Appliance Recycling Centers of America Reports First Quarter Operating Results

MINNEAPOLIS, May 11 /PRNewswire-FirstCall/ -- Appliance Recycling Centers of
America, Inc. (Nasdaq: ARCI) today reported operating results for the first
quarter ended April 4, 2009.

Total revenues for the first quarter of 2009 increased 1.8% to $26.2 million
from $25.7 million in the first quarter of 2008. ARCA reported a first quarter
2009 operating loss of $1.7 million compared to operating income of $0.6
million during the same period of 2008. The first quarter 2009 operating loss
was due primarily to lower retail gross profit compared to 2008. Gross profit
as a percentage of total revenues declined to 24.2% for the first quarter of
2009 compared to 31.4% for the first quarter of 2008. The decline was due
primarily to price compression on product to remain competitive with other
retailers in the current economic environment and to lower same store sales.
The Company reported a loss from continuing operations of $2.0 million or
$0.43 per diluted share for the first quarter of 2009 compared to income from
continuing operations of $0.3 million or $0.07 per diluted share for the same
period of the previous year.

Comparable store revenues from the fifteen ApplianceSmart Factory Outlets
operating during the entire first quarters of 2009 and 2008 decreased 8.9%,
while total store revenues increased 11.0% to $20.9 million from $18.9 million
during the same period of 2008 due to the opening of five factory outlet
stores later in 2008 and early 2009. The decline in comparable store revenues
was due primarily to the price compression previously mentioned along with the
lower same store sales. Revenues from ARCA's recycling segment decreased 23.8%
to $5.2 million in the first quarter of 2009 compared to revenues of $6.8
million in the same period of 2008. The decrease was due primarily to lower
recycling volumes in California and, to a lesser extent, lower scrap metal
prices compared to the first quarter of 2008. Selling expenses as a percentage
of total revenues in the first quarter of 2009 increased to 21.3% compared to
18.7% for the previous year. General and administrative expenses as a
percentage of total revenues decreased to 9.3% in the first quarter of 2009
from 10.3% in the first quarter of 2008. The Company's net loss for the first
quarter was $2.0 million or $0.43 per diluted share compared to net income of
$0.1 million or $0.03 per share for the first quarter of 2008.

Edward R. (Jack) Cameron, President and Chief Executive Officer, commented:
"The first quarter of 2009 continued to be a very difficult operating
environment. While our ApplianceSmart Factory Outlets actually performed well
in the Minnesota and Ohio markets, the Georgia market was very challenging.
The Georgia market has two new retail outlets that have been open for less
than two quarters, so it will take some time before they gain momentum in the
continued sluggish retail economy. For our appliance recycling business, we
feel good overall about our operating results in the first quarter. While
total revenues were down, the operating profit before corporate allocations
for the recycling segment increased 18% compared to the first quarter of
2008."

About ARCA
ARCA (www.arcainc.com) is one of the nation's largest recyclers of major
household appliances for the energy conservation programs of electric
utilities. The Company is also the exclusive North American distributor for
UNTHA Recycling Technology (URT), one of the world's leading manufacturers of
technologically advanced refrigerator recycling systems and recycling
facilities for electrical household appliances and electronic scrap. Through
its ApplianceSmart operation (www.appliancesmart.com), ARCA also is one of the
nation's leading retailers of special-buy household appliances, primarily
those manufactured by Maytag, GE, Frigidaire and Whirlpool. These special-buy
appliances, which include close-outs, factory overruns and scratch-and-dent
units, typically are not integrated into the manufacturer's normal
distribution channel. ApplianceSmart sells these new appliances at a discount
to full retail, offers a 100% money-back guarantee and provides warranties on
parts and labor. As of May 2009, ApplianceSmart was operating 20 factory
outlets: six in the Minneapolis/St. Paul market; one in Rochester, Minn.,
market, four in the Columbus, Ohio, market; six in the Atlanta market; and
three in San Antonio, Texas. As previously announced, the Company will open an
ApplianceSmart Factory Outlet in Cumming, Ga., in August 2009.

This press release contains statements that are forward-looking statements as
defined within the Private Securities Litigation Reform Act of 1995, including
statements regarding ARCA's future success. These forward-looking statements
are subject to risks and uncertainties that could cause actual results to
differ materially from the statements made, including the risks associated
with general economic conditions, competition in the retail and recycling
industries and regulatory risks. Other factors that could cause operating and
financial results to differ are described in ARCA's periodic reports filed
with the Securities and Exchange Commission. Other risks may be detailed from
time to time in reports to be filed with the SEC.

APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)

Three Months Ended
April 4, March 29,
2009 2008
Revenues:
Retail $20,940 $18,858
Recycling 4,562 5,944
Byproduct 656 900
Total revenues 26,158 25,702

Costs of revenues 19,829 17,641
Gross profit 6,329 8,061
Selling, general and administrative expenses 8,011 7,454
Operating income (loss) (1,682) 607

Other income (expense):
Interest expense, net (319) (397)
Other expenses, net 24 -
Income (loss) from continuing operations before
income taxes (1,977) 210
Benefit of income taxes (15) (117)
Income (loss) from continuing operations (1,962) 327
Loss from discontinued operations, net of tax - (210)
Net income (loss) $(1,962) $117

Basic income (loss) per share:
Continuing operations $(0.43) $0.07
Discontinued operations - (0.04)
Net income (loss) $(0.43) $0.03

Diluted income (loss) per share:
Continuing operations $(0.43) $0.07
Discontinued operations - (0.04)
Net income (loss) $(0.43) $0.03

Weighted average number of shares outstanding:
Basic 4,578 4,556
Diluted 4,578 4,624

APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)

April 4, January 3,
2009 2009
(unaudited)
Asset
Current assets:
Cash and cash equivalents $1,732 $3,498
Accounts receivable, net of allowance of
$331 and $292, respectively 4,587 6,056
Inventories, net of reserves of $300 and
$115, respectively 16,750 18,834
Other current assets 741 950
Deferred income taxes 448 448
Total current assets 24,258 29,786
Property and equipment, net 6,902 6,967
Deferred income taxes 174 177
Other assets 495 485
Total assets $31,829 $37,415

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $4,344 $4,473
Checks issued in excess of cash in bank 85 -
Accrued expenses 3,980 4,073
Line of credit 11,381 14,527
Current maturities of long-term obligations 446 579
Income taxes payable 31 362
Total current liabilities 20,267 24,014

Long-term obligations, less current maturities 4,966 4,892
Deferred income tax liabilities 519 520
Total liabilities 25,752 29,426

Commitments and contingencies - -

Shareholders' equity:
Common Stock, no par value; 10,000 shares
authorized; issued and outstanding:
4,578 shares 16,373 16,221
Accumulated deficit (9,891) (7,929)
Accumulated other comprehensive loss (405) (303)
Total shareholders' equity 6,077 7,989
Total liabilities and shareholders' equity $31,829 $37,415

SOURCE Appliance Recycling Centers of America, Inc.

Edward R. (Jack) Cameron, CEO, or Peter Hausback, EVP and CFO,
+1-952-930-9000, both of Appliance Recycling Centers of America, Inc.