FOX FACTORY HOLDING CORPFOXF
FOX FACTORY HOLDING CORP Income Taxes Disclosure
Income Taxes
Provision for Income Taxes
The components of income tax expense are as follows:
| For the fiscal years ended | |||||||||||||||||
| January 2, 2026 | January 3, 2025 | December 29, 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 7,483 | $ | 9,464 | $ | 14,427 | |||||||||||
| State | 1,979 | 3,568 | 5,404 | ||||||||||||||
| Foreign | 3,823 | 4,646 | 5,850 | ||||||||||||||
| Total current | 13,285 | 17,678 | 25,681 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | (31,986) | (21,107) | (4,782) | ||||||||||||||
| State | (9,852) | (2,041) | (2,693) | ||||||||||||||
| Foreign | (3,016) | (30) | (389) | ||||||||||||||
| Total deferred | (44,854) | (23,178) | (7,864) | ||||||||||||||
| (Benefit) provision for income taxes | $ | (31,569) | $ | (5,500) | $ | 17,817 | |||||||||||
The Company’s income (loss) before provision for income taxes was subject to taxes in the following jurisdictions for the following periods:
| For the fiscal years ended | |||||||||||||||||
| January 2, 2026 | January 3, 2025 | December 29, 2023 | |||||||||||||||
| United States | $ | (595,930) | $ | (13,351) | $ | 114,128 | |||||||||||
| Foreign | 19,641 | 14,363 | 24,535 | ||||||||||||||
| Total income before provision for income taxes | $ | (576,289) | $ | 1,012 | $ | 138,663 | |||||||||||
The following table presents a reconciliation of the statutory federal rate and the Company’s effective tax rate for the periods presented:
| For the fiscal years ended | ||||||||||||||||||||||||||
| January 2, 2026 | January 3, 2025 | December 29, 2023 | ||||||||||||||||||||||||
| US Federal Statutory Income Tax Rate | $ | (121,020) | 21.0 | % | $ | 213 | 21.0 | % | $ | 29,120 | 21 | % | ||||||||||||||
| Domestic Federal: | ||||||||||||||||||||||||||
| Tax Credits | ||||||||||||||||||||||||||
| Research and Development Credit | (1,201) | 0.2 | (6,530) | (645.2) | (5,296) | (3.8) | ||||||||||||||||||||
| Foreign Tax Credit | (2,341) | 0.4 | (8,322) | (822.3) | (12,753) | (9.2) | ||||||||||||||||||||
| Nontaxable or Nondeductible Items | ||||||||||||||||||||||||||
| Goodwill Impairment | 90,471 | (15.7) | — | 0.0 | — | 0.0 | ||||||||||||||||||||
| Stock-based Compensation | 1,289 | (0.2) | 1,981 | 195.7 | 419 | 0.3 | ||||||||||||||||||||
| Meals and Entertainment Expense | 188 | 0.0 | 175 | 17.3 | 235 | 0.2 | ||||||||||||||||||||
| Executive Compensation Deduction Limitation | 175 | 0.0 | 205 | 20.2 | 822 | 0.6 | ||||||||||||||||||||
| Fines and Penalties Expense | — | 0.0 | 16 | 1.6 | 3 | 0.0 | ||||||||||||||||||||
| Cross-Border tax laws | ||||||||||||||||||||||||||
| Global intangible low-taxed income | 2,100 | (0.4) | 1,277 | 126.2 | 103 | 0.1 | ||||||||||||||||||||
| Foreign-derived intangible income | (820) | 0.1 | (2,670) | (263.8) | (6,064) | (4.4) | ||||||||||||||||||||
| Other | ||||||||||||||||||||||||||
| Amended Return | — | 0.0 | 1,483 | 146.6 | (1,035) | (0.7) | ||||||||||||||||||||
| Return to Provision | 67 | 0.0 | (1,546) | (152.7) | 1,469 | 1.1 | ||||||||||||||||||||
| Deferred True Up | (1,449) | 0.3 | (2,465) | (243.5) | 995 | 0.7 | ||||||||||||||||||||
| Other | 296 | (0.1) | 71 | 7.0 | (283) | (0.4) | ||||||||||||||||||||
| Domestic state and local income taxes, net of federal effect | (6,159) | 1.1 | 1,221 | 120.6 | 1,076 | 0.8 | ||||||||||||||||||||
| Domestic changes in valuation allowance | 2,272 | (0.4) | 573 | 56.6 | — | 0.0 | ||||||||||||||||||||
| Foreign Tax Effects | ||||||||||||||||||||||||||
| Canada | ||||||||||||||||||||||||||
| Statutory income tax rate differential | (10) | 0.0 | 178 | 17.6 | 130 | 0.1 | ||||||||||||||||||||
| Non-Deductible Stock Compensation Expense | (176) | 0.0 | (137) | (13.6) | (106) | (0.1) | ||||||||||||||||||||
| SR&ED Credit Adjustment | (37) | 0.0 | (13) | (1.3) | 9 | 0.0 | ||||||||||||||||||||
| Other | 12 | 0.0 | 4 | 0.4 | 203 | 0.1 | ||||||||||||||||||||
| Germany | ||||||||||||||||||||||||||
| Statutory income tax rate differential | (211) | 0.0 | 221 | 21.8 | 45 | 0.0 | ||||||||||||||||||||
| Other | 263 | 0.0 | — | 0.0 | — | 0.0 | ||||||||||||||||||||
| Thailand | ||||||||||||||||||||||||||
| Changes in Valuation Allowance | 34 | 45 | 4.4 | (141) | (0.1) | |||||||||||||||||||||
| Other | (12) | 0.0 | — | 0.0 | 1 | 0.0 | ||||||||||||||||||||
| Japan | ||||||||||||||||||||||||||
| Statutory income tax rate differential | (3) | 0.0 | (21) | (2.1) | (1) | 0.0 | ||||||||||||||||||||
| Other | 163 | 0.0 | — | 0.0 | — | 0.0 | ||||||||||||||||||||
| Sweden | ||||||||||||||||||||||||||
| Changes in Valuation Allowance | (103) | 0.0 | 98 | 9.7 | — | 0.0 | ||||||||||||||||||||
| Foreign NOLs | 103 | 0.0 | 62 | 6.2 | — | 0.0 | ||||||||||||||||||||
| Other | (3) | 0.0 | 2 | 0.2 | 1 | 0.0 | ||||||||||||||||||||
| Taiwan | ||||||||||||||||||||||||||
| Statutory income tax rate differential | (236) | 0.0 | (141) | (13.9) | (227) | (0.2) | ||||||||||||||||||||
| Witholding taxes | 7,798 | (1.4) | 7,412 | 732.3 | 7,753 | 5.6 | ||||||||||||||||||||
| Other | 11 | 0.0 | 1 | 0.1 | (4) | 0.0 | ||||||||||||||||||||
| United Kingdom | ||||||||||||||||||||||||||
| Statutory income tax rate differential | 3 | 0.0 | (41) | (4.1) | (36) | 0.0 | ||||||||||||||||||||
| Foreign NOLs | 19 | 0.0 | (25) | 0.0 | (50) | 0.0 | ||||||||||||||||||||
| Changes in Valuation Allowance | (1,527) | 0.3 | 413 | 0.4 | 387 | 0.0 | ||||||||||||||||||||
| Foreign Branch | — | |||||||||||||||||||||||||
| Statutory income tax rate differential | (1,425) | 0.2 | 774 | 0.8 | 24 | 0.0 | ||||||||||||||||||||
| Other foreign jurisdictions | (322) | 0.1 | 1 | 0.0 | 72 | 0.0 | ||||||||||||||||||||
| Worldwide changes in unrecognized tax benefits | 222 | 0.0 | (15) | 0.0 | 946 | 0.0 | ||||||||||||||||||||
| Effective tax rate | $ | (31,569) | 5.5 | % | $ | (5,500) | (543.5) | % | $ | 17,817 | 12.8 | % | ||||||||||||||
Deferred Income Taxes
| January 2, 2026 | January 3, 2025 | ||||||||||
| Deferred tax assets: | |||||||||||
| Foreign tax credits, including amounts associated with accrued charges | $ | 45,409 | $ | 47,394 | |||||||
| Capitalized research & development | 45,210 | 44,967 | |||||||||
| Lease liability | 19,321 | 21,368 | |||||||||
| Inventory | 8,938 | 9,555 | |||||||||
| Accrued liabilities | 7,369 | 7,519 | |||||||||
| Interest Carryforward | 6,917 | 5,868 | |||||||||
| Net operating losses | 5,005 | 2,071 | |||||||||
| Research and development tax credits | 4,261 | 4,946 | |||||||||
| Interest rate swap | 2,473 | 1,544 | |||||||||
| Stock-based compensation | 72 | — | |||||||||
| Other | 2,308 | 2,441 | |||||||||
| Total deferred tax asset | 147,283 | 147,673 | |||||||||
| Valuation allowance | (2,927) | (1,785) | |||||||||
| Net deferred tax asset | 144,356 | 145,888 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Intangible assets | (30,467) | (63,016) | |||||||||
| Lease right-of-use-asset | (17,806) | (21,389) | |||||||||
| Depreciation | (5,686) | (12,554) | |||||||||
| Other | — | (2,087) | |||||||||
| Total deferred tax liability | (53,959) | (99,046) | |||||||||
| Net deferred tax asset | $ | 90,397 | $ | 46,842 | |||||||
As of January 2, 2026, the Company had foreign tax credits of $45,409 that begin to expire in 2028, unless previously utilized.
As of January 2, 2026, the Company assessed the realizability of deferred tax assets and evaluated the need for a valuation allowance for deferred tax assets for each jurisdiction based on the framework of ASC 740. For the year ended January 2, 2026, the valuation allowance increased by $1,142, primarily due to the establishment of a valuation allowance on branch foreign tax credits, partially offset by the release of U.K. net operating loss carryforward. It is reasonably possible that the company could record a material adjustment to the valuation allowance in the next twelve months related to the carrying value of foreign tax credits.
Unrecognized Tax Benefits
| For the fiscal years ended | |||||||||||||||||
| January 2, 2026 | January 3, 2025 | December 29, 2023 | |||||||||||||||
| Balance - beginning of period | $ | 29 | $ | 1,274 | $ | 119 | |||||||||||
| Increase related to current year tax positions | 281 | 686 | 1,274 | ||||||||||||||
| Decrease related to prior year tax positions | (259) | (1,931) | (119) | ||||||||||||||
| Balance - end of period | $ | 51 | $ | 29 | $ | 1,274 | |||||||||||
As of January 2, 2026, the Company had $51 of unrecognized tax benefits related to certain state tax positions. The Company regularly engages in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. It is reasonably possible that significant changes in the unrecognized tax benefit may occur within the next twelve months, including settlement of the full amount with the taxing authority.
The Company’s 2021 and forward federal tax returns, state tax returns from 2019 and forward, and foreign tax returns from 2021 and forward are subject to examination by tax authorities. In 2024, the IRS commenced an examination of our 2021 income tax return, which is ongoing.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Feb 27, 2026 | Showing above |
| 2025 | Feb 28, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 25, 2021 | |
| 2020 | Mar 3, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Mar 1, 2017 | |
| 2015 | Feb 29, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.