Calloway's Nursery Announces Results for First Quarter Ended March 31, 2008

FORT WORTH, Texas, May 9 /PRNewswire-FirstCall/ -- Calloway's Nursery, Inc. PinkSheets: CLWY today reported revenues and operating results for the first quarter ended March 31, 2008.

    Results for the First quarter

    --  Sales were $9.8 million for the 2008 quarter, compared to sales of
        $10.3 million for the 2007 quarter.  Same-store (18 stores) sales
        were $8.4 million for the 2008 quarter, compared to same-store sales
        of $9.0 million for the 2007 quarter.

    --  Net loss was $124,000 for the 2008 quarter, compared to net loss of
        $11,000 for the 2007 quarter.

    --  Diluted net loss per common share was $.02 for the 2008 quarter,
        compared to diluted net loss per common share of $.00 for the
        2007 quarter.


    Founded in 1986, Calloway's Nursery, Inc. operates retail garden centers
in Texas: Calloway's Nursery in Dallas - Fort Worth and Cornelius Nursery in
Houston.



                           CALLOWAY'S NURSERY, INC.
             CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)
               (amounts in thousands, except per share amounts)

                                                          Three-Months Ended
                                                               March 31,
                                                          2008          2007

    Net sales                                           $9,768       $10,292
    Cost of goods sold                                   4,978         5,115
    Gross profit                                         4,790         5,177

    Operating expenses                                   3,543         3,824
    Advertising expenses                                   432           266
    Occupancy expenses                                     759           839
    Depreciation and amortization                           90           110
    Net interest expense                                   154           154

    Total expenses                                       4,978         5,193

    Loss before provision for income taxes                (188)          (16)

    Income tax benefit                                      64             5

    Net loss                                             ($124)         ($11)

    Weighted average number of common shares
     outstanding - basic and diluted                     6,950         6,950

    Net loss per common share - basic and diluted        ($.02)        ($.--)




                  CALLOWAY'S NURSERY, INC. AND SUBSIDIARIES
              CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                                (In Thousands)

                                    ASSETS
                                                         March        March
                                                          31,          31,
                                                         2008         2007

    Cash and cash equivalents                           $2,701      $4,327
    Accounts receivable                                  1,368         907
    Inventories                                          5,599       6,461
    Prepaids and other assets                              147         113
    Deferred income taxes                                  324         154
      Total current assets                              10,139      11,962

    Property and equipment, net                         14,376      11,381
    Deferred income taxes                                  387         585
    Other assets                                           318         306

    Total assets                                       $25,220     $24,234

                     LIABILITIES AND SHAREHOLDERS' EQUITY

    Accounts payable and accrued expenses               $8,557      $9,439
    Current portion of long-term debt                      577         555
      Total current liabilities                          9,134       9,994

    Deferred rent payable                                  126         172
    Long-term debt, net of current portion              11,059       9,430
      Total liabilities                                 20,319      19,596

    Shareholders' equity:
     Common stock                                           72          72
     Additional paid-in capital                         10,220      10,220
     Accumulated deficit                                (3,983)     (4,246)
                                                         6,309       6,046

     Less: Treasury stock, at cost                      (1,408)     (1,408)
      Total shareholders' equity                         4,901       4,638

     Total liabilities and shareholders' equity        $25,220     $24,234



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

                                                             Quarter Ended
                                                                March 31,
                                                            2008        2007
    Cash flows from operating activities:
      Net loss                                             ($124)       ($11)
      Adjustments to reconcile net loss to
       net cash provided by operating activities:
        Depreciation and amortization                         90         110
        Net change in operating assets and liabilities       542         231
      Net cash provided by operating activities              508         330

    Cash flows from investing activities:
      Additions to property and equipment                 (2,576)     (1,406)
      Proceeds from sale of property and equipment            --         693

      Net cash used for investing activities              (2,576)       (713)

    Cash flows from financing activities:
      Proceeds from issuance of debt                       1,706         867
      Repayments of debt                                    (144)       (124)

      Net cash provided by financing activities            1,562         743

    Net increase (decrease) in cash and cash equivalents    (506)        360

    Cash and cash equivalents at beginning of period       3,207       3,967

    Cash and cash equivalents at end of period            $2,701      $4,327