GCFB Granite City Food and Brewery Ltd (CE)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

x       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 25, 2012

o          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 000-29643

GRANITE CITY FOOD & BREWERY LTD.

(Exact Name of Registrant as Specified in Its Charter)

701 Xenia Avenue South

Minneapolis, Minnesota 55416

(952) 215-0660

(Address of Principal Executive Offices and Issuer’s

Telephone Number, including Area Code)

Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x   No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  x   No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  o   No  x

As of November 6, 2012 the issuer had outstanding 8,051,712 shares of common stock.

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PART I       FINANCIAL INFORMATION

ITEM 1  Financial Statements

GRANITE CITY FOOD & BREWERY LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

See notes to condensed consolidated financial statements.

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GRANITE CITY FOOD & BREWERY LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

See notes to condensed consolidated financial statements.

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GRANITE CITY FOOD & BREWERY LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

See notes to condensed consolidated financial statements.

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GRANITE CITY FOOD & BREWERY LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Thirteen and Thirty-nine weeks ended September 25, 2012 and September 27, 2011

1.     Summary of significant accounting policies

Background

Granite City Food & Brewery Ltd. (the “Company”) develops and operates two casual dining concepts: Granite City Food & Brewery® and Cadillac Ranch All American Bar & Grill®.

Its original restaurant concept is a polished casual American restaurant known as Granite City Food & Brewery.   The Granite City restaurant theme is upscale casual dining with a wide variety of menu items that are prepared fresh daily, combined with freshly brewed hand-crafted beers finished on-site.  The Company opened its first Granite City restaurant in St. Cloud, Minnesota in July 1999 and has since expanded to other Midwest markets.  As of September 25, 2012, the Company operated 27 Granite City restaurants.  Additionally, the Company operates a centralized beer production facility which facilitates the initial stages of its brewing process.  The product produced at its beer production facility is then transported to the fermentation vessels at each of the Company’s Granite City restaurants where the brewing process is completed.  The Company believes that this brewing process improves the economics of microbrewing as it eliminates the initial stages of brewing and storage at multiple locations.  In 2007, the Company was granted a patent by the United States Patent Office for its brewing process and in June 2010, was granted an additional patent for an apparatus for distributed production of beer.

In the fourth quarter of fiscal year 2011, the Company purchased the assets of two Cadillac Ranch All American Bar & Grill restaurants, one at the Mall of America in Bloomington, Minnesota and one in Miami, Florida. Cadillac Ranch restaurants feature freshly prepared, authentic, All-American cuisine in a fun, dynamic environment.  Its patrons enjoy a warm, Rock N’ Roll inspired atmosphere, with plenty of room for friends, music and dancing.  The Cadillac Ranch menu is diverse with offerings ranging from homemade meatloaf to pasta dishes, all freshly prepared using quality ingredients.  During the first and second quarters of 2012, the Company purchased the assets of four additional Cadillac Ranch restaurants in Oxon Hill and Annapolis, Maryland, Indianapolis, Indiana and Pittsburgh, Pennsylvania, along with the intellectual property of Cadillac Ranch.

Principles of consolidation and basis of presentation

The Company’s condensed consolidated financial statements include the accounts and operations of the Company and its subsidiary corporation under which its four Kansas locations are operated.  By Kansas state law, 50% of the stock of the subsidiary corporation must be owned by a resident of Kansas.  Granite City Restaurant Operations, Inc., a wholly-owned subsidiary of the Company, owns the remaining 50% of the stock of the subsidiary corporation.  The resident-owner of the stock of that entity has entered into a buy-sell agreement with the subsidiary corporation providing, among other things, that transfer of the shares is restricted and that the shareholder must sell his shares to the subsidiary corporation upon certain events, or any event that disqualifies the resident-owner from owning the shares under applicable laws and regulations of the state.  The Company has entered into a master agreement with the subsidiary corporation that permits the operation of the restaurants and leases to the subsidiary corporation the Company’s property and facilities.  The subsidiary corporation pays all of its operating expenses and obligations, and the Company retains, as consideration for the operating arrangements and the lease of property and facilities, all the net profits, as defined, if any, from such operations.  The foregoing ownership structure was set up to comply with the licensing and ownership regulations related to microbreweries within the state of Kansas.  The Company has determined that such ownership structure will cause the subsidiary corporation to be treated as a variable interest entity in which the Company has a controlling financial interest for the purpose of Financial

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Accounting Standards Board’s (“FASB”) accounting guidance on accounting for variable interest entities.  As such, the subsidiary corporation is consolidated with the Company’s financial statements and the Company’s financial statements do not reflect a minority ownership in the subsidiary corporation.  Also included in the Company’s condensed consolidated financial statements are other wholly-owned subsidiaries.  All references to the Company in these notes to the condensed consolidated financial statements relate to the consolidated entity, and all intercompany balances have been eliminated.

In the opinion of management, all adjustments, consisting of normal recurring adjustments, which are necessary for a fair statement of the Company’s financial position as of September 25, 2012, and its results of operations for the interim periods ended September 25, 2012 and September 27, 2011, have been included.

The balance sheet at December 27, 2011 has been derived from the audited financial statements at that date, but does not include all of the information and notes required by generally accepted accounting principles for complete financial statements.  Certain information and note disclosures normally included in the Company’s annual financial statements have been condensed or omitted.  These condensed financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 27, 2011, filed with the SEC on March 23, 2012.

The results of operations for the thirteen and thirty-nine weeks ended September 25, 2012 are not necessarily indicative of the results to be expected for the entire year.

Related parties

In May 2011, Concept Development Partners LLC (“CDP”) became the Company’s controlling shareholder through its purchase of Series A Convertible Preferred Stock (“Series A Preferred”) and a related shareholder and voting agreement with DHW Leasing, L.L.C. (“DHW”).  As of September 25, 2012, CDP beneficially owned approximately 78.4% of the Company’s common stock, representing 6,000,000 shares issuable upon conversion of 3,000,000 shares of Series A Preferred owned by CDP, 1,666,666 shares over which CDP has voting power pursuant to a shareholder and voting agreement and irrevocable proxy between CDP and DHW, 3,125,000 shares of common stock purchased June 26, 2012 (Note 3), and 231,683 shares of common stock issued to CDP as dividends.

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America and regulations of the SEC requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period.  Significant estimates include estimates related to asset lives and gift card liability.  Actual results could differ from these estimates.

Cash and cash equivalents

The Company considers all highly liquid instruments with original maturities of three months or less to be cash equivalents.  Amounts receivable from credit card processors are considered cash equivalents because they are both short-term and highly liquid in nature and are typically converted to cash within three days of the sales transaction.

Inventory

Inventory, consisting of food, beverages, retail items and beer production supplies, is stated at the lower of cost or market and determined using the first-in, first-out (FIFO) method.

Prepaid expenses and other current assets

The Company has cash outlays in advance of expense recognition for items such as rent, insurance, fees and service contracts.  All amounts identified as prepaid expenses and other current assets are expected to be utilized during the twelve-month period after the balance sheet dates presented.  Other current assets consist

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primarily of receivables of amounts due from third-party gift card sales, third-party delivery services and rebate amounts due from certain vendors.

Revenue recognition

Revenue is derived from the sale of prepared food and beverage and select retail items.  Revenue is recognized at the time of sale and is reported on the Company’s condensed consolidated statements of operations net of sales taxes collected.  The amount of sales tax collected is included in other accrued expenses until the taxes are remitted to the appropriate taxing authorities.  Revenue derived from gift card sales is recognized at the time the gift card is redeemed.  Until the redemption of gift cards occurs, the outstanding balances on such cards are included in accrued expenses in the accompanying condensed consolidated balance sheets.  When the Company determines there is no legal obligation to remit the value of unredeemed gift cards to the relevant jurisdictions, the Company periodically recognizes gift card breakage which represents the portion of its gift card obligation for which management believes the likelihood of redemption by the customer is remote, based upon historical redemption patterns.  Such amounts are included as a reduction to general and administrative expense.

Pre-opening costs

Pre-opening costs are expensed as incurred and include direct and incremental costs incurred in connection with the opening of each restaurant’s operations.  Pre-opening costs consist primarily of travel, food and beverage, employee payroll and related training costs.  Pre-opening costs also include non-cash rental costs under operating leases incurred during a construction period pursuant to the FASB guidance on accounting for rental costs incurred during a construction period.

Stock-based compensation

The Company measures and recognizes all stock-based compensation under the fair value method using the Black-Scholes option-pricing model.  Share-based compensation expense recognized is based on awards ultimately expected to vest, and as such, it is reduced for estimated or actual forfeitures.  Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.  The Company used the following assumptions within the Black-Scholes option-pricing model for the thirty-nine weeks ended September 25, 2012 and September 27, 2011:

Income tax

For income tax return purposes, the Company has federal net operating loss carryforwards and federal general business credit carryforwards.  These carryforwards are limited due to changes in control of the Company during 2009 and 2011 and, if not used, portions of these carryforwards will begin to expire in 2020.  The Company has determined, based upon its history, that it is probable that future taxable income may be insufficient to fully realize the benefits of the net operating loss carryforwards and other deferred tax assets. As such, the Company has determined that a full valuation allowance is needed at this time.

Net loss per share

Basic net loss per share is calculated by dividing net loss less the sum of preferred stock dividends declared by the weighted average number of common shares outstanding during the period.  Diluted net loss per share is not presented since the effect would be anti-dilutive due to the losses in the respective reporting periods.  Calculations of the Company’s net loss per common share for the thirteen and thirty-nine weeks ended September 25, 2012 and September 27, 2011 are set forth in the following table:

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Of the net loss per common share, $(0.03) and $(0.10) was attributable to dividends declared for the third quarter and first three quarters of fiscal year 2012, respectively, while $(0.04) and $(0.05) was attributable to dividends declared in the third quarter and first three quarters of fiscal year 2011.  Of the net loss per common share, $(1.08) was attributable to the beneficial conversion feature in the first three quarters of 2011.

2.     Fair value of financial instruments

At September 25, 2012 and December 27, 2011, the fair value of cash and cash equivalents, receivables, accounts payable and accrued expenses approximates their carrying value due to the short-term nature of these financial instruments. The fair value of the capital lease obligations and long-term debt is estimated at its carrying value based upon current rates available to the Company.

3.               Significant transactions

Cadillac Ranch asset acquisition

In November 2011, the Company entered into a master asset purchase agreement with CR Minneapolis, LLC, Pittsburgh CR, LLC, Indy CR, LLC, Kendall CR LLC, 3720 Indy, LLC, CR NH, LLC, Parole CR, LLC, CR Florida, LLC, Restaurant Entertainment Group, LLC, Clint R. Field and Eric Schilder, relating to the purchase of the assets of up to eight restaurants operated by the selling parties under the name “Cadillac Ranch All American Bar & Grill.” Pursuant to the master asset purchase agreement, as amended, the Company acquired the following Cadillac Ranch restaurant assets in November and December 2011:

The acquisition of the Cadillac Ranch assets was accounted for as a business combination under ASC 805, Business Combinations.  The purchase price was allocated to equipment, leasehold improvements and intangible assets comprised of, in part, licenses, trade names, trademarks, trade secrets and proprietary information.  The Company assessed the fair value of the assets acquired under the assumption that a typical

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Cadillac Ranch restaurant would be reasonably similar to a Granite City build-out, including kitchen equipment.  Based on the costs of assets of its Granite City restaurants, management estimated depreciation from the time the assets were placed in service until the assets were purchased by the Company.  Management believes that in the early years, the net book value of the assets at its restaurants approximates fair value.  As the assets acquired were less than three years old, management valued the assets based on estimated cost less related depreciation.  The fair values for acquired intangible assets were determined by management, in part, based on valuation discussions with an independent valuation specialist.  The Company is amortizing the intellectual property over 20 years.

In conjunction with acquiring these assets, the Company assumed the leases for the property at the five Cadillac Ranch restaurant locations.  The terms range from two to twelve years, each with options for additional terms, and the leases have been classified as operating leases.

In January 2012, the Company and the sellers of the Cadillac Ranch restaurant assets agreed that the Company would purchase the Cadillac Ranch restaurant operated by Pittsburgh CR, LLC in Pittsburgh, Pennsylvania for $900,000.  The asset purchase closed in May 2012 following issuance of the related liquor license by the Pennsylvania Liquor Control Board.

While the assets of two Cadillac Ranch restaurant locations were acquired prior to the beginning of fiscal year 2012 and the assets of four Cadillac Ranch restaurant locations were acquired after the start of fiscal 2012, these acquisitions were all made pursuant to one master asset purchase agreement.  In order to best evaluate the nature and financial effect of this transaction, the Company’s management believes a pro forma presentation of the combined acquisitions is necessary.  As such, the presentation below reflects the amounts of revenue and earnings of these six Cadillac Ranch restaurant locations included in the Company’s condensed consolidated income statement for the third quarter and first three quarters of fiscal year 2012, and the revenue and earnings of the combined entity had the acquisition date of all assets referenced above been December 29, 2010 (the first day of the Company’s fiscal year 2011).  The following unaudited pro forma disclosure does not purport to report current or future operations.

The 2012 supplemental pro forma earnings were adjusted to exclude $199,560 and $684,745 of acquisition-related costs incurred in the third quarter and first three quarters of fiscal year 2012, respectively.

Sale of common stock

In June 2012, the Company entered into a stock purchase agreement with CDP, its majority shareholder.  Pursuant to such agreement, the Company issued 3,125,000 shares of its common stock to CDP at a price of $2.08 per share, resulting in gross proceeds to the Company of $6.5 million.  The Company used $5.0 million of the net proceeds to pay down its credit facility with Fifth Third Bank (the “Bank”), $1.0 million of which was a required pay-down (Note 7) and the other $4.0 million was paid on the line of credit to reduce the Company’s interest expense.  The Company plans to use the remaining net proceeds for general corporate purposes, including working capital and new restaurant construction.  The Company will borrow from its line of credit as needed.

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4.               Non-current assets

Property and equipment

Property and equipment is recorded at cost and depreciated over the estimated useful lives of the assets.  Leasehold improvements are depreciated over the term of the related lease or the estimated useful life, whichever is shorter.  Depreciation and amortization of assets held under capital leases and leasehold improvements are computed on the straight-line method for financial reporting purposes.  The following is a summary of the Company’s property and equipment at September 25, 2012 and December 27, 2011:

*Construction in progress includes the following approximate amounts for items yet to be placed in service:

Interest is capitalized during the period of development based upon applying the Company’s borrowing rate to the actual development costs incurred.  Capitalized interest costs were $21,316 in the third quarter of 2012 and $98,500 in the first three quarters of 2012.  No such costs were capitalized in the first three quarters of 2011.

Intangible and other assets

Intangible and other assets consisted of the following:

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5.     Accrued expenses

Accrued expenses consisted of the following:

6.     Deferred rent

Under the terms of the lease agreement the Company entered into regarding its Lincoln, Nebraska property, the Company received a lease incentive of $450,000, net.  This lease incentive was recorded as deferred rent and is being amortized to reduce rent expense over the initial term of the lease using the straight-line method.

Also included in deferred rent is the difference between minimum rent payments and straight-line rent over the initial lease term including the “build out” or “rent-holiday” period.  Deferred rent also includes amounts certain of the Company’s landlords agreed to defer for specified periods of time.  The deferrals are offset in part by the fair value of the warrants issued to certain landlords in consideration of rent reductions.  Contingent rent expense, which is based on a percentage of revenue, is also recorded to the extent it exceeds minimum base rent per the lease agreement.  As of September 25, 2012 and December 27, 2011, deferred rent payable consisted of the following:

7.     Long-term debt and line of credit

In August 2008, the Company issued a promissory note to an Indiana general partnership in the amount of $250,000.  The note was issued to obtain the liquor license for the Company’s restaurant located in South Bend, Indiana.

In the first quarter of fiscal year 2011, the Company entered into lease termination agreements regarding the restaurant in Rogers, Arkansas at which it ceased operations in August 2008.  Pursuant to these lease termination agreements, the Company issued a $400,000 promissory note to the mall owner and a $1.0 million promissory note to the developer, Dunham Capital Management, L.L.C. (“DCM”).

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In March 2011, the Company entered into a $1.3 million loan agreement with First Midwest Bank (“FMB”), an independent financial institution in Sioux Falls, South Dakota, for the purchase of the buildings and all related improvements associated with its Indianapolis and South Bend, Indiana restaurants.

In May 2011, the Company entered into a $10.0 million credit agreement with the Bank, collateralized by liens on the Company’s subsidiaries, personal property, fixtures and real estate owned or to be acquired.  The credit agreement, as amended through the first quarter of 2012, provided for a term loan in the amount of $5.0 million which was advanced on May 10, 2011, a term loan in the amount of $5.0 million which was advanced on December 30, 2011, and a line of credit in the amount of $10.0 million.

On June 26, 2012, the Company entered into a sixth amendment to its credit agreement with the Bank.  Pursuant to the sixth amendment, the line of credit was increased by $2.0 million to $12.0 million and the date on which the line of credit will convert to a term loan was extended one year to December 31, 2013.  Prior to the sixth amendment, the credit agreement would have required the Company to pay down one of its term loans by 25% of the net proceeds received from the issuance of common stock to CDP in June 2012 (Note 3).  Under the sixth amendment, the required term loan repayment was decreased to $1.0 million.  Such payment was made on June 28, 2012.  As a result of the sixth amendment, the total credit facility increased to $21.0 million.  In July 2012, the Company paid down $4.0 million on the line of credit to lower its interest expense.  In November, the Company took an advance of $1.0 million on the line of credit to fund construction of its Franklin, Tennessee restaurant.  As of November 6, 2012, the Company had $7.0 million outstanding on the line of credit.

As of September 25, 2012 and December 27, 2011, the balances, interest rates and maturity dates of the Company’s long-term debt were as follows:

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As of September 25, 2012, future maturities of long-term debt, exclusive of interest, were as follows:

8.     Capital leases

As of September 25, 2012, the Company operated 23 restaurants under capital lease agreements, of which one expires in 2020, one in 2022, three in 2023, two in 2024, five in 2026, four in 2027 and seven in 2030, all with renewable options for additional periods.  Under certain of the leases, the Company may be required to pay additional contingent rent based upon restaurant sales.  At the inception and the amendment date of each of these leases, the Company evaluated the fair value of the land and building separately pursuant to the FASB guidance on accounting for leases.  The land portion of these leases is classified as an operating lease while the building portion of these leases is classified as a capital lease because its present value was greater than 90% of the estimated fair value at the beginning or amendment date of the lease and/or the lease term represents 75% or more of the expected life of the property.

In October 2011, the Company entered into a purchase and sale agreement with Store Capital Acquisitions, LLC (“Store Capital”) regarding the Granite City restaurant in Troy, Michigan.  In May 2012, pursuant to the agreement, as amended, Store Capital purchased the property and improvements for $4.0 million.  Upon the closing of the sale, the Company entered into an agreement with Store Capital whereby the Company is leasing the restaurant from Store Capital for an initial term of 15 years at an annual rental rate of $370,000.  Such agreement includes options for additional terms and provisions for rental adjustments.  The Company invested approximately $5.0 million in this site and subsequently sold it for $4.0 million, resulting in a loss of approximately $1.0 million.  Management evaluated the fair value of the property and determined it to be equal to book value, and therefore recorded such loss as a deferred loss which will be amortized over the life of the lease, pursuant to the sales leaseback guidance in ASC 840 Leases.

The Company also has a land and building lease agreement for its beer production facility.  This ten-year lease allows the Company to purchase the facility at any time for $1.00 plus the unamortized construction costs.  Because the construction costs will be fully amortized through payment of rent during the base term, if the option is exercised at or after the end of the initial ten-year period, the option price will be $1.00.  As such, the lease, including land, is classified as a capital lease.

Included in property and equipment as of September 25, 2012 and December 27, 2011 are the following assets held under capital leases:

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Minimum future lease payments under all capital leases are as follows:

The foregoing table does not include leases entered into subsequent to September 25, 2012.  Amortization expense related to the assets held under capital leases is included with depreciation expense on the Company’s statements of operations.

9.         Commitments and contingencies

Leases

In February 2012, the Company entered into a 15-year lease agreement for a site in Franklin, Tennessee where it plans to construct a Granite City restaurant.  The lease, which may be extended at the Company’s option for up to two additional five-year periods, calls for annual base rent starting at $158,000.  The Company anticipates opening this restaurant in the first quarter of 2013.

In June 2012, the Company entered into a 10-year lease agreement for a site in Indianapolis, Indiana where it plans to construct a Granite City restaurant.  The lease, which may be extended at the Company’s option for up to two additional five-year periods, calls for annual base rent starting at $210,000.  The Company anticipates opening this restaurant in the third quarter of 2013.  Under the terms of the lease, the Company may be required to pay additional contingent rent based upon restaurant sales.

In October 2012, the Company entered into a 10-year lease agreement for a site in Lyndhurst, Ohio where it plans to construct a Granite City restaurant.  The lease, which may be extended at the Company’s option for up to two additional five-year periods, calls for annual base rent starting at $456,850.  The Company anticipates opening this restaurant in the summer of 2013.  Under the terms of the lease, the Company may be required to pay additional contingent rent based upon restaurant sales.

Litigation

From time to time, lawsuits are threatened or filed against the Company in the ordinary course of business.  Such lawsuits typically involve claims from customers, former or current employees, and others related to

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issues common to the restaurant industry.  A number of such claims may exist at any given time.  Although there can be no assurance as to the ultimate disposition of these matters, it is management’s opinion, based upon the information available as of November 6, 2012, that the expected outcome of these matters, individually or in the aggregate, will not have a material adverse effect on the results of operation, liquidity or financial condition of the Company.

Employment agreements

The Company has employment agreements with its chief executive officer, chief concept officer, president and chief financial officer.  The agreements provide for an annual base salary, incentive compensation as determined by the Company’s compensation committee, and participation in the Company’s other employee benefit plans.  The agreements entitle the executives to receive severance benefits under certain conditions including a change of control of the Company.  Each executive has also agreed to certain nondisclosure, non-competition, non-recruitment and/or non-interference provisions during the term of his employment and for a certain period thereafter.  Each agreement either automatically extends, or may be extended, for additional one-year terms upon the mutual agreement of the Company and the executive.

Purchase commitments

The Company has entered into contracts through 2016 with certain suppliers of raw materials (primarily hops) for minimum purchases both in terms of quantity and in pricing.   As of September 25, 2012, the Company’s future obligations under such contracts aggregated approximately $0.8 million.

10.      Stock option plans

In August 2002, the Company adopted the 2002 Equity Incentive Plan, now known as the Amended and Restated Equity Incentive Plan.  As of September 25, 2012, there were options outstanding under the plan for the purchase of 999,019 shares.  Although vesting schedules vary, option grants under this plan generally vest over a three or four-year period and options are exercisable for no more than ten years from the date of grant.  The Amended and Restated Equity Incentive Plan expired in February 2012.

In October 2011, the Company’s shareholders approved its Long-Term Incentive Plan.  The plan provides for flexible, broad-based incentive compensation in the form of stock-based awards of options, stock appreciation rights, warrants, restricted stock awards and restricted stock units, stock bonuses, cash bonuses, performance awards, dividend equivalents, and other equity-based awards.  The issuance of up to 400,000 shares of common stock is authorized under the plan.  All stock options issued under the plan must have an exercise price equal to or greater than the fair market value of the Company’s common stock on the date of grant.  As of September 25, 2012, options for the purchase of 74,650 shares were issued and outstanding under the plan and options for the purchase of 325,350 shares remained available for issuance.

A summary of the status of the Company’s stock options as of September 25, 2012 is presented below: