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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 000-22857
SCHEID VINEYARDS INC.
(Exact name of small business issuer as specified in its charter)
Delaware 77-0461833
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
13470 Washington Blvd.
Marina del Rey, California 90292
(Address of principal executive offices) (Zip Code)
(310) 301-1555
(Registrant'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
--------- --------
There were 5,528,555 shares outstanding of registrant's Common Stock, par value
$.001 per share, as of November 13, 2000, consisting of 2,154,455 shares of
Class A Common Stock and 3,374,100 shares of Class B Common Stock.
Transitional Small Business Disclosure Format (check one):
Yes No X
--------- --------
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Page 1 of 14
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SCHEID VINEYARDS INC.
FORM 10-QSB INDEX
Page No.
--------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
a. Consolidated Balance Sheets at September 30, 2000
and December 31, 1999 3
b. Consolidated Statements of Operations for the
three and nine months ended September 30, 2000
and 1999 4
c. Consolidated Statements of Cash Flows for the
nine months ended September 30, 2000 and 1999 5
d. Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities and Use of Proceeds 12
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Page 2 of 14
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SCHEID VINEYARDS INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................................ $ 96 $ 411
Accounts receivable, trade....................................... 10,067 1,177
Accounts receivable, other....................................... -- 581
Inventories...................................................... 2,197 673
Supplies, prepaid expenses and other current assets.............. 426 384
Current portion of long-term receivable.......................... 525 525
-------- --------
Total current assets........................................ 13,311 3,751
PROPERTY, PLANT AND EQUIPMENT, NET.................................. 51,596 46,170
LONG-TERM RECEIVABLE................................................ 4,199 4,724
OTHER ASSETS, NET................................................... 838 575
-------- --------
$ 69,944 $ 55,220
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt................................ $ 1,390 $ 1,530
Accounts payable and accrued liabilities......................... 1,804 1,365
Accrued interest payable......................................... 390 409
Income taxes payable............................................. 542 297
Deferred income taxes............................................ 397 60
-------- --------
Total current liabilities................................... 4,523 3,661
LONG-TERM DEBT, NET OF CURRENT PORTION.............................. 35,025 21,915
DEFERRED INCOME TAXES............................................... 1,087 1,087
-------- --------
Total liabilities.......................................... 40,635 26,663
-------- --------
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value; 2,000,000 shares authorized;
no shares issued and outstanding............................... -- --
Common stock,
Class A, $.001 par value; 20,000,000 shares authorized;
2,154,455 and 2,310,463 and shares outstanding at
September 30, 2000 and December 31, 1999, respectively
Class B, $.001 par value; 10,000,000 shares authorized;
3,374,100 shares issued and outstanding at September 30,
2000 and December 31, 1999................................... 7 7
Additional paid-in capital....................................... 21,868 21,868
Retained earnings................................................ 12,933 11,572
Less: treasury stock; 1,170,858 and 1,014,850 Class A shares
at cost at September 30, 2000 and December 31, 1999,
respectively................................................... (5,499) (4,890)
-------- --------
Total stockholders' equity.................................. 29,309 28,557
-------- --------
$ 69,944 $ 55,220
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 3 of 14
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SCHEID VINEYARDS INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Sales........................................................ $ 10,127 $ 709 $ 10,243 $ 1,004
Vineyard management, services and other fees................. 178 219 566 632
-------- -------- -------- --------
Total revenues............................................... 10,305 928 10,809 1,636
COST OF SALES................................................... 5,108 482 5,252 662
-------- -------- -------- --------
GROSS PROFIT.................................................... 5,197 446 5,557 974
General and administrative expenses.......................... 934 897 2,870 2,842
Interest expense (income), net............................... (65) 45 419 18
-------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME TAX PROVISION (BENEFIT)............. 4,328 (496) 2,268 (1,886)
INCOME TAX PROVISION (BENEFIT) ................................. 1,731 (198) 907 (754)
-------- -------- -------- --------
NET INCOME (LOSS)............................................... $ 2,597 $ (298) $ 1,361 $ (1,132)
======== ======== ======== ========
BASIC AND DILUTED NET INCOME (LOSS) PER SHARE .................. $ 0.47 $ (0.05) $ 0.24 $ (0.19)
======== ======== ======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING............................. 5,547 6,038 5,607 6,087
======== ======== ======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 4 of 14
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SCHEID VINEYARDS INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).......................................... $ 1,361 $ (1,132)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation, amortization and abandonments.............. 1,550 1,200
Deferred income taxes.................................... 337 (754)
Changes in operating assets and liabilities:
Accounts receivable, trade.............................. (8,890) 111
Accounts receivable, other.............................. 581 398
Inventories............................................. (1,524) (5,327)
Supplies, prepaid expenses and other current assets..... (42) 239
Accounts payable and accrued liabilities................ 420 1,520
Income taxes payable................................... 245 (2,480)
-------- --------
Net cash used in operating activities................. (5,962) (6,225)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Long-term receivable....................................... 525 457
Additions to property, plant and equipment................. (7,009) (12,602)
Proceeds from sale of property, plant and equipment........ 33 --
Other assets............................................... (263) (106)
-------- --------
Net cash used in investing activities................. (6,714) (12,251)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in long-term debt................................. 14,300 17,969
Repayment of long-term debt................................ (1,330) (1,866)
Repurchase of common stock................................. (609) (2,261)
-------- --------
Net cash provided by financing activities............. 12,361 13,842
-------- --------
Decrease in cash and cash equivalents................. (315) (4,634)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD................ 411 5,031
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD...................... $ 96 $ 397
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 5 of 14
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SCHEID VINEYARDS INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
BASIS OF PRESENTATION
The consolidated financial statements included herein have been
prepared by Scheid Vineyards Inc. (the "Company" or "SVI") without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission (the "SEC"). Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been omitted pursuant to such SEC rules
and regulations. In the opinion of management of the Company, the foregoing
consolidated statements contain all adjustments necessary to present fairly
the financial position of the Company as of September 30, 2000, and its
results of operations for the three and nine-month periods ended September
30, 2000 and 1999 and cash flows for the nine-month periods ended September
30, 2000 and 1999. Due to the seasonality of the wine grape business, the
interim results reflected in the foregoing consolidated financial statements
are not considered indicative of the results expected for the full fiscal
year. The Company's consolidated balance sheet as of December 31, 1999
included herein has been derived from the Company's audited financial
statements as of that date included in the Company's Annual Report on Form
10-KSB. The accompanying consolidated financial statements should be read in
conjunction with the financial statements and the notes thereto filed as part
of the Company's Annual Report on Form 10-KSB.
RECENT DEVELOPMENTS
On July 21, 2000, the Company instituted a stock repurchase program
in which the Company may spend up to $3 million in open market transactions
to purchase outstanding shares of its Class A Common Stock at such times, in
such amounts or blocks and at such prices as deemed appropriate. This
repurchase program will expire on June 30, 2001, and replaces a previously
existing repurchase program that was to expire on December 31, 2000, unless
otherwise terminated at the discretion of the Board of Directors. Through
November 13, 2000, the Company had repurchased 39,300 shares under this
program for approximately $157,000. Under previous stock repurchase programs
and other repurchases, the Company had repurchased approximately 1.1 million
shares for an aggregate purchase price of approximately $5,346,000. The
repurchase plans were initiated due to management's belief that the
Company's stock was undervalued in the marketplace. The Company continues to
explore a variety of alternatives to enhance shareholder value.
Page 6 of 14
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Scheid Vineyards Inc. is a leading independent (I.E., not winery
controlled) producer of premium varietal wine grapes. The Company currently
operates approximately 6,000 acres of wine grape vineyards. Of this total,
approximately 4,400 acres are operated for the Company's own account, and
1,600 acres are operated under management contracts for others. All of the
properties currently operated by the Company are located in Monterey and San
Benito Counties in California, both of which are generally recognized as
excellent regions for growing high quality wine grape varieties.
The Company currently produces 19 varieties of premium wine grapes,
primarily Chardonnay, Cabernet Sauvignon, Merlot and Sauvignon Blanc.
Substantially all of the Company's current wine grape production is
contracted at least through the harvest of 2001, and the majority is
contracted at least through the harvest of 2006.
The wine grape business is extremely seasonal. Similar to most
nondiversified agricultural crop producers, the Company recognizes
substantially all of its crop sales revenues at the time of its annual
harvest in September and October. Because success of the Company's operations
is dependent upon the results of the Company's annual harvest, the first two
quarters have historically resulted in a loss and quarterly results are not
considered indicative of those to be expected for a full year. Profits, if
any, are recognized when revenues from grape sales are recognized. In
addition, the timing of the annual harvest varies each year based primarily
on seasonal growing conditions, resulting in timing differences in the
portion of grape revenues recognized in the third and fourth quarters of any
one year. From time to time, the Company has, and may in the future, convert
grapes into bulk wine for sale in years subsequent to the harvest year, which
may impact quarterly results. These are significant factors in comparing
quarterly operating results between fiscal years.
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
REVENUES. SVI derives its revenues from four sources: (i) sales of
wine grapes; (ii) sales of bulk wine; (iii) vineyard management and services
revenues consisting primarily of management and harvest fees and equipment
rentals for services provided to owners of vineyards; and (iv) sales of wine
and wine-related merchandise sold primarily through the Company's tasting
room. The Securities and Exchange Commission has issued Staff Accounting
Bulletin 101, which deals with revenue recognition. The Company has evaluated
this pronouncement and believes that it does not effect the way it recognizes
revenues.
Page 7 of 14
<PAGE>
Sales increased by 920% to $10,243,000 in the nine months ended
September 30, 2000 from $1,004,000 in the 1999 period, an increase of
$9,239,000, and is comprised of the following:
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Grape sales................................................ $ 9,993,000 $ 617,000
Bulk wine sales............................................ -- 215,000
Wine and wine related merchandise.......................... 250,000 172,000
------------- ------------
Total Sales................................................ $ 10,243,000 $ 1,004,000
============= ============
</TABLE>
Through September 30, 2000, approximately 53% of the Company's
producing acres had been harvested, as compared to only 7% at September 30,
1999. Due to a delay in beginning the 1999 harvest due to cool weather
conditions, grape sales were almost entirely recognized in the fourth quarter.
The Company sold all of the remaining amount of its 1997 bulk wine
inventory in 1999.
Revenue from vineyard management, services and other fees decreased
by 10% to $566,000 for the nine months ended September 30, 2000 from $632,000
in the 1999 period, a decrease of $66,000. The decrease was primarily due to
the elimination of an 83-acre vineyard management contract.
GROSS PROFIT. Gross profit for the nine months ended September 30,
2000 was $5,557,000 compared to $974,000 for the nine months ended September
30, 1999, an increase of $4,583,000 or 471%. This increase was primarily the
result of the increase in grape sales due to the timing of the harvests in
2000 and 1999 and increased yields per acre in 2000. The increase in grape
sales was partially offset by the reduction in sales of bulk wine and the
decrease in management fees from 1999 to 2000.
Primarily as the result of an increase in yields per acre in 2000
compared to 1999, gross margin on grape sales increased to 49% in the 2000
third quarter as compared to 28% in the 1999 period.
Costs associated with the provision of management services are
reimbursed by the Company's clients, therefore, no cost of sales is deducted
in determining gross profit on these services.
GENERAL AND ADMINISTRATIVE. General and administrative expenses were
$2,870,000 for the nine months ended September 30, 2000 as compared to
$2,842,000 in the 1999 period, an increase of $28,000 or 1%.
Page 8 of 14
<PAGE>
INTEREST EXPENSE (INCOME), NET. Net interest expense was $419,000 for
the nine months ended September 30, 2000 as compared to $18,000 in the 1999
period, an increase of $401,000, and is comprised of the following:
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Interest expense........................................... $ 1,575,000 $ 742,000
Less capitalized interest.................................. (1,143,000) (691,000)
------------- ------------
Interest expense, net of amount capitalized................ 432,000 51,000
Interest income............................................ (13,000) (33,000)
------------- ------------
Interest expense (income), net............................. $ 419,000 $ 18,000
============= ============
</TABLE>
Total interest expense increased in the 2000 period as a result of
higher outstanding borrowings primarily as the result of expenditures for the
continued development of Company-owned vineyards. Capitalized interest
increased in the 2000 period due to the increased expenditures for vineyard
acreage being improved or developed.
INCOME TAX PROVISION (BENEFIT). The income tax provision increased
$1,661,000 to $907,000 for the nine months ended September 30, 2000 from an
income tax benefit of $754,000 in the 1999 period. The effective tax rate for
both periods was 40%.
NET INCOME (LOSS). As a result of the above, the Company had net
income for the nine months ended September 30, 2000 of $1,361,000 as compared
to a net loss of $1,132,000 in the 1999 period.
ANTICIPATED RESULTS FOR FISCAL YEAR ENDING DECEMBER 31, 2000
The harvest of 2000 was completed on November 13, 2000 and the
Company estimates that total tons harvested in 2000 are approximately 40%
more than in 1999. The Company estimates that for the fiscal year ending
December 31, 2000, it will record revenues in excess of $17,000,000, an
increase of over 30% from fiscal 1999 revenues. Although the Company believes
this estimate is realistic, it should be noted that not all information used
to derive amounts due from customers has been finalized as of the date of
this report and actual revenues may differ from those projected above. The
Company cautions that historical amounts of cost of sales and other expenses
deducted in arriving at net income, and historical and third quarter 2000
ratios of costs of sales and other expenses to revenues, should not be
expected to provide an indication of gross profit or net income to be
reported by the Company for fiscal 2000. See "--Special Note Regarding
Forward-Looking Statements."
LIQUIDITY AND CAPITAL RESOURCES
SVI's primary sources of cash have historically been funds provided
by internally generated cash flow and bank borrowings. The Company has made
substantial capital expenditures to redevelop its existing vineyard
properties and acquire and develop new acreage, and the Company intends to
continue these types of expenditures. Cash generated from operations has not
been sufficient to satisfy all of the Company's working capital and capital
expenditure needs. As a consequence, the Company has depended upon and
continues to rely upon, both short and long-term bank borrowings. The Company
had working capital at
Page 9 of 14
<PAGE>
September 30, 2000 of $8,788,000 as compared to $90,000 at December 31, 1999,
an increase of $8,698,000. The increase in working capital was due primarily
to current year grape sale receivables.
Under the Company's historical working capital cycle, working
capital is required primarily to finance the costs of growing and harvesting
its wine grape crop. The Company normally delivers substantially all of its
crop in September and October, and receives the majority of its cash from
grape sales in November. In order to bridge the gap between incurrence of
expenditures and receipt of cash from grape sales, large working capital
outlays are required for approximately eleven months each year. Historically,
SVI has obtained these funds pursuant to credit lines with banks.
The Company currently has credit lines that provide both short-term
and long-term funds. The Company's "crop" line has maximum credit available
of $19,000,000 and is intended to finance the Company's anticipated working
capital needs. The current crop line expires June 5, 2002, and is secured by
crops and other assets of the Company. There was $17,000,000 outstanding
under the Company's crop line at September 30, 2000. The interest rate on
this line is based on the bank's "reference" or "cost of funds" rate. At
September 30, 2000, the weighted average interest rate on borrowings under
this line of credit was 8.57%.
SVI also has long-term credit facilities which expire through June
2008 and provide for maximum borrowings totaling $8,916,000, which diminish
annually through the expiration dates to a maximum allowable commitment of
$5,412,000. At September 30, 2000, the outstanding amount owed by the Company
under these facilities was $8,916,000. The interest rate on each of these
lines is based on the bank's "reference" or "cost of funds" rate. At
September 30, 2000, the weighted average per annum interest rate on these
lines was 8.47%. These credit lines are secured by deeds of trust on
underlying vineyard properties.
The Company also has other long-term notes payable which, as of
September 30, 2000, totaled approximately $5,775,000. The interest rate on
each of these notes is based on the bank's "reference" or "cost of funds"
rate. At September 30, 2000, the weighted average per annum interest rate on
these notes was 8.43%. These notes are secured by deeds of trust on
underlying vineyard properties.
The Company also has a bank line of credit with an original maximum
loan commitment of $7,500,000, the proceeds of which were used to develop a
vineyard owned by a major client and managed under a long-term contract by
the Company. Any amount borrowed on the line, even if repaid before the end
of the availability period, permanently reduces the remaining available line
of credit. At September 30, 2000, the maximum available balance and the
outstanding balance on this line of credit was $4,724,000. This line bears
interest at the bank's reference rate (7.11% at September 30, 2000) and is
repayable in six annual installments which began in January 2000. The note is
secured by a letter of credit provided by the client and by the Company's
management contract. The management contract provides for the Company's
client to make payment of the annual principal installments under this line
as and when they become due.
The Company's principal credit facilities and notes payable bind the
Company to a number of affirmative and negative covenants, including
requirements to maintain certain financial ratios within certain
Page 10 of 14
<PAGE>
parameters and to satisfy certain other financial tests. The credit
facilities also prohibit the payment of cash dividends. At September 30,
2000, the Company was in compliance with these covenants.
Although no assurances can be given, management believes that the
Company's anticipated working capital levels and short-term borrowing
capabilities will be adequate to meet the Company's currently anticipated
liquidity needs during the next twelve months. At November 13, 2000, the
Company had $1.2 million in borrowing availability under its long-term
revolving credit facilities and crop line of credit.
Management anticipates that capital requirements will continue to
support expected improvements in the Company's existing vineyard properties
and that this will result in the expenditure of the Company's available cash
and additional borrowing under credit lines and/or new arrangements for term
debt. The Company's planned new vineyard developments are expected to require
approximately $6 million in capital investment through December 31, 2001, and
continued improvements and redevelopments of existing vineyards are expected
to require approximately $6.5 million. In addition, the Company expects to
invest approximately $2.5 million in equipment purchases. Of these expected
capital requirements, the Company has expended approximately $4.7 million for
the development of new vineyards, $1.7 million for the continued improvement
and redevelopment of existing vineyards, and $0.6 million for equipment
purchases during the nine months ended September 30, 2000. Management
believes it should be able to obtain long-term funds from its present
principal lender, but there can be no assurance that the Company will be able
to obtain financing when required or that such financings will be available
on favorable terms.
Net cash used in operating activities was $5,962,000 for the nine
months ended September 30, 2000, compared to $6,225,000 for the same period
in 1999, a decrease of $263,000. The decrease was primarily due to the
increase in the percentage of acreage harvested by September 30, 2000 over
the 1999 period. This increase resulted in an increase in net income and the
related income tax accounts, an increase in trade accounts receivable and a
decrease in crop inventories from the 1999 period to the 2000 period.
Net cash used in investing activities was $6,714,000 for the nine
months ended September 30, 2000, compared to $12,251,000 for the same period
in 1999, a decrease of $5,537,000. The decrease was principally the result of
decreases in expenditures for the ongoing development of approximately 1,300
acres of new vineyards and improvements in the Company's existing vineyards.
The Company completed the planting of its 750-acre Mesa del Rio Vineyard in
May of 1999, although improvements on these acres will continue until the
vineyard begins to produce grapes.
Net cash provided by financing activities was $12,361,000 for the
nine months ended September 30, 2000, compared to $13,842,000 for the same
period in 1999, a decrease of $1,481,000. Net borrowings under the Company's
long-term credit lines were $12,970,000 in 2000 as compared to $16,103,000 in
1999. Borrowings under the Company's long-term credit facilities have been
used for vineyard development as well as to fund the current year's crop
costs. In addition, the Company repurchased shares of its Class A Common
Stock in the amount of $609,000 and $2,261,000 during the nine-month periods
ended September 30, 2000 and 1999, respectively.
Page 11 of 14
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain matters discussed in this Management's Discussion and
Analysis of Financial Condition and Results of Operations are
"forward-looking statements". These forward-looking statements can generally
be identified as such because the context of the statement will include such
words as the Company "believes," "anticipates," "expects," 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, of additional 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) proposed expansion of
the Company's wine business, (xii) the Company's dependence on a small number
of clients for the purchase of a substantial portion of the Company's grape
production, (xiii) the availability of financing on terms acceptable to the
Company, and (xiv) the Company's labor relations. These and other factors,
risks and uncertainties are discussed in greater detail under the caption
"Business -Cautionary Information Regarding Forward Looking Statements" in
the Company's Annual Report on Form 10-KSB filed with the Securities and
Exchange Commission on March 13, 2000. 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 Form 10-QSB and the Company undertakes
no obligation to publicly update such forward-looking statements to reflect
subsequent events or circumstances.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
Page 12 of 14
<PAGE>
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its 2000 Annual Meeting of Stockholders on
September 28, 2000. A total of 1,991,944 shares of Class A
Common Stock and 3,374,100 shares of Class B Common Stock, or
91.9% and 100.0%, respectively, of the stockholders of record
as of August 31, 2000, were present or represented at the
meeting.
Each class of Common Stock votes separately in the election of
directors, with the holders of Class A Common Stock currently
being entitled to elect two directors and the holders of Class
B Common Stock currently being entitled to elect three
directors. Each share of Class A Common Stock is entitled to
one vote and each share of Class B Common Stock is entitled to
five votes on all other matters submitted to a vote of
stockholders.
The following persons were elected to the Board of Directors
of the Company by the Class A stockholders, each of whom was
an existing director at that time: John L. Crary and Robert P.
Hartzell. The number of shares voting in favor of each nominee
was 1,981,526, the number voting against was 10,418 and the
number of shares withholding votes was 174,611.
The following persons were elected to the Board of Directors of
the Company by the Class B stockholders, each of whom was an
existing director at that time: Alfred G. Scheid, Scott D. Scheid
and Heidi M. Scheid. The number of shares voting in favor of each
nominee was 3,374,100.
No other persons were nominated for election to the Board of
Directors.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herewith:
27.1 Financial Data Schedule (electronically filed herewith)
(b) Reports on Form 8-K
None
Page 13 of 14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 13, 2000 SCHEID VINEYARDS INC.
/s/ HEIDI M. SCHEID
--------------------------------
Heidi M. Scheid
Vice President Finance and Chief
Financial Officer
(Duly Authorized Officer and
Principal Financial
and Accounting Officer
Page 14 of 14
