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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 June 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
incorporation or organization) Identification No.)
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 5,540,755 shares outstanding of registrant's Common Stock, par value
$.001 per share, as of August 10, 2000, consisting of 2,166,655 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 13
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SCHEID VINEYARDS INC.
FORM 10-QSB INDEX
<TABLE>
<CAPTION>
Page No.
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<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
a. Consolidated Balance Sheets at June 30, 2000 and 3
December 31, 1999
b. Consolidated Statements of Operations for the three and six 4
months ended June 30, 2000 and 1999
c. Consolidated Statements of Cash Flows for the six months 5
ended June 30, 2000 and 1999
d. Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition 7
and Results of Operations
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 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 13
Signatures
</TABLE>
Page 2 of 13
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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>
June 30, December 31,
2000 1999
----------------- --------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................................... $ 252 $ 411
Accounts receivable, trade.................................................. 33 1,177
Accounts receivable, other.................................................. -- 581
Inventories................................................................. 5,201 673
Supplies, prepaid expenses and other current assets......................... 900 384
Deferred income taxes....................................................... 764 --
Current portion of long-term receivable..................................... 525 525
------------------ -----------------
Total current assets................................................... 7,675 3,751
PROPERTY, PLANT AND EQUIPMENT, NET............................................. 49,242 46,170
LONG-TERM RECEIVABLE........................................................... 4,199 4,724
OTHER ASSETS, NET.............................................................. 735 575
------------------ -----------------
$ 61,851 $ 55,220
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt........................................... $ 1,390 $ 1,530
Accounts payable and accrued liabilities.................................... 2,220 1,365
Accrued interest payable.................................................... 10 409
Income taxes payable........................................................ -- 297
Deferred income taxes....................................................... -- 60
------------------ -----------------
Total current liabilities.............................................. 3,620 3,661
LONG-TERM DEBT, NET OF CURRENT PORTION......................................... 30,275 21,915
DEFERRED INCOME TAXES.......................................................... 1,087 1,087
------------------ -----------------
Total liabilities..................................................... 34,982 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;
2,193,755 and 2,310,463 and shares outstanding at June 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 June 30, 2000
and December 31, 1999................................................... 7 7
Additional paid-in capital.................................................. 21,868 21,868
Retained earnings........................................................... 10,336 11,572
Less: treasury stock; 1,131,558 and 1,014,850 Class A shares
at cost at June 30, 2000 and December 31, 1999, respectively.............. (5,342) (4,890)
------------------ -----------------
Total stockholders' equity............................................. 26,869 28,557
------------------ -----------------
$ 61,851 $ 55,220
================= =================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 3 of 13
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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 SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ----------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C>
REVENUES:
Sales......................................................... $ 67 $ 45 $ 116 $ 295
Vineyard management, services and other fees.................. 236 226 388 413
-------------- ------------ ----------- -----------
Total revenues.......................................... 303 271 504 708
COST OF SALES.................................................... 126 22 144 180
-------------- ------------ ----------- -----------
GROSS PROFIT..................................................... 177 249 360 528
General and administrative expenses........................... 941 953 1,936 1,945
Interest expense (income), net................................ 268 (19) 484 (27)
-------------- ------------ ----------- -----------
LOSS BEFORE INCOME TAX BENEFIT................................... (1,032) (685) (2,060) (1,390)
INCOME TAX BENEFIT .............................................. 413 274 824 556
-------------- ------------ ----------- -----------
NET LOSS......................................................... $ (619) $ (411) $ (1,236) $ (834)
============== ============ =========== ===========
BASIC AND DILUTED NET LOSS PER SHARE ............................ $ (0.11) $ (0.07) $ (0.22) $ (0.14)
============== ============ =========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING.............................. 5,590 6,108 5,637 6,112
============== ============ =========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 4 of 13
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SCHEID VINEYARDS INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ................................................................................. $ (1,236) $ (834)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, amortization and abandonments............................................. 1,178 778
Deferred income taxes................................................................... (824) (556)
Changes in operating assets and liabilities:
Accounts receivable, trade............................................................. 1,144 726
Accounts receivable, other............................................................. 581 398
Inventories............................................................................ (4,528) (3,649)
Supplies, prepaid expenses and other current assets.................................... (516) (103)
Accounts payable and accrued liabilities............................................... 456 1,680
Income taxes payable.................................................................. (297) (2,480)
------------ ------------
Net cash used in operating activities................................................ (4,042) (4,040)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Long-term receivable...................................................................... 525 562
Additions to property, plant and equipment................................................ (4,283) (10,240)
Proceeds from sale of property, plant and equipment....................................... 33 --
Other assets.............................................................................. (160) (2)
------------ ------------
Net cash used in investing activities................................................ (3,885) (9,680)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in long-term debt................................................................ 9,550 12,614
Repayment of long-term debt............................................................... (1,330) (1,376)
Repurchase of common stock................................................................ (452) (616)
------------ ------------
Net cash provided by financing activities............................................ 7,768 10,622
------------ ------------
Decrease in cash and cash equivalents................................................ (159) (3,098)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD............................................... 411 5,031
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD..................................................... $ 252 $ 1,933
============ =============
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 5 of 13
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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 June 30, 2000, and its results of operations for the three and
six-month periods ended June 30, 2000 and 1999 and cash flows for the six-month
periods ended June 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 August 8, 2000, the Company entered into a new long-term crop line
of credit agreement with its principal bank. The new crop line expires on June
5, 2002, provides for maximum borrowings totaling $19,000,000, and replaces the
Company's previous crop line of credit. The interest rate on borrowings under
this crop line of credit is based upon the bank's "reference" or "cost of funds"
rate.
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 August 10, 2000,
the Company had repurchased 27,100 shares under this program for approximately
$107,000. 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 13
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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 18 varieties of premium wine grapes,
primarily Chardonnay, Merlot, Cabernet Sauvignon 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.
Regarding the outlook for the upcoming harvest of 2000, the
Company's vineyards experienced reasonably good weather in the spring, but
were hit with a triple-digit heat wave in mid-May and another in early June.
This primarily impacted the red grape varieties, which were in bloom at the
time, and caused the developing grape clusters to retain fewer berries than
normal, a condition known as "shatter". The result of shattered clusters is a
lighter crop. The Company believes that its red varieties, which represent
about 55% of acres in production, will produce a lighter crop than would be
expected in a normal year. The Company believes that the white grape
varieties were not as affected by the heat waves as the red grape varieties
and that they are on track to produce a relatively average yield.
RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 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 is currently
evaluating this pronouncement but believes it will have no effect on the way
it recognizes revenues.
Sales (which is comprised of revenue from sales of wine grapes, bulk
wine, and wine and wine- related merchandise) decreased by 61% to $116,000 in
the six months ended June 30, 2000 from $295,000 in the 1999 period, a decrease
of $179,000. Sales for the six months ended June 30, 2000 is comprised solely of
wine and wine-related merchandise sold through the Company's tasting room. Sales
for the six months
Page 7 of 13
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ended June 30, 1999 is comprised of $215,000 in bulk wine sales and $80,000 from
the sale of wine and wine-related merchandise. The Company sold all of the
remaining amount of its 1997 bulk wine inventory in 1999. There were no bulk
wine sales in 2000, which accounted for a significant portion of the decrease in
sales from 1999 to 2000.
Revenue from vineyard management, services and other fees decreased by
6% to $388,000 for the six months ended June 30, 2000 from $413,000 in the 1999
period, a decrease of $25,000. The decrease was primarily due to the elimination
of an 83-acre vineyard management contract.
GROSS PROFIT. Gross profit for the six months ended June 30, 2000 was
$360,000 compared to $528,000 for the six months ended June 30, 1999, a decrease
of $168,000 or 32%. This decrease was primarily the result of the reduction in
sales of bulk wine and the decrease in management fees from 1999 to 2000.
GENERAL AND ADMINISTRATIVE. General and administrative expenses were
$1,936,000 for the six months ended June 30, 2000 as compared to $1,945,000 in
the 1999 period, a decrease of $9,000.
INTEREST EXPENSE (INCOME), NET. Net interest expense was $484,000 for
the six months ended June 30, 2000 and net interest income was $27,000 in the
1999 period, an increase of $511,000, and is comprised of the following:
<TABLE>
<CAPTION>
2000 1999
----- ----
<S> <C>
Interest expense......................................................... $ 920,000 $ 379,000
Less capitalized interest................................................ (426,000) (373,000)
------------------ ----------------
Interest expense, net of amount capitalized.............................. 494,000 6,000
Interest income.......................................................... (10,000) (33,000)
------------------ ----------------
Interest expense (income), net........................................... $ 484,000 $ (27,000)
================== ================
</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 BENEFIT. The income tax benefit increased to $824,000 for
the six months ended June 30, 2000 from $556,000 in the 1999 period.
NET LOSS. As a result of the above, the Company had a net loss for
the six months ended June 30, 2000 of $1,236,000 as compared to $834,000 in the
1999 period.
Page 8 of 13
<PAGE>
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 June 30,
2000 of $4,055,000 as compared to $90,000 at December 31, 1999, an increase of
$3,965,000. The increase in working capital was primarily due to borrowings on
long-term credit facilities to fund current year crop costs.
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 $12,250,000 outstanding under the
Company's crop line at June 30, 2000. The interest rate on this line is based on
the bank's "reference" or "cost of funds" rate. At June 30, 2000, the weighted
average interest rate on borrowings under this line of credit was 8.62%.
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
June 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 June 30, 2000, the weighted average per
annum interest rate on these lines was 8.62%. 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 June
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 June 30,
2000, the weighted average per annum interest rate on these notes was 8.61%.
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 June 30, 2000, the maximum available balance and the outstanding balance on
this line of credit was $4,724,000. This line
Page 9 of 13
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bears interest at the bank's reference rate (7.12% at June 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 parameters and
to satisfy certain other financial tests. At June 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 August 10, 2000, the Company
had $4,750,000 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 $2.4 million for the
development of new vineyards, $1.3 million for the continued improvement and
redevelopment of existing vineyards, and $0.5 million for equipment purchases
for the six months ended June 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.
Cash used in operating activities was $4,042,000 for the six months
ended June 30, 2000, compared to $4,040,000 for the same period in 1999, an
increase of $2,000. The increase was primarily due to the increase in the net
loss, and was offset by increases in depreciation expense, current year's crop
inventories and the timing of the payment of 1998 income tax liabilities, which
were not paid until March of 1999.
Cash used in investing activities was $3,885,000 for the six months
ended June 30, 2000, compared to $9,680,000 for the same period in 1999, a
decrease of $5,795,000. 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 new 750-acre Mesa del Rio Vineyard in May of 1999,
although improvements on these acres will continue until the vineyard begins to
produce grapes.
Cash provided by financing activities was $7,768,000 for the six months
ended June 30, 2000, compared to $10,622,000 for the same period in 1999, a
decrease of $2,854,000. Net borrowings under the Company's long-term credit
lines were $8,220,000 in 2000 as compared to $11,238,000 in 1999.
Page 10 of 13
<PAGE>
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 $452,000 and $616,000 during the six-month periods ended June 30, 2000
and 1999, respectively.
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.
Page 11 of 13
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herewith:
10.1 Credit Agreement, dated August 8, 2000, by
and between Sanwa Bank California and Scheid
Vineyards California Inc.
27.1 Financial Data Schedule (electronically filed
herewith)
(b) Reports on Form 8-K
(i) Form 8-K filed May 26, 2000, announcing the
Company's signing of a Purchase and Sale
Agreement, whereby the Company's wholly-owned
subsidiary, Scheid Vineyards California Inc.,
agreed to sell four of its vineyard properties
totaling 1,350 acres for a purchase price of $21.3
million.
(ii) Form 8-K filed June 13, 2000, announcing the
termination of a Purchase and Sale Agreement
whereby the Company's wholly-owned subsidiary,
Scheid Vineyards California Inc., had agreed to
sell four of its vineyard properties
totaling 1,350 acres for a purchase price of
$21.3 million.
Page 12 of 13
<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: August 10, 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 13 of 13
