FORT WORTH, Texas, May 10 /PRNewswire-FirstCall/ -- Calloway's Nursery, Inc. (OTC Pink Sheets: CLWY) today reported revenues and operating results for the first quarter ended March 31, 2006. Results for the First Quarter * Sales were $8.6 million for 2006, compared to sales of $9.5 million for 2005. * Same-store sales were $8.6 million for 2006, compared to same-store sales of $9.5 million for 2005. * Net loss was $0.8 million for 2006, compared to net loss of $0.2 million for 2005. * Diluted net loss per common share was $.12 for 2006, compared to diluted net loss per common share of $.03 for 2005. 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) Three-Month Period Ended March 31, 2006 2005 Net sales $8,627 $9,515 Cost of goods sold 4,464 4,840 Gross profit 4,163 4,675 Operating expenses 3,509 3,505 Occupancy expenses 850 859 Advertising expenses 372 303 Depreciation and amortization 88 99 Interest expense (net) 177 148 Total expenses 4,996 4,914 Net loss ($833) ($239) Weighted average number of common shares outstanding - basic and diluted 6,950 6,950 Net loss per common share - basic and diluted ($.12) ($.03) CALLOWAY'S NURSERY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In Thousands) ASSETS March 31, Dec. 31, March 31, 2006 2005 2005 Cash and cash equivalents $3,137 $5,062 $4,733 Accounts receivable 453 167 440 Inventories 4,722 2,956 5,469 Prepaids and other assets 98 132 80 Total current assets 8,410 8,317 10,722 Property and equipment, net 10,122 10,159 10,394 Other assets 302 308 310 Total assets $18,834 $18,784 $21,426 LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable and accrued expenses $6,956 $4,128 $7,849 Current portion of long-term debt 522 522 487 Preferred stock classified as liability --- 1,789 3,245 Total current liabilities 7,478 6,439 11,581 Deferred rent payable 254 276 366 Long-term debt, net of current portion 9,076 9,210 8,350 Total liabilities 16,808 15,925 20,297 Commitments and contingencies Shareholders' equity: Common stock 72 72 72 Additional paid-in capital 10,220 10,220 10,220 Accumulated deficit (6,858) (6,025) (7,755) 3,434 4,267 2,537 Less: Treasury stock, at cost (1,408) (1,408) (1,408) Total shareholders' equity 2,026 2,859 1,129 Total liabilities and shareholders' equity $18,834 $18,784 $21,426 CALLOWAY'S NURSERY, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Three-Months Period Ended March 31, 2006 2005 Cash flows from operating activities: Net loss ($833) ($239) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 88 99 Net change in operating assets and liabilities 794 1,263 Net cash flows provided by operating activities 49 1,123 Cash flows from investing activities - Additions to property and equipment (51) (84) Cash flows from financing activities: Retirement of preferred stock (1,789) --- Net proceeds from issuance/repayments of long-term debt (134) (82) Net cash used for financing activities (1,923) (82) Net increase (decrease) in cash and cash equivalents from continuing operations (1,925) 957 Cash and cash equivalents at beginning of period 5,062 3,776 Cash and cash equivalents at end of period $3,137 $4,733 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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