SCHEID VINEYARDS INC. 
By SALINAS, Calif., Oct. 29 /PRNewswire-FirstCall/ -- Scheid Vineyards Inc. (Pink Sheets: SVIN) announced today its financial results for the second quarter and six months ended August 31, 2009.
Financial Results
Mike Thomsen, Chief Financial Officer, reported, "Revenues for the six months ended August 31, 2009 increased to $5.6 million from $3.2 million for the same period in 2008, primarily due to increased sales of bulk wine. Revenues for 2009 were offset by cost of sales of $6.6 million; selling, general and administrative expenses of $3.6 million; and interest expense of $2.0 million. Revenues for the same period in 2008 were offset by cost of sales of $3.0 million; selling, general and administrative expenses of $3.8 million; and interest expense of $1.6 million."
Mr. Thomsen explained, "Although revenues have increased from last year's levels, margins are down in 2009 due to decreased demand for certain bulk wine varieties and a resulting decline in the sales price for those varieties. The Company wrote-down its remaining 2008 vintage bulk wine inventories by $2.3 million in the second quarter ended August 31, 2009 to more properly reflect their current market values."
"Losses from operations for the six months ended August 31, 2009 totaled $6.6 million ($7.28 per share), as compared to losses from operations of $5.2 million ($5.16 per share) for the same period in 2008. After adjustments for a benefit from income taxes ($2.8 million), and an increase in the market valuation of an interest rate swap ($0.1 million), the net loss for the six months ended August 31, 2009 was $3.9 million ($4.31 per share). After adjustments for a benefit from income taxes ($1.8 million), and a decrease in the market valuation of an interest rate swap ($0.8 million), the net loss for the six months ended August 31, 2008 was $2.6 million ($2.56 per share). Because of the timing of the Company's annual harvest, which typically begins in the first part of September each year, the Company recognizes the majority of its revenues in the third and fourth quarters of each fiscal year ending on February 28th."
Mr. Thomsen also stated that, "Due primarily to the net loss reported in fiscal 2009, which was the result of a major decrease in grape production in the Company's vineyards, and the losses for the first six months of fiscal 2010, the Company is currently in non-compliance of certain of its financial covenants under the terms of its bank loans. The Company is in the process of working with its bank to resolve this situation."
2009 Harvest
Mr. Scott Scheid, President and CEO, reported that the 2009 harvest will be complete by the end of this week. "Through this date we have harvested approximately 95% of our acreage, with average to above average yields in most of the varieties we have picked thus far."
Scheid Vineyards Inc. (www.scheidvineyards.com) operates approximately 5,300 acres of premium wine grape vineyards, primarily in Monterey County, California. The Company's state-of-the-art winery commenced operations in 2005 and has the capacity to process approximately 30,000 tons of grapes each harvest. The Company's primary business is producing wine grapes and converting them into high quality bulk wine for sale to other wineries. In addition, the Company produces ultra premium wine under the Scheid Vineyards label, which is sold through the Company's tasting rooms, wine club, and Monterey, California area retailers.
The Class A Common Stock of Scheid Vineyards is traded on the Pink Sheets Electric Quotation Service under the stock symbol SVIN. The "Pink Sheets" is a centralized quotation service that collects and publishes market maker quotes in real time, primarily through its website, www.pinksheets.com.
This release contains forward-looking statements as well as historical information. Statements of goals and strategies and words such as "plan", "believe", "anticipate", "expect", "objectives", "forecast", and "predict" and other similar words are intended to identify forward-looking statements. These forward looking statements are included in accordance with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, and involve risks, uncertainties and other factors that may cause the Company's actual results, performance, or financial condition to be materially different from any results, performance, or financial condition suggested by the statements in this release.
SCHEID VINEYARDS INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED AUGUST 31, 2009 AND 2008
(amounts in thousands, except per share data)
Three Months Ended Six Months Ended
August 31, August 31,
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2009 2008 2009 2008
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REVENUES:
Bulk wine sales $288 $718 $4,207 $1,257
Grape sales - 280 - 280
Winery processing and other
revenues 90 375 387 1,028
Vineyard management, services
and other fees 169 179 399 399
Direct sales revenues 342 130 611 262
--- --- --- ---
Total revenues 889 1,682 5,604 3,226
COST OF SALES 3,072 1,597 6,636 2,960
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GROSS PROFIT (LOSS) (2,183) 85 (1,032) 266
General and administrative
expenses 1,114 1,320 2,705 2,966
Selling expenses 453 494 922 806
Interest expense 1,018 770 1,951 1,648
Market adjustment for
interest rate swap (101) 173 137 (773)
Gain on sale of land and
equipment (3) - (5) -
--- --- --- ---
LOSS BEFORE BENEFIT FROM INCOME
TAXES (4,664) (2,672) (6,742) (4,381)
BENEFIT FROM INCOME TAXES 2,059 1,095 2,831 1,796
----- ----- ----- -----
NET LOSS $(2,605) $(1,577) $(3,911) $(2,585)
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NET LOSS PER SHARE:
BASIC $(2.95) $(1.57) $(4.31) $(2.56)
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DILUTED $(2.95) $(1.57) $(4.31) $(2.56)
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WEIGHTED AVERAGE SHARES
OUTSTANDING:
BASIC 883 1,002 907 1,007
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DILUTED 883 1,002 907 1,007
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SOURCE Scheid Vineyards Inc.
