FORT WORTH, Texas, Aug. 9 /PRNewswire-FirstCall/ -- Calloway's Nursery, Inc. (OTC Pink Sheets: CLWY) today reported revenues and operating results for the second quarter and six month period ended June 30, 2006. Results for the Second Quarter * Sales were $20.0 million for the second quarter of 2006, compared to sales of $19.7 million for the June 2005 quarter. * Net income was $3.9 million for the second quarter of 2006, compared to net income of $3.7 million for the June 2005 quarter. * Diluted net income per common share was $.56 for the second quarter of 2006, compared to diluted net income per common share of $.53 for the June 2005 quarter. Results for the Six Month Period * Sales were $28.6 million for 2006, compared to sales of $29.2 million for 2005. * Net income was $3.1 million for 2006, compared to net income of $3.5 million for 2005. * Diluted net income per common share was $.44 for 2006, compared to diluted net income per common share of $.50 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 11.5 million. CALLOWAY'S NURSERY, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (amounts in thousands, except per share amounts) Six-Month Three-Month Period Ended Period Ended June 30, June 30, 2006 2005 2006 2005 Net sales $28,649 $29,193 $20,022 $19,678 Cost of goods sold 14,275 14,687 9,811 9,847 Gross profit 14,374 14,506 10,211 9,381 Operating expenses 8,265 8,066 4,756 4,561 Occupancy expenses 1,727 1,686 877 827 Advertising expenses 886 835 514 532 Depreciation and amortization 177 196 89 97 Interest expense (net) 260 271 83 123 Total expenses 11,315 11,054 6,319 6,140 Net income $3,059 $3,452 $3,892 $3,691 Weighted average number of common shares outstanding - basic and diluted 6,950 6,950 6,950 6,950 Net income per common share - basic and diluted $.44 $.50 $.56 $.53 CALLOWAY'S NURSERY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In Thousands) ASSETS June 30, December 31, June 30, 2006 2005 2005 Cash and cash equivalents $6,222 $5,062 $6,688 Accounts receivable 217 167 283 Inventories 3,989 2,956 4,258 Prepaids and other assets 156 132 114 Total current assets 10,584 8,317 11,343 Property and equipment, net 10,050 10,159 10,308 Other assets 358 308 308 Total assets $20,992 $18,784 $21,959 LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable and accrued expenses $5,358 $4,128 $5,667 Current portion of long-term debt 522 522 469 Preferred stock classified as liability --- 1,789 1,789 Total current liabilities 5,880 6,439 7,925 Deferred rent payable 231 276 336 Long-term debt, net of current portion 8,963 9,210 8,878 Total liabilities 15,074 15,925 17,139 Commitments and contingencies Shareholders' equity: Common stock 72 72 72 Additional paid-in capital 10,220 10,220 10,220 Accumulated deficit (2,966) (6,025) (4,064) 7,326 4,267 6,228 Less: Treasury stock, at cost (1,408) (1,408) (1,408) Total shareholders' equity 5,918 2,859 4,820 Total liabilities and shareholders' equity $20,992 $18,784 $21,959 CALLOWAY'S NURSERY, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Six-Month Period Ended June 30, 2006 2005 Cash flows from operating activities: Net income $3,059 $3,452 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 177 196 Net change in operating assets and liabilities 28 387 Net cash flows provided by operating activities 3,264 4,035 Cash flows from investing activities - Additions to property and equipment (68) (95) Cash flows from financing activities: Retirement of preferred stock (1,789) (1,456) Net proceeds from issuance/repayments of long-term debt (247) 428 Net cash used for financing activities (2,036) (1,028) Net increase in cash and cash equivalents from continuing operations 1,160 2,912 Cash and cash equivalents at beginning of period 5,062 3,776 Cash and cash equivalents at end of period $6,222 $6,688 DATASOURCE: Calloway's Nursery, Inc. CONTACT: media, investors, analysts, Dan Reynolds of Calloway's Nursery, Inc., +1-817-222-1122 Web site: http://www.calloways.com/

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