Calloway's Nursery Announces Results for Third Quarter Ended September 30, 2011

CALLOWAY'S NURSERY, INC.

CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)

(Amounts in thousands, except per share amounts)

Three-Months Ended

Nine-Months Ended

September 30,

September 30,

2011

2010

2011

2010

Net sales

$5,860

$5,619

$37,007

$34,352

Cost of goods sold

3,416

3,117

19,260

17,562

Gross profit

2,444

2,502

17,747

16,790

Operating expenses

2,807

2,671

11,256

10,602

Advertising expenses

115

90

927

798

Occupancy expenses

856

811

2,559

2,465

Depreciation and amortization

148

153

445

445

Net interest expense

200

245

606

824

Total expenses

4,126

3,970

15,793

15,134

Income (loss) before provision for income taxes and extraordinary gain

(1,682)

(1,468)

1,954

1,656

Income tax expense (benefit)

(533)

(497)

716

577

Net income (loss) before extraordinary gain

(1,149)

(971)

1,238

1,079

Extraordinary gain, net of income tax expense

--

--

--

246

Net income (loss)

($1,149)

($  971)

$ 1,238

$ 1,325

Weighted average number of common shares outstanding – basic and diluted

7,886

7,338

7,769

7,268

Income (loss) before extraordinary gain per common share – basic and diluted

($0.15)

($0.13)

$0.16

$0.15

Extraordinary gain, net of tax, per common share - basic and diluted

--

--

--

0.03

Net income (loss) per common share - basic and diluted

($0.15)

($0.13)

$0.16

$0.18

CALLOWAY'S NURSERY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Amounts in thousands)

ASSETS

September 30,

September 30,

2011

2010

Cash and cash equivalents

$ 2,531

$ 1,851

Accounts receivable

243

325

Inventories

3,690

3,171

Prepaids and other assets

21

21

Deferred income taxes

547

--

Total current assets

7,032

5,368

Property and equipment, net

17,090

17,599

Deferred income taxes

--

167

Other assets

299

291

 Total assets

$24,421

$23,425

LIABILITIES AND SHAREHOLDERS' EQUITY

Accounts payable and accrued expenses

$ 6,126

$ 5,372

Current portion of long-term debt

801

3,363

 Total current liabilities

6,927

8,735

Deferred rent payable

4

14

Long-term debt, net of current portion

11,202

9,311

Deferred income taxes

51

--

Total liabilities

18,184

18,060

Shareholders' equity:

  Common stock

82

77

  Additional paid-in capital

10,718

10,448

  Accumulated deficit

(3,155)

(3,752)

7,645

6,773

Less: Treasury stock, at cost

(1,408)

(1,408)

Total shareholders' equity

6,237

5,365

 Total liabilities and shareholders' equity

$24,421

$23,425

CALLOWAY'S NURSERY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Amounts in thousands)

Nine-Months Ended

September 30,

2011

2010

Cash flows from operating activities:

Net income

$1,238

$1,325

Adjustments to reconcile net income to net cash provided by (used for) operating activities:

Depreciation and amortization

445

445

Gain on involuntary conversion of assets

--

(372)

Net change in operating assets and liabilities

(1,254)

(1,863)

Net cash provided by (used for) operating activities

429

(465)

Cash flows from investing activities:

Additions to property and equipment

(86)

(579)

Proceeds from involuntary conversion of assets

--

606

Proceeds from sales of property and equipment

--

680

Net cash provided by (used for) investing activities

(86)

707

Cash flows from financing activities:

Proceeds from issuance of debt

56

--

Repayments of debt

(568)

(931)

Proceeds from issuance of common stock

235

131

Net cash used for financing activities

(277)

(800)

Net increase (decrease) in cash and cash equivalents

66

(558)

Cash and cash equivalents at beginning of period

2,465

2,409

Cash and cash equivalents at end of period

$2,531

$1,851