For Further Information:
Scheid Vineyards Inc.
(Nasdaq: SVIN)
305 Hilltown Road
Salinas, CA 93908
(831) 455-9990
Contact: Scott D. Scheid,
President and Chief Executive Officer
Mike Thomsen,
Chief Financial Officer
For Immediate Release:
February 26, 2004
SCHEID VINEYARDS INC.
REPORTS YEAR END RESULTS
COMMENTS ON EXPECTED PRICES FOR 2004
Salinas, CA - February 26,
2004 - Scheid Vineyards Inc. (Nasdaq:
SVIN) announced today its financial results for the year ended December 31,
2003.
Company revenues increased 9% to $26.4 million in 2003
from $24.3 million in 2002. Net income
for 2003 was $3.0 million, as compared to $2.5 million in 2002. Earnings per share was $0.56 and $0.45 in
2003 and 2002, respectively. The
weighted average shares outstanding were 5.5 million for each period. The results include write downs of vineyard
improvements in the amount of $1.3 million in 2003 and $1.0 million in 2002.
Scott D. Scheid, President and Chief Executive Officer,
said, “For the year 2003, we harvested approximately 20,700 tons of wine
grapes, an 18% increase from the 2002 harvest of 17,550 tons. This increase was primarily due to a 19%
increase in average yield per acre from 2002 to 2003, as recently planted acres
continue to mature. The increase in
yields was partially offset by a decrease in prices in 2003 which were, on
average, approximately 8% less than in 2002 due to a continuing oversupply of
certain grape varieties on the open market.
Bulk wine sales increased to $1.3 million in 2003 from $0.7 million in
2002.”
Mr.
Scheid continued, “The write down of vineyard improvements relates to the
pull-out of approximately 260 acres of
under performing vines after the 2003 harvest.
Similarly, there were 150 acres pulled out in 2002.”
The Company also commented on the recently released
Preliminary Grape Crush Report which covers the 2003 harvest. The California Department of Food and
Agriculture published the Preliminary Grape Crush Report on February 10, 2004
and the Final Grape Crush Report is scheduled to be published on March 10,
2004. This report is published annually
and shows prices paid during the previous year’s harvest for grapes purchased
for wine, concentrate, juice, vinegar and beverage brandy by California
processors. Prices for approximately
45% of the Company’s current wine grape production are determined by pricing
formulas utilizing the Final Grape Crush Report.
Heidi M. Scheid, Senior Vice President, stated, “The
contract prices we will receive for the 2004 harvest that are derived from the
Crush Report continue to decline, as they have for the past three years. Chardonnay and Merlot show the greatest
change, with anticipated decreases in the average price per ton of approximately
10% to 11%. Compared to prices on the
spot market, however, the prices for grapes under contract are relatively
strong.” Ms. Scheid continued, “The
market is currently in an oversupply situation for some grape varieties,
Cabernet Sauvignon in particular, and we anticipate that the prices we may
receive for grapes which are currently not contracted, representing about 40%
of anticipated production, should be significantly less than the prices we will
receive for contracted grapes.”
Although historically there have not been significant
differences in the pricing data reported in the Preliminary and the Final Grape
Crush Reports, it is possible that there may be some adjustments to the
Company’s expected 2004 grape prices when the Final Report is published on
March 10.
Ms. Scheid also stated, “In December 2003, the Company’s
largest customer delivered a notice to the Company terminating grape purchase
contracts covering approximately 1,400 acres, or 38% of the Company’s producing
acreage, such termination to become effective after the harvest of 2006. This same customer had previously delivered
a notice to the Company terminating a contract covering an additional 570
acres, or 15% of the Company’s producing acreage. This contract terminated after the 2003 harvest. The Company is actively marketing its
uncontracted grape production.”
Scheid Vineyards Inc. ( is a leading independent producer of premium
wine grapes and operates approximately 5,600 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 wines, and the
Company also produces a small amount of ultra premium wine under its own label.
Note: This press release
contains forward-looking statements concerning pricing expectations for the
2004 harvest. These forward-looking
statements can generally be identified as such because the context of the statement
will include such words as “believes”, “anticipates”, “expects”, “should be”, or
words of similar import. Similarly,
statements that describe the Company’s future operating performance, financial
results, plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject
to certain factors, risks and uncertainties which could cause actual results to
differ materially from those currently anticipated. Such factors, risks and uncertainties include, but are not
limited to, (i) success in planting, cultivating and harvesting of existing and
new vineyards, including the effects of weather conditions, (ii) the potential
effect on the Company’s vineyards of certain diseases, insects and pests,
including the glassy-winged sharpshooter, (iii) effects of variances in grape
yields and prices from harvest to harvest due to agricultural, market and other
factors and relatively fixed farming costs, (iv) success in, and the timing of,
future acquisitions, if any, ofadditional properties for vineyard development
and related businesses as well as variability in acquisition and development
costs, (v) consumer demand and preferences for the wine grape varieties
produced by the Company, (vi) general health and social concerns regarding
consumption of wine and spirits, (vii) the size and growth rate of the
California wine industry, (viii) seasonality of the wine grape producing
business, (ix) increases or changes in government regulations regarding
environmental impact, water use, labor or consumption of alcoholic beverages,
(x) competition from other producers and wineries, (xi) the Company’s
dependence on a small number of clients for the purchase of a substantial
portion of the Company’s grape production, (xii) the availability of financing
on terms acceptable to the Company, and (xiii) the Company’s labor
relations. These and other factors,
risks and uncertainties are discussed in our filings with the Securities and
Exchange Commission, including but not limited to, our Form 10-KSB and 10-QSB
filings. Stockholders, potential
investors and other readers are urged to consider these factors carefully in
evaluating the forward-looking statements and are cautioned not to place undo
reliance on such forward-looking statements.
The forward-looking statements made herein are only made as of the date
of this press release and the Company undertakes no obligation to publicly
update such forward-looking statements to reflect subsequent events or
circumstances.
SCHEID VINEYARDS INC. AND
SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except
per share data)
(Unaudited)
|
|
|
Three Months Ended
December 31,
|
|
Year Ended
December 31,
|
|
|
|
|
2003
|
|
2002
|
|
2003
|
|
2002
|
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
12,877
|
|
$
|
15,387
|
|
$
|
25,296
|
|
$
|
23,232
|
|
|
Vineyard management, services and other fees
|
|
387
|
|
331
|
|
1,060
|
|
1,051
|
|
|
Total revenues
|
|
13,264
|
|
15,718
|
|
26,356
|
|
24,283
|
|
|
COST OF SALES
|
|
6,737
|
|
8,751
|
|
14,501
|
|
14,283
|
|
GROSS PROFIT
|
|
6,527
|
|
6,967
|
|
11,855
|
|
10,000
|
|
|
General and administrative expenses
|
|
1,336
|
|
1,030
|
|
4,694
|
|
4,060
|
|
|
Write down of vineyard improvements
|
|
1,269
|
|
1,040
|
|
1,269
|
|
1,040
|
|
|
Income from related partnership
|
|
—
|
|
6
|
|
—
|
|
(263
|
)
|
|
Interest expense, net
|
|
202
|
|
255
|
|
756
|
|
1,032
|
|
|
INCOME BEFORE PROVISION FOR INCOME TAXES
|
|
3,720
|
|
4,636
|
|
5,136
|
|
4,131
|
|
|
PROVISION FOR INCOME TAXES
|
|
1,501
|
|
1,875
|
|
2,096
|
|
1,673
|
|
|
NET INCOME
|
|
$
|
2,219
|
|
$
|
2,761
|
|
$
|
3,040
|
|
$
|
2,458
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME PER SHARE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC
|
|
$
|
0.41
|
|
$
|
0.50
|
|
$
|
0.56
|
|
$
|
0.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED
|
|
$
|
0.40
|
|
$
|
0.50
|
|
$
|
0.56
|
|
$
|
0.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
|
|
BASIC
|
|
5,475
|
|
5,475
|
|
5,475
|
|
5,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED
|
|
5,482
|
|
5,475
|
|
5,475
|
|
5,475
|
|
#######