Scheid Vineyards Inc. Reports 2nd Quarter Results

October 29, 2009

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,
                                        --------------      --------------
                                        2009      2008      2009      2008
                                        ----      ----      ----      ----
    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
                                       -----     -----    -----      -----
    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)
                                     =======   =======  =======    =======

    NET LOSS PER SHARE:
       BASIC                          $(2.95)   $(1.57)  $(4.31)    $(2.56)
                                      ======    ======   ======     ======
       DILUTED                        $(2.95)   $(1.57)  $(4.31)    $(2.56)
                                      ======    ======   ======     ======

    WEIGHTED AVERAGE SHARES
     OUTSTANDING:
       BASIC                             883     1,002      907      1,007
                                         ===     =====      ===      =====
       DILUTED                           883     1,002      907      1,007
                                         ===     =====      ===      =====

SOURCE Scheid Vineyards Inc.