FORT WORTH, Texas, Feb. 3 /PRNewswire-FirstCall/ -- Calloway's Nursery, Inc. (OTC Pink Sheets: CLWY) today reported revenues and operating results for the three-month and twelve-month periods ended December 31, 2005. Results for the Three-Month Period * Sales were $11.9 million for 2005, compared to sales of $10.9 million for 2004. * Same-store sales were $11.6 million for 2005 compared to $10.6 million for 2004. * Net loss was $0.2 million for 2005, compared to net loss of $0.7 million for 2004. The 2005 net loss included a $0.2 million nonrecurring charge to settle litigation related to preferred stock. All of the outstanding preferred stock was redeemed, and the related litigation was settled, in January 2006. * Diluted net loss per common share was $.03 for 2005, compared to diluted net loss per common share of $.10 for 2004. Results for the Twelve-Month Period * Sales were $47.2 million for 2005, compared to sales of $48.2 million for 2004. * Same-store sales were $45.7 million for 2005 compared to $43.9 million for 2004. * Net income was $1.5 million for 2005, compared to net income of $0.2 million for 2004. The 2005 net income included a $0.2 million nonrecurring charge to settle litigation related to preferred stock. All of the outstanding preferred stock was redeemed, and the related litigation was settled, in January 2006. * Diluted net income per common share was $.21 for 2005, compared to diluted net income per common share of $.03 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) Twelve-Month Three-Month Period Ended Period Ended December 31, December 31, 2005 2004 2005 2004 Net sales $47,208 $48,227 $11,855 $10,948 Cost of goods sold 24,720 25,931 6,515 6,307 Gross profit 22,488 22,296 5,340 4,641 Operating expenses 15,045 15,643 3,869 3,821 Occupancy expenses 3,291 3,494 795 858 Advertising expenses 1,473 1,617 415 421 Depreciation and amortization 383 447 94 106 Interest expense (net) 569 884 122 138 Settlement on preferred stock 236 --- 236 --- Total expenses 20,997 22,085 5,531 5,344 Net income (loss) $1,491 $211 ($191) ($703) Weighted average number of common shares outstanding - Basic and diluted 6,950 6,954 6,950 6,950 Net income (loss) per common share - basic and diluted $.21 $.03 ($.03) ($.10) CALLOWAY'S NURSERY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In Thousands) ASSETS December 31, December 31, 2005 2004 Cash and cash equivalents $5,062 $3,776 Accounts receivable 167 143 Inventories 2,956 3,283 Prepaids and other assets 132 128 Total current assets 8,317 7,330 Property and equipment, net 10,159 10,409 Other assets 308 244 Total assets $18,784 $17,983 LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable and accrued expenses $4,128 $4,054 Current portion of long-term debt 522 485 Preferred stock classified as liability 1,789 3,245 Total current liabilities 6,439 7,784 Deferred rent payable 276 397 Long-term debt, net of current portion 9,210 8,434 Total liabilities 15,925 16,615 Commitments and contingencies Shareholders' equity: Common stock 72 72 Additional paid-in capital 10,220 10,220 Accumulated deficit (6,025) (7,516) 4,267 2,776 Less: Treasury stock, at cost (1,408) (1,408) Total shareholders' equity 2,859 1,368 Total liabilities and shareholders' equity $18,784 $17,983 CALLOWAY'S NURSERY, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Twelve-Month Period Ended December 31, 2005 2004 Cash flows from operating activities: Net income $1,491 $211 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 383 447 Accretion of preferred stock included in interest expense --- 353 Net change in operating assets and liabilities 188 (642) Net cash flows provided by operating activities 2,062 369 Cash flows from investing activities - Additions to property and equipment (133) (141) Cash flows from financing activities: Net proceeds from issuance/retirement of common stock --- (12) Retirement of preferred stock (1,456) (175) Net proceeds from issuance/repayments of long-term debt 813 1,854 Net cash provided by (used for) financing activities (643) 1,667 Net increase in cash and cash equivalents 1,286 1,895 Cash and cash equivalents at beginning of period 3,776 1,881 Cash and cash equivalents at end of period $5,062 $3,776 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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