FORT WORTH, Texas, Aug. 10 /PRNewswire-FirstCall/ -- Calloway's Nursery, Inc. (OTC Pink Sheets: CLWY) today reported revenues and operating results for the quarter and nine month periods ended June 30, 2005. Results for the Quarter * Sales were $19.7 million for the June 2005 quarter, compared to sales of $18.4 million for the June 2004 quarter. * Same-store sales were $19.0 million for the June 2005 quarter, compared to same-store sales of $16.8 million for the June 2004 quarter. * Net income was $3.7 million for the June 2005 quarter, compared to net income of $2.3 million for the June 2004 quarter. * Diluted net income per common share was $.53 for the June 2005 quarter, compared to diluted net income per common share of $.33 for the June 2004 quarter. Results for the Nine Month Period * Sales were $40.1 million for 2005, compared to sales of $40.0 million for 2004. * Same-store sales were $38.8 million for 2005, compared to same-store sales of $36.5 million for 2004. * Net income was $2.7 million for 2005, compared to net income of $1.3 million for 2004. * Diluted net income per common share was $.40 for 2005, compared to diluted net income per common share of $.19 for 2004. Founded in 1986, Calloway's Nursery, Inc. operates 23 retail garden centers in the three largest metropolitan areas in Texas: Dallas - Fort Worth, San Antonio and Houston, reaching a combined population of over 11.5 million. CALLOWAY'S NURSERY, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (amounts in thousands, except per share amounts) Nine-months Ended Three-months Ended June 30, June 30, 2005 2004 2005 2004 Net sales $40,141 $39,989 $19,678 $18,443 Cost of goods sold 20,994 21,167 9,847 9,838 Gross profit 19,147 18,822 9,831 8,605 Operating expenses 11,888 12,260 4,561 4,586 Occupancy expenses 2,544 2,566 827 846 Advertising expenses 1,256 1,416 532 511 Depreciation and amortization 302 356 97 112 Interest expense (net) 409 841 123 267 Total expenses 16,398 17,439 6,140 6,322 Income from continuing operations before income taxes 2,749 1,383 3,691 2,283 Income tax expense --- 66 --- --- Income from continuing operations 2,749 1,317 3,691 2,283 Loss from discontinued operations --- (27) --- --- Net income $2,749 $1,290 $3,691 $2,283 Weighted average number of common shares outstanding - basic and diluted 6,950 6,957 6,950 6,954 Net income per common share - basic and diluted $.40 $.19 $.53 $.33 CALLOWAY'S NURSERY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In Thousands) ASSETS June 30, September 30, June 30, 2005 2004 2004 Cash and cash equivalents $6,688 $1,745 $3,598 Accounts receivable 283 214 185 Inventories 4,258 5,215 5,013 Prepaids and other assets 114 154 95 Total current assets 11,343 7,328 8,891 Property and equipment, net 10,308 10,452 10,499 Other assets 308 153 160 Total assets $21,959 $17,933 $19,550 LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable and accrued expenses $5,667 $ 5,479 $5,666 Current portion of long-term debt 469 510 472 Preferred stock classified as liability 1,789 3,245 3,302 Total current liabilities 7,925 9,234 9,440 Deferred rent payable 336 425 481 Long-term debt, net of current portion 8,878 6,203 6,381 Total liabilities 17,139 15,862 16,302 Commitments and contingencies Shareholders' equity: Common stock 72 72 72 Additional paid-in capital 10,220 10,220 10,220 Accumulated deficit (4,064) (6,813) (5,636) 6,228 3,479 4,656 Less: Treasury stock, at cost (1,408) (1,408) (1,408) Total shareholders' equity 4,820 2,071 3,248 Total liabilities and shareholders' equity $21,959 $17,933 $19,550 CALLOWAY'S NURSERY, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Nine-months Ended June 30, 2005 2004 Cash flows from operating activities: Net income $2,749 $1,290 Adjustments to reconcile net income to net cash provided by operating activities: Loss from discontinued operations --- 27 Depreciation and amortization 302 356 Accretion of preferred stock included in interest expense --- 353 Net change in operating assets and liabilities 872 1 Net cash flows provided by operating activities 3,923 2,027 Cash flows from investing activities - Additions to property and equipment (158) (14) Cash flows from financing activities: Net proceeds from issuance/retirement of common stock --- 7 Retirement of preferred stock (1,456) --- Net proceeds from issuance/repayments of long-term debt 2,634 (316) Net cash provided by (used for) financing activities 1,178 (309) Net increase in cash and cash equivalents from continuing operations 4,943 1,704 Net decrease in cash and cash equivalents from discontinued operations --- (27) Net increase in cash and cash equivalents 4,943 1,677 Cash and cash equivalents at beginning of period 1,745 1,921 Cash and cash equivalents at end of period $6,688 $3,598 DATASOURCE: Calloway's Nursery, Inc. CONTACT: Dan Reynolds of Calloway's Nursery, Inc., +1-817-222-1122 Web site: http://www.calloways.com/

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