Calloway's Nursery Announces Results for First Quarter Ended March 31, 2010

FORT WORTH, Texas, May 13 /PRNewswire-FirstCall/ -- Calloway's Nursery, Inc. (Pink Sheets: CLWY) today reported revenues and operating results for the first quarter ended March 31, 2010.

Results for the First Quarter

Sales were $8.3 million for 2010, compared to sales of $8.7 million for 2009. Same-store (17 stores) sales were $6.8 million for 2010, compared to same-store sales of $8.1 million for 2009.
Net loss was $24,000 for 2010, compared to net loss of $257,000 for 2009. The 2010 quarter included a $246,000 extraordinary gain.
Diluted net loss per common share was $.00 (break-even) for 2010, compared to diluted net loss per common share of $.04 for 2009. The 2010 quarter included a $.03 per-share extraordinary gain.

Founded in 1986, Calloway's Nursery, Inc. is a 19-store garden center chain serving the Dallas - Fort Worth (as Calloway's Nursery) and Houston (as Cornelius Nursery) markets. The company strives to make gardening fun, easy and successful for customers by offering expert advice from Texas Certified Nursery Professionals; store environments that are educational and easy to shop; weekly gardening clinics that serve both novice and expert gardeners; displays and instructions to aid gardeners with design and color development in their yards; and a product selection of the best plant varieties available.

CALLOWAY'S NURSERY, INC. CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED) (Amounts in thousands, except per share amounts)
	Three-Months Ended
	March 31,
	2010	2009

Net sales	$8,277	$8,682
Cost of goods sold	3,999	4,367
Gross profit	4,278	4,315

Operating expenses	3,085	3,300
Advertising expenses	298	457
Occupancy expenses	832	814
Depreciation and amortization	140	103
Net interest expense	327	111
Total expenses	4,682	4,785
Loss before provision for income taxes and extraordinary gain	(404)	(470)
Income tax benefit	(134)	(213)
Net loss before extraordinary gain	(270)	(257)
Extraordinary gain, net of income tax expense of $126	246	--
Net loss	$ (24)	$ (257)

Weighted average number of common shares outstanding – basic and diluted	7,185	6,950

Loss before extraordinary gain per common share – basic and diluted	$(0.03)	$(0.04)
Extraordinary gain, net of tax, per common share - basic and diluted	0.03	--
Net loss per common share - basic and diluted	$(0.00)	$(0.04)

CALLOWAY'S NURSERY, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Amounts in thousands)
ASSETS
	March 31,	March 31,
	2010	2009

Cash and cash equivalents	$ 2,250	$ 2,539
Accounts receivable - trade	705	427
Accounts receivable - insurance	685	685
Inventories	4,304	5,431
Prepaids and other assets	52	52
Deferred income taxes	12	162
Assets held for sale	585	--
Total current assets	8,593	9,296

Property and equipment, net	17,507	16,506
Deferred income taxes	1,413	621
Other assets	302	282
Total assets	$27,815	$26,705

LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued expenses	$ 8,181	$ 8,490
Line of credit	2,000	--
Current portion of long-term debt	4,042	585
Total current liabilities	14,223	9,075

Deferred rent payable	36	80
Long-term debt, net of current portion	9,404	12,155
Total liabilities	23,663	21,310
Shareholders' equity:
Common stock	75	72
Additional paid-in capital	10,362	10,220
Accumulated deficit	(4,877)	(3,489)
	5,560	6,803
Less: Treasury stock, at cost	(1,408)	(1,408)
Total shareholders' equity	4,152	5,395
Total liabilities and shareholders' equity	$27,815	$26,705

CALLOWAY'S NURSERY, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Amounts in thousands)
	Three-Months Ended
	March 31,
	2010	2009
Cash flows from operating activities:
Net loss	$(24)	$(257)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	140	103
Deferred income taxes	(139)	(218)
Gain on involuntary conversion of assets, net of tax	(246)	--
Net change in operating assets and liabilities	(1,659)	1,025
Net cash provided by (used for) operating activities	(1,928)	653

Cash flows from investing activities:
Additions to property and equipment	(199)	(291)
Proceeds from involuntary conversion assets	84	392
Net cash provided by (used for) investing activities	(115)	101

Cash flows from financing activities:
Net borrowings from line of credit	2,000	--
Repayments of debt	(159)	(146)
Proceeds from issuance of common stock	43	--
Net cash provided by (used for) financing activities	1,884	(146)
Net increase (decrease) in cash and cash equivalents	(159)	608
Cash and cash equivalents at beginning of period	2,409	1,931

Cash and cash equivalents at end of period	$ 2,250	$2,539