What changed in this filing

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Item 9A. Controls and Procedures

2024-02-28 compared with 2023-03-01 · 98 added, 238 removed, 139 unchanged (71% of the section changed)

3 unchanged sentences

Our disclosure controls are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of December 31, 2022.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as a result of the material weakness in our internal control over financial reporting, described below, as of December 30, 2023.

A "material weakness" is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement in annual or interim financial statements will not be prevented or detected on a timely basis.

Management's Report on Internal Control Over Financial Reporting

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The Company's management conducted an assessment of the Company's internal control over financial reporting based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013).

Based on this assessment, the Company's management has concluded that, as of December 31, 2022, the Company's internal control over financial reporting is effective.

The Company's internal control over financial reporting as of December 31, 2022 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which is set forth below.

In connection with this assessment, the Company’s management identified deficiencies in the design and operating effectiveness of controls in its internal control over financial reporting related to certain information technology general computer controls ("ITGC’s").

The replacement of components of our enterprise resource planning system in late August 2023 led to a significant increase in the volume of transactions across user access, program change management, and IT operations for which our existing controls were not designed to address.

As a result, certain of the Company’s related business controls that are dependent upon the affected ITGC’s were also deemed ineffective.

We did not identify any misstatements to the consolidated financial statements as of and for the year ended December 30, 2023 because of these control deficiencies.

However, the pervasive impact of these control deficiencies to the Company's internal control over financial reporting created a reasonable possibility that a material misstatement to the consolidated financial statements would not be prevented or detected on a timely basis.

Therefore, we concluded that the deficiencies represent a material weakness in our internal control over financial reporting and, as such, our internal control over financial reporting was not effective as of December 30, 2023.

Deloitte & Touche LLP, an independent registered public accounting firm, who audited the fiscal 2023 consolidated financial statements included in this Annual Report on Form 10-K, issued an adverse report on the Company’s internal control over financial reporting reflecting this material weakness as of December 30, 2023 as stated in its report which is set forth below.

Remediation Plan

Management is in the process of establishing a remediation plan and expects its remediation efforts will involve implementing additional controls or a redesign of controls to ensure that user access, program change management and IT operations controls are designed and operating effectively.

These remediation efforts began during the fiscal quarter ended December 30, 2023 and are expected to be completed during the fiscal year ending December 28, 2024.

Changes in Internal Control over Financial Reporting

During the quarter ended December 31, 2022, there was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Other than the material weakness described above, which was identified by management as part of the Company annual assessment of internal control over financial reporting, during the fiscal quarter ended December 30, 2023, there was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls

In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

reasonable assurance of achieving the desired control objectives.

In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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and subsidiaries (the "Company") as of December 30, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2022, of the Company and our report dated March 1, 2023, expressed an unqualified opinion on those financial statements.

In our opinion, because of the effect of the material weakness identified below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 30, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 30, 2023, of the Company and our report dated February 28, 2024, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting.

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

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

Material Weakness

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management's assessment:

General Information Technology Controls (GITCs)

The Company identified deficiencies in the design and operating effectiveness of controls in its internal control over financial reporting related to certain information technology general computer controls ("ITGC's").

The replacement of components of the Company's enterprise resource planning system in late August 2023 led to a significant increase in the volume of transactions across user access, program change management, and IT operations for which their existing controls were not designed to address.

As a result, certain of the Company's related business controls that are dependent upon the affected ITGC's were also deemed ineffective.

The Company concluded that the pervasive impact of these control deficiencies to the Company's internal control over financial reporting created a reasonable possibility that a material misstatement to the consolidated financial statements would not be prevented or detected on a timely basis.

The material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements as of and for the year ended December 30, 2023, of the Company, and this report does not affect our report on such financial statements.

/s/ DELOITTE & TOUCHE LLP

San Francisco, California

March 1, 2023

February 28, 2024

OTHER INFORMATION

Rule 10b5-1 Trading Plans - Directors and Section 16 Officers

During the 13 weeks ended December 30, 2023, none of our directors or Officers (as such term is defined under Section 16 of the Exchange Act) adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act or any "non-Rule 10b5-1 trading arrangement."

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

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DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

The information required by this item is incorporated herein by reference from sections entitled "Corporate Governance and Board Matters," "Proposals for Consideration and the Annual Meeting – Proposal 1 – Election of Directors" and "Additional Information" in our definitive Proxy Statement related to the 2023 Annual Meeting of Stockholders (the "2023 Proxy Statement") to be filed with the SEC within 120 days of our fiscal year ended December 31, 2022 and is incorporated herein by reference.

The information required by this item is incorporated herein by reference from sections entitled "Corporate Governance and Board Matters," "Executive Officers," "Proposals for Consideration at Annual Meeting – Proposal 1 – Election of Class II Directors" and "Additional Information" in our definitive Proxy Statement related to the 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days of our fiscal year ended December 30, 2023 (the "2024 Proxy Statement").

There were no material changes to the procedures by which stockholders may recommend nominees to our board of directors.

EXECUTIVE COMPENSATION

The information required by this item is incorporated herein by reference from sections entitled "Compensation Discussion and Analysis," "Named Executive Officer Compensation Tables" (excluding the information under the subheading "Pay Versus Performance"), "Corporate Governance and Board Matters - Board of Directors – Director Compensation," "Corporate Governance and Board Matters – Board of Directors – Compensation Committee Interlocks and Insider Participation," and "Compensation Committee Report" in our 2023 Proxy Statement.

The information required by this item is incorporated herein by reference from sections entitled "Compensation Discussion and Analysis," "Named Executive Officer Compensation Tables" (excluding the information under the subheading "Pay Versus Performance"), "Corporate Governance and Board Matters – Director Compensation," "Corporate Governance and Board Matters – Board of Directors – Compensation Committee Interlocks and Insider Participation," and "Compensation Committee Report" in our 2024 Proxy Statement.

However, the Compensation Committee Report included in such 2024 Proxy Statement shall not be deemed "filed" with the SEC for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing made by us with the SEC, regardless of any general incorporation language in such filing.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this item is included under the sections entitled "Security Ownership of Certain Beneficial Owners and Management," and "Securities Authorized for Issuance Under Equity Compensation Plans," in each case in our 2023 Proxy Statement and is incorporated herein by reference.

The information required by this item is incorporated herein by reference from sections entitled "Security Ownership of Certain Beneficial Owners and Management," and "Securities Authorized for Issuance Under Equity Compensation Plans" in our 2024 Proxy Statement.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item is included under the sections entitled "Certain Relationships and Related Party Transactions," and "Corporate Governance and Board Matters – Board of Directors – Director Independence," in each case in our 2023 Proxy Statement and is incorporated herein by reference.

The information required by this item is incorporated herein by reference from sections entitled "Certain Relationships and Related Party Transactions," and "Corporate Governance and Board Matters – Board of Directors – Director Independence" in our 2024 Proxy Statement.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item is included under the sections entitled "Corporate Governance and Board Matters – Board of Directors," and "Other Audit and Risk Committee Matters" in our 2023 Proxy Statement and is incorporated herein by reference.

The information required by this item is incorporated herein by reference from the section entitled "Other Audit and Risk Committee Matters" in our 2024 Proxy Statement.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

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Financial Statement Schedules

See Schedule I—Condensed Financial Information of Registrant (Parent Company Only) beginning on page 103 herein.

All other schedules have been omitted because they are either not required, not applicable, not present in amounts sufficient to require submission of the schedule, or the required information is included elsewhere in this Annual Report on Form 10-K.

All schedules have been omitted because they are either not required, not applicable, not present in amounts sufficient to require submission of the schedule, or the required information is included elsewhere in this Annual Report on Form 10-K.

Incorporated by Reference

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4.3 Description of Grocery Outlet Holding Corp.'s Securities

10.1 Incremental Agreement, dated as of January 24, 2020, among GOBP Holdings, Inc., Globe Intermediate Corp., certain subsidiaries of GOBP Holdings, Inc., the lenders party thereto, and Morgan Stanley Senior Funding, Inc., as Administrative Agent

10-K 001-38950 3/1/2023 4.3

10.2 Incremental Agreement, dated as of July 23, 2019, among GOBP Holdings, Inc., Globe Intermediate Corp., certain subsidiaries of GOBP Holdings, Inc., the lenders party thereto, and Morgan Stanley Senior Funding, Inc., as Administrative Agent

8-K 001-38950 7/25/2019 10.1

10.3 First Lien Credit Agreement, dated as of October 22, 2018, among Globe Intermediate Corp., GOBP Holdings, Inc., Morgan Stanley Senior Funding, Inc., as administrative agent and collateral agent, the lenders from time to time party thereto and the letter of credit issuers from time to time party thereto

S-1/A 333-231428 5/22/2019 10.1

10.4 First Lien Security Agreement, dated as of October 22, 2018, among Globe Intermediate Corp., GOBP Holdings, Inc., the subsidiaries of GOBP Holdings, Inc.

from time to time party thereto and Morgan Stanley Senior Funding, Inc., as collateral agent

S-1/A 333-231428 5/22/2019 10.2

10.5 First Lien Pledge Agreement, dated as of October 22, 2018, among Globe Intermediate Corp., GOBP Holdings, Inc., the subsidiaries of GOBP Holdings, Inc.

from time to time party thereto and Morgan Stanley Senior Funding, Inc., as collateral agent

S-1/A 333-231428 5/22/2019 10.3

10.6 First Lien Copyright Security Agreement, dated as of October 22, 2018, between Grocery Outlet Inc.

and Morgan Stanley Senior Funding, Inc., as collateral agent

S-1/A 333-231428 5/22/2019 10.4

10.7 First Lien Trademark Security Agreement, dated as of October 22, 2018, between Grocery Outlet Inc.

and Morgan Stanley Senior Funding, Inc., as collateral agent

S-1/A 333-231428 5/22/2019 10.5

10.8 First Lien Guarantee, dated as of October 22, 2018, among Globe Intermediate Corp., GOBP Holdings, Inc., the subsidiaries of GOBP Holdings, Inc.

from time to time party thereto and Morgan Stanley Senior Funding, Inc., as collateral agen t

S-1/A 333-231428 5/22/2019 10.6

10.9 Credit Agreement, dated as of February 21, 2023, by and among Grocery Outlet Holding Corp.

, the Lenders and Letter of Credit Issuers from time to time party thereto, and Bank of America, N.A., as the Administrative Agent, Collateral Agent and Swingline Lender.

8-K 001-38950 2/23/2023 10.1

10.1† Globe Holding Corp.

1 unchanged sentence

S-1/A 333-231428 5/22/2019 10.13

10.11† Amended and Restated Performance Vesting Stock Option Grant Notice and Agreement (Globe Holding Corp.

2014 Stock Incentive Plan) (Eric J.

Lindberg, Jr., S.

MacGregor Read, Jr.), dated October 21, 2014

S-1/A 333-231428 5/22/2019 10.14

10.2† Amended and Restated Time Vesting Stock Option Grant Notice and Agreement (Globe Holding Corp.

2014 Stock Incentive Plan) (Eric J.

Lindberg, Jr., S.

MacGregor Read, Jr.), dated October 21, 2014

Lindberg, Jr.), dated October 21, 2014

S-1/A 333-231428 5/22/2019 10.15

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2014 Stock Incentive Plan) (Charles C.

Bracher, Robert Joseph Sheedy, Jr., Steven K.

Bracher, Robert J.

Sheedy, Jr., Steven K.

S-1/A 333-231428 5/22/2019 10.16

1 unchanged sentence

2014 Stock Incentive Plan) (Charles C.

Bracher, Robert Joseph Sheedy, Jr., Steven K.

Bracher, Robert J.

Sheedy, Jr., Steven K.

S-1/A 333-231428 5/22/2019 10.17

5 unchanged sentences

S-1/A 333-231428 6/10/2019 10.19

10.17† 2020 Form of Restricted Stock Unit Grant and Award Agreement (Grocery Outlet Holding Corp.

2019 Incentive Plan)

S-1/A 333-231428 6/10/2019 10.20

10.18† Grocery Outlet Inc.

2019 Annual Incentive Plan

S-1/A 333-231428 6/10/2019 10.21

10.19† Amended and Restated Executive Employment Agreement by and between Eric J.

Lindberg, Jr., Grocery Outlet Inc.

and Globe Holding Corp., dated October 7, 2014

S-1/A 333-231428 5/22/2019 10.22

10.20† Form of Indemnification Agreement between Grocery Outlet Holding Corp.

and directors and executive officers of Grocery Outlet Holding Corp.

S-1/A 333-231428 6/10/2019 10.31

10.21† Grocery Outlet Holding Corp.

Directors Deferral Plan

10-Q 001-38950 11/10/2020 10.1

10.22† Grocery Outlet Holding Corp.

Executive Severance Plan

10-Q 001-38950 11/10/2020 10.2

10.23† 2020 Form of Performance Stock Unit Grant and Agreement (Grocery Outlet Holding Corp.

2019 Stock Incentive Plan)

10-Q 001-38950 5/12/2020 10.3

10.7† 2021 Form of Restricted Stock Unit Grant and Agreement (Grocery Outlet Holding Corp.

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10-K 001-38950 3/2/2021 10.33

10.26† Form of Restricted Stock Unit Grant and Agreement for Non-Employee Directors (Grocery Outlet Holding Corp.

2019 Stock Incentive Plan) (effective February 2021)

10-K 001-38950 3/2/2021 10.34

10.27† Transition, Separation Agreement, and General Release of all Claims, dated as of December 13, 2021, by and between Grocery Outlet Inc.

and Heather L.

8-K 001-38950 12/15/2021 10.1

10.9† Form of Performance Stock Unit Grant and Agreement (Grocery Outlet Holding Corp.

4 unchanged sentences

10-K 001-38950 3/2/2022 10.30

10.30† Non-Employee Director Compensation Policy (as amended November 6, 2020)

10.11† 2023 Form of Performance Stock Unit Grant and Agreement (Grocery Outlet Holding Corp.

2019 Stock Incentive Plan)

10-Q 001-38950 5/10/2023 10.8

10.12† Restricted Stock Unit Grant and Agreement (Grocery Outlet Holding Corp.

2019 Stock Incentive Plan) (CEO Form)

10-K 001-38950 3/1/2023 10.34

10.31† Non-Employee Director Compensation Policy (as amended April 27, 2022)

10.13† Form of Restricted Stock Unit Grant and Agreement for Non-Employee Directors (Grocery Outlet Holding Corp.

2019 Stock Incentive Plan) (effective June 2023)

10-Q 001-38950 8/9/2023 10.1

1 unchanged sentence

8-K 001-38950 11/8/2022 10.2

10.33† Employment Agreement, effective January 1, 2023, by and among Robert Joseph Sheedy, Jr., Grocery Outlet Inc.

10.15† Grocery Outlet Holding Corp.

Directors Deferral Plan

10-Q 001-38950 11/10/2020 10.1

10.16† Grocery Outlet Holding Corp.

Executive Severance Plan

10-Q 001-38950 11/10/2020 10.2

10.17† Grocery Outlet Inc.

2019 Annual Incentive Plan (Amended and Restated Effective August 24, 2023)

10-Q 001-38950 11/8/2023 10.1

10.18† Employment Agreement, effective January 1, 2023, by and among Robert J.

Sheedy, Jr., Grocery Outlet Inc.

and Grocery Outlet Holding Corp.

8-K 001-38950 11/8/2022 10.1

10.34†* Restricted Stock Unit Grant and Agreement (Grocery Outlet Holding Corp.

2019 Stock Incentive Plan) (CEO Form)

21.1* Subsidiaries of the Registrant

10.19† Form of Indemnification Agreement between Grocery Outlet Holding Corp.

and directors and executive officers of Grocery Outlet Holding Corp.

S-1/A 333-231428 6/10/2019 10.31

10.20 Credit Agreement, dated as of February 21, 2023, by and among Grocery Outlet Holding Corp., the Lenders and Letter of Credit Issuers from time to time party thereto, and Bank of America, N.A., as the Administrative Agent, Collateral Agent and Swingline Lender., the Lenders and Letter of Credit Issuers from time to time party thereto, and Bank of America, N.A., as the Administrative Agent, Collateral Agent and Swingline Lender.

8-K 001-38950 2/23/2023 10.1

10.21 Pledge and Security Agreement, dated as of February 21, 2023, among Grocery Outlet Holding Corp., the subsidiaries of Grocery Outlet Holding Corp.

from time to time party thereto and Bank of America, N.A., as Collateral Agent

10-Q 001-38950 5/10/2023 10.2

10.22 Copyright Security Agreement, dated as of February 21, 2023, among Grocery Outlet Inc.

and Bank of America, N.A., as Collateral Agent

10-Q 001-38950 5/10/2023 10.3

10.23 Trademark Security Agreement, dated as of February 21, 2023, among Grocery Outlet Inc.

and Bank of America, N.A., as Collateral Agent

10-Q 001-38950 5/10/2023 10.4

10.24 Guarantee, dated as of February 21, 2023, among Grocery Outlet Holding Corp., the subsidiaries of Grocery Outlet Holding Corp.

from time to time party thereto and Bank of America, N.A., as Administrative Agent and Collateral Agent

10-Q 001-38950 5/10/2023 10.5

21.1* Subsidiary of the Registrant

23.1* Consent of Deloitte and Touche LLP

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

97.1†* Grocery Outlet Holding Corp.

Incentive Compensation Clawback Policy

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

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under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing.

Schedule I—Condensed Financial Information of Registrant (Parent Company Only)

GROCERY OUTLET HOLDING CORP.

INDEX TO CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY ONLY)

Condensed Balance Sheets

Condensed Statements of Operations and Comprehensive Income

Condensed Statements of Cash Flows

Notes to Condensed Financial Statements

Schedule I—Condensed Financial Information of Registrant

GROCERY OUTLET HOLDING CORP.

CONDENSED BALANCE SHEETS

(PARENT COMPANY ONLY)

(in thousands, except share and per share amounts)

2022 January 1,

Investment in wholly owned subsidiary $ 1,112,226 $ 1,011,033

Total assets $ 1,112,226 $ 1,011,033

Liabilities and Stockholders' Equity

Intercompany payable $ 2,012 $ 1,761

Total liabilities 2,012 1,761

Stockholders' equity:

Capital stock:

Common stock, par value $ 0.001 per share, 500,000,000 shares authorized;

97,674,356 and 96,144,433 shares issued and outstanding, respectively

Series A Preferred stock, par value $ 0.001 per share, 50,000,000 shares authorized;

no shares issued and outstanding

Additional paid-in capital 847,589 811,701

Retained earnings 262,527 197,475

Total stockholders' equity 1,110,214 1,009,272

Total liabilities and stockholders' equity $ 1,112,226 $ 1,011,033

See Notes to Condensed Financial Statements (Parent Company Only)

Schedule I—Condensed Financial Information of Registrant

GROCERY OUTLET HOLDING CORP.

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(PARENT COMPANY ONLY)

(in thousands)

Fiscal Year Ended

2022 January 1,

2022 January 2,

Operating expenses $ 251 $ 251 $ 265

Operating loss ( 251 ) ( 251 ) ( 265 )

Loss before equity in net income of subsidiary ( 251 ) ( 251 ) ( 265 )

Equity in net income of subsidiary, net of tax 65,303 62,561 106,978

Net income and comprehensive income $ 65,052 $ 62,310 $ 106,713

See Notes to Condensed Financial Statements (Parent Company Only)

Schedule I—Condensed Financial Information of Registrant

GROCERY OUTLET HOLDING CORP.

CONDENSED STATEMENTS OF CASH FLOWS

(PARENT COMPANY ONLY)

(in thousands)

Fiscal Year Ended

2022 January 1,

2022 January 2,

Cash flows from operating activities:

Net income $ 65,052 $ 62,310 $ 106,713

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Equity in net income of subsidiary ( 65,303 ) ( 62,561 ) ( 106,978 )

Changes in operating assets and liabilities:

Net cash used in operating activities ( 251 ) ( 251 ) ( 265 )

Cash flows from investing activities:

Investment in subsidiary ( 3,439 ) ( 7,226 ) ( 32,121 )

Net cash used in investing activities ( 3,439 ) ( 7,226 ) ( 32,121 )

Cash flows from financing activities:

Intercompany payables 251 251 265

Proceeds from exercise of share-based compensation awards 6,890 7,226 32,604

Payments related to net settlement of share-based compensation awards — — ( 483 )

Repurchase of common stock ( 3,451 ) — —

Net cash provided by financing activities 3,690 7,477 32,386

Net increase (decrease) in cash and cash equivalents — — —

Cash and cash equivalents at beginning of period — — —

Cash and cash equivalents at end of period $ — $ — $ —

See Notes to Condensed Financial Statements (Parent Company Only)

Schedule I—Condensed Financial Information of Registrant

GROCERY OUTLET HOLDING CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS (PARENT COMPANY ONLY)

NOTE 1—Description of Grocery Outlet Holding Corp.

Grocery Outlet Holding Corp.

(the "Parent Company") owns 100 % of Globe Intermediate Corp.

("Intermediate"), which owns 100 % of GOBP Holdings, Inc.

("GOBP Holdings"), which owns 100 % of GOBP Midco, Inc.

("Midco"), which owns 100 % of Grocery Outlet Inc.

GOI is a high-growth, extreme value retailer of quality, name-brand consumables and fresh products sold through a network of independently operated stores.

The Parent Company was incorporated in Delaware on September 11, 2014 and became the ultimate parent of GOI on October 7, 2014.

The Parent Company has no operations or significant assets or liabilities other than its investment in Intermediate.

Accordingly, the Parent Company is dependent upon distributions from Intermediate to fund its limited, non-significant operating expenses.

As of December 31, 2022, GOBP Holdings' and GOI's ability to pay dividends or lend to Intermediate or the Parent Company were limited under the terms of various debt agreements.

Intermediate and GOBP Holdings were parties to credit facilities that contained covenants limiting the Parent Company's ability and the ability of its restricted subsidiaries to, among other things:

pay dividends or distributions, repurchase equity, prepay junior debt and make certain investments;

incur additional debt or issue certain disqualified stock and preferred stock;

incur liens on assets;

merge or consolidate with another company or sell all or substantially all assets;

enter into transactions with affiliates;

and enter into agreements that would restrict its subsidiaries to pay dividends or make other payments to the Parent Company.

Due to the aforementioned qualitative restrictions, substantially all of the assets of the Parent Company's subsidiaries were restricted.

These covenants were subject to important exceptions and qualifications as described in such credit facilities.

NOTE 2—Basis of Presentation

The accompanying condensed financial statements (parent company only) include the accounts of the Parent Company and its investment in Intermediate, accounted for in accordance with the equity method, and do not present the financial statements of the Parent Company and its subsidiary on a consolidated basis.

These parent company only financial statements should be read in conjunction with the Parent Company's consolidated financial statements and notes thereto, included elsewhere in this Annual Report on Form 10-K.

NOTE 3—Secondary Offerings

On February 3, 2020, certain selling stockholders completed a secondary public offering of shares of our common stock.

We did not receive any of the proceeds from the sale of these shares by the selling stockholders.

We incurred offering costs of $ 1.1 million, which were recognized in SG&A expenses during fiscal 2020.

We received $ 1.4 million in cash (excluding withholding taxes) in connection with the exercis e of 191,470 opti ons by certain stockholders participating in this secondary public offering.

On April 27, 2020, certain of our selling stockholders completed another secondary public offering of shares of our common stock.

We did not receive any of the proceeds from the sale of these shares by the selling stockholders.

We incurred related offering costs of $ 1.0 million which we recognized in SG&A expenses during fiscal 2020.

We received $ 1.6 million in cash (excluding withholding taxes) in connection with the exercise of 269,000 options by certain stockholders participating in this secondary public offering.

On May 28, 2020, the stockholder affiliated with our former private equity sponsor, Hellman and Friedman LLC, distributed the remainder of its holdings representing 9.6 million shares of our common stock to its equity holders.

We did not receive any proceeds or incur any material costs related to this distribution.

NOTE 4—Subsequent Event

On February 21, 2023, the Parent Company entered into a credit agreement with Bank of America, N.A., as administrative agent and collateral agent, and the other parties party thereto (the "Credit Agreement").

The Credit Agreement provides for senior secured credit facilities consisting of (i) a senior secured term loan facility (the "term loan facility") in an aggregate principal amount of $ 300.0 million and (ii) a senior secured revolving credit facility (the "revolving credit facility" and, together with the term loan facility, the "credit facilities") in an aggregate principal amount of $ 400.0 million.

The term loan facility was borrowed in full at closing, and $ 25.0 million of the revolving credit facility was borrowed at closing.

On February 21, 2023, Parent Company repaid all of the outstanding indebtedness under a first lien credit agreement, dated as of October 22, 2018, with GOBP Holdings as borrower (the "Prior First Lien Credit Agreement"), of $ 387.2 million as well as fees and expenses in connection therewith.

All obligations of the Parent Company’s subsidiaries under the Prior First Lien Credit Agreement were discharged as of such date.

The revolving credit facility includes borrowing capacity available for letters of credit and for borrowings on same-day notice, referred to as the swingline loans.

The credit facilities permit the Parent Company to add one or more incremental term loan facilities, increase any existing term loan facility, increase revolving commitments, and/or add incremental replacement revolving credit facility tranches.

The aggregate principal amount of such incremental facilities are limited to (a) an amount not in excess of the sum of the greater of $ 200.0 million and 100 % of Consolidated EBITDA (as defined in the Credit Agreement), subject to certain limitations, plus (b) voluntary prepayments of the term loan facility, voluntary permanent reductions of the commitments for the revolving credit facility and voluntary prepayments of indebtedness secured by liens on the collateral securing the credit facilities, subject to certain exceptions, plus (c) an amount such that (assuming that the full amount of any such incremental revolving increase and/or incremental replacement revolving credit facility was drawn, and after giving effect to any appropriate pro forma adjustment events) the Parent Company would be in compliance, on a pro forma basis (but excluding the cash proceeds of such incurrence), with a total net leverage ratio of 3.00 to 1.00.

The lenders under the credit facilities are not under any obligation to provide any such incremental commitments or loans under incremental facilities and any such incremental commitments or loans under incremental facilities are subject to certain customary conditions.

Borrowings under the Credit Agreement in dollars bear interest at a rate equal to, at our option, either (a) the base rate, which is defined as a fluctuating rate per annum equal to the greatest of (i) the federal funds rate then in effect, plus 0.50 %, (ii) the prime rate then in effect and (iii) a specified Term SOFR (as defined in the Credit Agreement) rate plus 1.00 %, subject to the interest rate floors set forth therein, plus an applicable margin ranging from 0.75 % to 1.75 % based on the Parent Company's total net leverage ratio;

and (b) an adjusted Term SOFR rate determined on the basis of a one, three or six month interest period, plus 0.10 %, subject to the interest rate floors set forth therein, plus an applicable margin ranging from 1.75 % to 2.75 % based on the Parent Company's total net leverage ratio.

As of the closing date, interest on the initial borrowings under the new credit facility were based on one-month Term SOFR with an applicable margin of 2.25 %.

The term credit facilities mature on February 21, 2028.

The Parent Company’s obligations under the Credit Agreement are unconditionally guaranteed by all of the Parent Company’s wholly owned restricted subsidiaries, subject to certain exceptions.

All obligations under the Credit Agreement, and the guarantees of such obligations, are secured, subject to permitted liens and other exceptions, by substantially all of the Parent Company’s assets and those of each subsidiary guarantor.

The Credit Agreement requires the Parent Company to make scheduled amortization payments of the outstanding term loans.

The Parent Company may voluntarily prepay the senior secured credit facilities, in whole or in part, at any time without premium or penalty, subject to reimbursement of the lenders’ breakage and redeployment costs in applicable cases.

The Credit Agreement contains certain customary representations and warranties, subject to limitations and exceptions, and affirmative and customary covenants.

The Credit Agreement contains certain covenants that, among other things, limit the Parent Company’s ability and the ability of the Parent Company’s restricted subsidiaries to:

pay dividends or distributions, repurchase equity, prepay junior debt and make certain investments;

incur additional debt or issue certain disqualified stock and preferred stock;

incur liens on assets;

merge or consolidate with another company or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets;

enter into transactions with affiliates;

and allow to exist certain restrictions on the ability of subsidiaries to pay dividends or make other payments to the Parent Company.

The Credit Agreement also contains financial performance covenants requiring the Parent Company to satisfy a maximum total net leverage ratio test and a minimum interest coverage ratio test as of the last day of each fiscal quarter ending on or after April 1, 2023, as specified therein.

FORM 10-K SUMMARY

2 unchanged sentences

Grocery Outlet Holding Corp.

March 1, 2023 By:

/s/ Robert Joseph Sheedy, Jr.

Robert Joseph Sheedy, Jr.

February 28, 2024 By:

/s/ Robert J.

President and Chief Executive Officer

1 unchanged sentence

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitute and appoint Robert Joseph Sheedy, Jr., Charles C.

Bracher and Luke D.

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitute and appoint Robert J.

Sheedy, Jr., Lindsay E.

Gray and Luke D.

Thompson, or any of them, his or her attorneys-in-fact, for such person in any and all capacities, to sign any amendments to this report and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that either of said attorneys-in-fact, or substitute or substitutes, may do or cause to be done by virtue hereof.

1 unchanged sentence

Signature Title Date

/s/ Robert Joseph Sheedy, Jr.

/s/ Robert J.

President and Chief Executive Officer;

(Principal Executive Officer) March 1, 2023

Robert Joseph Sheedy, Jr.

(Principal Executive Officer) February 28, 2024

/s/ Charles C.

Bracher Chief Financial Officer

(Principal Financial Officer) March 1, 2023

(Principal Financial Officer) February 28, 2024

/s/ Lindsay E.

Gray Senior Vice President, Accounting

(Principal Accounting Officer) March 1, 2023

(Principal Accounting Officer) February 28, 2024

Lindberg, Jr.

Director, Chairman of the Board March 1, 2023

Director, Chairman of the Board February 28, 2024

Lindberg, Jr.

Ragatz Lead Independent Director March 1, 2023

Ragatz Lead Independent Director February 28, 2024

/s/ Kenneth W.

Alterman Director March 1, 2023

Bachman Director March 1, 2023

/s/ Mary Kay Haben Director March 1, 2023

Alterman Director February 28, 2024

Bachman Director February 28, 2024

/s/ Mary Kay Haben Director February 28, 2024

Mary Kay Haben

/s/ Thomas F.

Herman Director March 1, 2023

Jaros Director March 1, 2023

/s/ Norman S.

Matthews Director March 1, 2023

/s/ Gail Moody-Byrd Director March 1, 2023

Herman Director February 28, 2024

Jaros Director February 28, 2024

/s/ Gail Moody-Byrd Director February 28, 2024

Gail Moody-Byrd

/s/ Jeffrey R.

York Director March 1, 2023

York Director February 28, 2024

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures