Calloway's Nursery Announces Results for Second Quarter Ended June 30, 2010

FORT WORTH, Texas, Aug. 11 /PRNewswire-FirstCall/ -- Calloway's Nursery, Inc. (Pink Sheets: CLWY) today reported revenues and operating results for the second quarter ended June 30, 2010.

Results for the Second Quarter

Sales were $20.5 million for 2010, compared to sales of $16.5 million for 2009. Same-store (17 stores) sales were $17.8 million for 2010, compared to same-store sales of $15.3 million for 2009.
Net income was $2.3 million for 2010, compared to net income of $856,000 for 2009.
Diluted net income per common share was $.32 for 2010, compared to diluted net income per common share of $.12 for 2009.

Results for the Six Month Period

Sales were $28.7 million for 2010, compared to sales of $25.2 million for 2009. Same-store (17 stores) sales were $24.6 million for 2010, compared to same-store sales of $23.4 million for 2009.
Net income was $2.3 million for 2010, compared to net income of $599,000 for 2009. The 2010 period included a $246,000 extraordinary gain.
Diluted net income per common share was $.32 for 2010, compared to diluted net income per common share of $.09 for 2009. The 2010 period 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		Six-Months Ended
	June 30,		June 30,
	2010	2009	2010	2009

Net sales	$20,456	$16,531	$28,733	$25,213
Cost of goods sold	10,446	9,564	14,445	13,931
Gross profit	10,010	6,967	14,288	11,282

Operating expenses	4,846	4,077	7,931	7,377
Advertising expenses	410	421	708	878
Occupancy expenses	822	843	1,654	1,657
Depreciation and amortization	152	131	292	234
Net interest expense	252	188	579	299
Total expenses	6,482	5,660	11,164	10,445
Income before provision for income taxes and extraordinary gain	3,528	1,307	3,124	837
Income tax expense	1,208	451	1,074	238
Net income before extraordinary gain	2,320	856	2,050	599
Extraordinary gain, net of income tax expense	--	--	246	--
Net income	$2,320	$856	$2,296	$599

Weighted average number of common shares outstanding – basic and diluted	7,277	6,950	7,232	6,950

Income before extraordinary gain per common share – basic and diluted	$0.29	$0.12	$0.29	$0.09
Extraordinary gain, net of tax, per common share - basic and diluted	0.03	--	0.03	--
Net income per common share - basic and diluted	$0.32	$0.12	$0.32	$0.09

CALLOWAY'S NURSERY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Amounts in thousands)

ASSETS
	June 30,	June 30,
	2010	2009

Cash and cash equivalents	$4,248	$3,612
Accounts receivable	498	741
Inventories	2,141	2,709
Prepaids and other assets	35	36
Deferred income taxes	241	--
Assets held for sale	568	--
Total current assets	7,731	7,098

Property and equipment, net	17,750	16,632
Deferred income taxes	609	621
Other assets	296	331
Total assets	$26,386	$24,682

LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued expenses	$7,251	$5,593
Current portion of long-term debt	3,388	497
Total current liabilities	10,639	6,090

Deferred rent payable	25	69
Long-term debt, net of current portion	9,432	12,248
Total liabilities	20,096	18,407
Shareholders' equity:
Common stock	76	73
Additional paid-in capital	10,402	10,243
Accumulated deficit	(2,780)	(2,633)
	7,698	7,683
Less: Treasury stock, at cost	(1,408)	(1,408)

Total shareholders' equity	6,290	6,275
Total liabilities and shareholders' equity	$26,386	$24,682

CALLOWAY'S NURSERY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Amounts in thousands)

	Three- Months Ended
	June 30,
	2010	2009
Cash flows from operating activities:
Net income	$2,297	$599
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	292	234
Gain on involuntary conversion of assets, net of tax	(372)	--
Net change in operating assets and liabilities	294	1,513
Net cash provided by operating activities	2,511	2,346

Cash flows from investing activities:
Additions to property and equipment	(577)	(1,117)
Proceeds from involuntary conversion of assets	606	--
Net cash provided by (used for) investing activities	29	(1,117)

Cash flows from financing activities:
Proceeds from issuance of debt	--	1,460
Repayments of debt	(785)	(1,032)
Proceeds from issuance of common stock	84	24
Net cash provided by (used for) financing activities	(701)	452
Net increase in cash and cash equivalents	1,839	1,681
Cash and cash equivalents at beginning of period	2,409	1,931
Cash and cash equivalents at end of period	$4,248	$3,612