FORT WORTH, Texas, Nov. 9 /PRNewswire-FirstCall/ -- Calloway's Nursery, Inc. (Pink Sheets: CLWY) today reported revenues and operating results for the third quarter and nine-month periods ended September 30, 2007. Results for the Third Quarter -- Sales were $7.1 million for the third quarter of 2007, compared to sales of $6.9 million for the September 2006 quarter. Same-store sales were $7.1 million for the third quarter of 2007, compared to same-store sales of $6.8 million for the September 2006 quarter. -- Net loss was $0.8 million for the third quarter of 2007, compared to net loss of $1.4 million for the September 2006 quarter. The September 2007 quarter included $0.4 million income tax benefit, compared to no income tax benefit for the 2006 third quarter. -- Diluted net loss per common share was $.11 for the third quarter of 2007, compared to diluted net loss per common share of $.20 for the September 2006 quarter. The September 2007 quarter results included $.06 per-share income tax benefit, compared to no income tax benefit for the September 2006 quarter. Results for the Nine-Month Period -- Sales were $35.5 million for 2007, compared to sales of $35.6 million for 2006. Same-store sales were $35.1 million for the September 2007 period, compared to same-store sales of $35.0 million for the September 2006 period. -- Net income was $0.5 million for 2007, compared to net income of $1.7 million for 2006. The September 2007 period results included $0.3 million income tax expense, compared to no income tax expense for the September 2006 period. -- Diluted net income per common share was $.07 for 2007, compared to diluted net income per common share of $.24 for 2006. The September 2007 period results included $.05 per-share income tax expense, compared to no income tax expense for the September 2006 period. Founded in 1986, Calloway's Nursery, Inc. operates 22 retail garden centers in the three largest metropolitan areas in Texas: Dallas -- Fort Worth, San Antonio and Houston, reaching a combined population over 11.5 million. CALLOWAY'S NURSERY, INC. CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED) (amounts in thousands, except per share amounts) Nine-Months Ended Three-Months Ended September 30, September 30, 2007 2006 2007 2006 Net sales $35,451 $35,585 $7,050 $6,936 Cost of goods sold 18,942 18,086 3,683 3,811 Gross profit 16,509 17,499 3,367 3,125 Operating expenses 11,603 11,495 3,350 3,230 Advertising expenses 1,001 1,083 216 197 Occupancy expenses 2,405 2,587 751 860 Depreciation and amortization 290 258 97 81 Net interest expense 436 397 157 137 Total expenses 15,735 15,820 4,571 4,505 Income (loss) before provision for income taxes 774 1,679 (1,204) (1,380) Income tax expense (benefit) 318 - - (414) - - Net income (loss) $456 $1,679 $(790) $(1,380) Weighted average number of common shares outstanding -- basic and diluted 6,950 6,950 6,950 6,950 Net income (loss) per common share -- basic and diluted $0.07 $0.24 $(0.11) $(0.20) CALLOWAY'S NURSERY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In Thousands) ASSETS September December September 30, 31, 30, 2007 2006 2006 Cash and cash equivalents $1,480 $3,967 $3,115 Accounts receivable 507 109 405 Inventories 5,541 3,612 4,712 Prepaids and other assets 234 276 291 Deferred income taxes - - 149 - - Total current assets 7,762 8,113 8,523 Property and equipment, net 11,357 10,778 10,006 Deferred income taxes 848 585 - - Other assets 280 299 372 Total assets $20,247 $19,775 $18,901 LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable and accrued expenses $5,253 $5,696 $4,765 Current portion of long-term debt 540 555 528 Total current liabilities 5,793 6,251 5,293 Deferred rent payable 149 188 209 Long-term debt, net of current portion 9,200 8,687 8,861 Total liabilities 15,142 15,126 14,363 Shareholders' equity: Common stock 72 72 72 Additional paid-in capital 10,220 10,220 10,220 Accumulated deficit (3,779) (4,235) (4,346) 6,513 6,057 5,946 Less: Treasury stock, at cost (1,408) (1,408) (1,408) Total shareholders' equity 5,105 4,649 4,538 Total liabilities and shareholders' equity $20,247 $19,775 $18,901 CALLOWAY'S NURSERY, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Nine-Months Ended September 30, 2007 2006 Cash flows from operating activities: Net income $456 $1,679 Adjustments to reconcile net income to net cash provided by (used for) operating activities: Depreciation and amortization 290 258 Net change in operating assets and liabilities (2,862) (1,647) Net cash provided by (used for) operating activities (2,116) 290 Cash flows from investing activities: Additions to property and equipment (1,562) (105) Proceeds from sale of property and equipment 693 -- Net cash used for investing activities (869) (105) Cash flows from financing activities: Proceeds from issuance of debt 867 29 Repayments of debt (369) (372) Retirement of preferred stock -- (1,789) Net cash provided by (used for) financing activities 498 (2,132) Net decrease in cash and cash equivalents from continuing operations (2,487) (1,947) Cash and cash equivalents at beginning of period 3,967 5,062 Cash and cash equivalents at end of period $1,480 $3,115 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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