this Agreement. For purposes of clarification, it is understood by the parties that Section 10(h) shall in no way invalidate Executive’s obligation to act within the sixty (60) day time limit of Section 4(b)(iii), as applied to Section 4(b)(ii)(B) and Section 4(b )(iv).
|
i.
|
Insurance
. The Company may procure in its own name and for its own benefit life and/or disability insurance on Executive in any amount or amounts considered advisable. Executive agrees to cooperate in any reasonable medical or other examination, supply any available information and execute and delivery any applications or other instruments in writing as may be reasonably necessary to obtain and maintain such insurance.
|
j.
|
Corporate Opportunity
. During his employment, Executive shall submit to the Company all business, commercial and investment opportunities or offers presented to Executive, or of which Executive becomes aware, at any time during Executive’s employment which relate to the business of design, manufacture, distribution, marketing, assembly or sale of suspension products for vehicles, including mountain bikes, snow mobiles, all-terrain vehicles, motorcycles and off-road automotive vehicles (“
Corporate Opportunities
”). Unless approved by the Board, Executive shall not accept or pursue, directly or indirectly, any Corporate Opportunities on Executive’s own behalf.
|
k.
|
Executive’s Cooperation
. During his employment and thereafter, Executive shall cooperate, at the Company’s expense, with the Company and its Subsidiaries in any internal investigation or administrative, regulatory or judicial proceeding as reasonably requested by the Company (including, without limitation, Executive being available to the Company upon reasonable notice for interviews and factual investigations, appearing at the Company’s request to give testimony without requiring service of a subpoena or other legal process, volunteering to the Company all pertinent information and turning over to the Company copies of all relevant documents which are or may come into Executive’s possession to the extent they may be provided to the Company without civil or criminal penalty to Executive, all at times and on schedules that are reasonably consistent with Executive’s other permitted activities and commitments).
|
l.
|
Clawback Policy
. Notwithstanding any other provision contained herein, all amounts payable pursuant to Article 3(b) of this Agreement shall be subject to the Company’s policy entitled “Recoupment of Incentive Compensation Upon Restatement or Misstatement of Financial Results, or as Required by Law” (as may be amended from time to time). Executive hereby acknowledges receipt of a copy of such policy.
|
m.
|
Arbitration
. Any controversy, claim, cause of action, in law or equity, or dispute involving the parties (or their affiliated persons or entities) directly or indirectly concerning this Agreement, Executive’s employment by the Company or cessation thereof, and/or the subject matter thereof, including its enforcement, performance, breach, or interpretation, shall be resolved solely and exclusively by final and binding arbitration held in Santa Cruz, California by one (1) arbitrator in accordance with the rules of employment arbitration then followed by JAMS or any successor to the functions thereof. The arbitrator shall apply California law in the resolution of all controversies, claims and disputes and shall have the right and authority to determine how his or her decision or determination as to each issue or matter in dispute may be implemented or enforced. Any decision or award of the arbitrator shall be final, conclusive and binding on the parties to this Agreement, and there shall be no appeal therefrom other than from gross negligence or willful misconduct. Notwithstanding the foregoing, claims regarding worker’s compensation and unemployment compensation benefits shall not be subject to arbitration under this Agreement. Each party in any such arbitration shall be responsible for its own attorneys’ fees, costs and necessary disbursements; provided, however, that if one party refuses to arbitrate and the other party seeks to compel arbitration by court order, if such other party prevails, it shall be entitled to recover its reasonable attorneys’ fees, costs and necessary disbursements. Notwithstanding the forgoing, the Company shall pay the arbitrator’s fees.
|
i.
|
The parties hereto agree that any action to compel arbitration pursuant to this Agreement may be brought in any appropriate state court in Santa Cruz County, California, and in connection with such action to compel, the laws of California shall control. Application may also be made to such court for confirmation of any decision or award of the arbitrator, for an order of the enforcement and for any other remedies which may be necessary to effectuate such decision or award. The parties hereto hereby consent to the jurisdiction of the arbitrator and of such court and waive any objection to the jurisdiction of such arbitrator and court.
|
ii.
|
Notwithstanding the foregoing, the Company shall be entitled to seek injunctive relief and other equitable remedies, in any court of competent jurisdiction, to enforce this Agreement.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Fox Factory Holding Corp.:
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
May 2, 2018
|
|
/s/ Larry L. Enterline
|
Larry L. Enterline
|
Chief Executive Officer
|
(Principal Executive Officer)
|
May 2, 2018
|
|
/s/ Larry L. Enterline
|
Larry L. Enterline
|
Chief Executive Officer
|
(Principal Executive Officer)
|
|
/s/ Zvi Glasman
|
Zvi Glasman
|
Chief Financial Officer and Treasurer
|
(Principal Financial Officer and Treasurer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Fox Factory Holding Corp.:
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
May 2, 2018
|
|
/s/ Zvi Glasman
|
Zvi Glasman
|
Chief Financial Officer and Treasurer
|
(Principal Financial Officer and Treasurer)
|