For Further Information:

 

Scheid Vineyards Inc. 

305 Hilltown Road

Salinas, CA 93908

(831) 455-9990

www.scheidvineyards.com

 

CONTACT:    Scott Scheid, President and Chief Executive Officer

Mike Thomsen, Chief Financial Officer

 

 

For Immediate Release:

August 8, 2006

 

 

SCHEID VINEYARDS INC. REPORTS SECOND QUARTER RESULTS AND

ANNOUNCES STOCK REPURCHASE PROGRAM

 

President Comments on Upcoming Harvest

 

SALINAS, CA - August 8, 2006 - Scheid Vineyards Inc. announced today its financial results for the second quarter ended June 30, 2006.

 

Financial Results

 

            Revenues for the second quarter of 2006 totaled $1.5 million, compared to $0.8 million for the second quarter of 2005.  This increase was attributable to increased sales of bulk wine, and revenues generated by the Company’s new winery, which began operations in September of 2005.  The net loss for the three months ended June 30, 2006 was $1.4 million ($1.37 per share), compared to a net loss of $301,000 ($0.29 per share) in 2005. 

 

            Revenues for the six months ended June 30, 2006 totaled $8.5 million, compared to $1.8 million for the same period of 2005.   This increase was driven primarily by sales of bulk wine.  The net loss for the six months ended June 30, 2006 was $932,000 ($0.91 per share), compared to a net loss of $944,000 ($0.92 per share) in 2005. 

 

            Commenting on the results, Mr. Mike Thomsen, Chief Financial Officer of Scheid Vineyards, said, “The timing of revenues in our business fluctuates from quarter-to-quarter and is difficult to predict, therefore, results from the first half of the year are not indicative of what should be expected for the full calendar year.  The annual grape harvest occurs in September and October and revenues derived from grape sales, as well as crush fees from winery operations, are recognized at that time.”

 

Mr. Thomsen continued, “For the first six months of 2006, sales of bulk wine totaled $7.4 million, as compared to $1.3 million for the 2005 period.  This increase was due primarily to the increase in the amount of bulk wine that was sold by the Company after the 2005 grape harvest.  In addition, the Company’s winery generated approximately $0.5 million in storage and processing revenues during the first six months of 2006.  Primarily as the result of the increase in bulk wine sales, gross profit increased to $3.2 million for the first six months of 2006, compared to $0.6 million in 2005.  The gross profit margin on revenues increased to 38% for the first six months of 2006, compared to 34% in 2005, primarily as a result of the revenues produced by the Company’s winery. 

 

The increase in gross profit for the first six months of 2006 was offset by a $0.7 million increase in legal, accounting, and administrative expenses, primarily from fees related to the Company’s reverse stock split in May 2006, and the additional overhead necessary to operate the Company’s new winery.  In addition, interest expense increased to $1.2 million during the first six months of 2006, as compared to $0.4 million in 2005, due to increased borrowings to fund the construction of the Company’s winery.  It should be noted that the profit results for the 2005 period reflect a gain of $0.9 million from the sale of vineyard land and certain equipment.  There were no similar sales in the first half of 2006.” 

 

2006 Harvest Update

 

            Commenting on the outlook for the upcoming 2006 harvest, Mr. Scott Scheid, President and Chief Executive Officer, stated, “The 2006 growing season has been characterized by a very wet spring followed by a warm early summer.  In late July, all of California experienced a prolonged and record-breaking heat wave.  This heat wave does not appear to have had a significant adverse affect on the crop, although it is not possible to predict actual crop size and future weather conditions or other factors may affect the ultimate size of the crop.  At this time, however, management anticipates that yields from the Company’s vineyards in 2006 will be at average levels for most varieties.  The grape harvest usually begins in early September in the Company’s southernmost vineyards, and it is expected that the harvest will be in full swing in late September.  This timing is normal for wine grape vineyards in the Central Coast.” 

           

Stock Repurchase Program

 

Scheid also announced today that its Board of Directors has approved a stock repurchase program in which the Company may use up to $1 million in open market transactions to purchase outstanding shares of its Class A Common Stock at such times, and in such amounts or blocks, as management deems appropriate.

 

About Scheid Vineyards Inc.

 

Scheid Vineyards Inc. (www.scheidvineyards.com) is an independent producer of premium wine grapes and bulk wine.  The Company operates approximately 5,700 acres of vineyards, primarily in Monterey County, California. The Company sells most of its grape production under short and long-term grape and bulk wine contracts to wineries producing high quality table wine.  The Company also operates a winery with an approximately 13,000 ton processing capability in which the Company produces bulk wine, as well as a small amount of ultra premium wine under its own label.  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.

 

Forward Looking Statements

 

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

                                         CONSOLIDATED BALANCE SHEETS

                                       (Amounts in thousands, except share data)

                                                                (Unaudited)

 

 

June 30,
2006

 

December 31,
2005

 

ASSETS

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

Cash and cash equivalents

 

$

200

 

$

1,197

 

Accounts receivable

 

1,005

 

10,273

 

Inventories

 

10,654

 

6,992

 

Supplies, prepaid expenses and other current assets

 

1,118

 

949

 

Deferred income taxes

 

250

 

—

 

Total current assets

 

13,227

 

19,411

 

PROPERTY, PLANT AND EQUIPMENT, net

 

72,267

 

69,964

 
OTHER ASSETS, net

 

548

 

550

 

 

 

$

86,042

 

$

89,925

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

1,583

 

$

2,956

 

Deferred revenues

 

—

 

233

 

Income taxes payable

 

—

 

1,612

 

Deferred income taxes

 

—

 

398

 

Total current liabilities

 

1,583

 

5,199

 

LONG-TERM DEBT, net of current portion

 

36,429

 

35,804

 

DEFERRED INCOME TAXES

 

6,905

 

6,905

 

Total liabilities

 

44,917

 

47,908

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

Preferred stock, $.001 par value; 2,000,000 shares authorized; no shares issued and outstanding

 

—

 

—

 

Common stock,

 

 

 

 

 

Class A, $.001 par value; 4,000,000 shares authorized;
 805,117,and 409,250 shares outstanding at

     June 30, 2006 and December 31, 2005, 

     respectively

 

 

 

 

 

Class B, $.001 par value; 2,000,000 shares authorized;
  219,443 and 612,443 and shares issued and 

     outstanding at June 30, 2006 and December 31, 

     2005, respectively

 

1

 

1

 

Additional paid-in capital

 

21,973

 

21,898

 

Retained earnings

 

26,736

 

27,668

 

Less: treasury stock; 309,829 and 308,829 Class A shares at cost at June 30, 2006 and December 31, 2005, respectively

 

(7,585

) 

(7,550

)

Total stockholders’ equity

 

41,125

 

42,017

 

 

 

$

86,042

 

$

89,925

 

 

 

 

 

SCHEID VINEYARDS INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended 

June 30,

 

Six Months Ended 

June 30,

 

 

 

2006

 

2005

 

2006

 

2005

 

REVENUES:

 

 

 

 

 

 

 

 

 

Bulk wine sales

 

$

906

 

$

444

 

$

7,391

 

$

1,255

 

Winery processing and other revenues

 

206

 

—

 

460

 

—

 

Vineyard management, services and other fees

 

241

 

218

 

409

 

391

 

Tasting room revenues

 

109

 

95

 

214

 

171

 

Total revenues

 

1,462

 

757

 

8,474

 

1,817

 

COST OF SALES

 

1,418

 

466

 

5,256

 

1,197

 

GROSS PROFIT

 

44

 

291

 

3,218

 

620

 

General and administrative expenses

 

1,615

 

1,220

 

3,176

 

2,518

 

Selling expenses

 

181

 

138

 

311

 

244

 

Write-down of vineyard improvements

 

—

 

—

 

120

 

—

 

Interest expense

 

624

 

247

 

1,203

 

394

 

Investment and interest (income) loss

 

(2

)

—

 

(5

)

(31

)

   Gain on sales of land and equipment

 

(7

)

(813

)

(7

)

(931

)

LOSS BEFORE INCOME TAX BENEFIT

 

(2,367

)

(501

)

(1,580

)

(1,574

)

INCOME TAX BENEFIT

 

970

 

200

 

648

 

630

 

NET LOSS

 

$

(1,397

)

$

(301

)

$

(932

)

$

(944

)

 

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED NET LOSS PER SHARE

 

$

(1.37

)

$

(0.29

)

$

(0.91

)

$

(0.92

)

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

1,022

 

1,021

 

1,023

 

1,021

 

        

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

#####