MINNEAPOLIS, May 4 /PRNewswire-FirstCall/ -- Appliance Recycling Centers of America, Inc. (NASDAQ:ARCI) today reported sales of $17,916,000 for the first quarter of 2006 ended April 1, an increase of 6% from $16,909,000 in the year-earlier period. ARCA's net loss for this period came to $678,000 or $0.16 per share, compared to the net loss of $433,000 or $0.10 per share in the first quarter of 2005. Same-store sales of the 11 ApplianceSmart factory outlets that were open during the complete first quarters of 2006 and 2005 increased 4%, while total retail sales rose 6% to $15,837,000. ApplianceSmart's third factory outlet in the Atlanta market will open in this year's second quarter, bringing the total number of stores to 14 nationally. First quarter recycling revenues of $1,763,000 were substantially unchanged from the level in the year-earlier period. Utilities generally increase their advertising support in the second quarter, which is expected to have a positive impact on recycling volumes. ARCA has submitted a proposal for an extension of the appliance recycling program sponsored by Southern California Edison Company for the years 2006 through 2008. This proposal covers substantially the same southern California territory as the 2004-2005 program, which has been rolled over into 2006, pending approval of ARCA's proposal by California's Public Utilities Commission. ARCA also has submitted a proposal for renewing its appliance recycling program with San Diego Gas & Electric. Edward R. (Jack) Cameron, president and chief executive officer, commented: "ARCA's results were affected by seasonal conditions that typically cause the first quarter to be ApplianceSmart's weakest period of the year. In addition, we temporarily delayed planned newspaper advertising in our large Minnesota market until we negotiated more favorable advertising rates. We also believe high gasoline prices and rising interest rates could have affected the discretionary purchasing decisions of our value-conscious customer base. The second and third quarters are typically ApplianceSmart's seasonally strongest periods, and we entered the second quarter with increased advertising support to coincide with this anticipated strengthening. While the impact of national economic conditions on our customers remains a concern, we believe the second quarter should be a stronger period for our retail operation." About ARCA Through its ApplianceSmart ( http://www.appliancesmart.com/ ) operation, ARCA 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 virtually new appliances at a discount to full retail, offers a 100% money-back guarantee and provides warranties on parts and labor. As of May 2006, ApplianceSmart was operating 13 factory outlets: five in the Minneapolis/St. Paul market; three in the Columbus, Ohio, market; two in the Atlanta market; two in San Antonio, Texas and one in Los Angeles. ARCA is also one of the nation's largest recyclers of major household appliances for the energy conservation programs of electric utilities. Statements about ARCA's outlook are forward-looking and involve risks and uncertainties, including but not limited to: the strength of recycling programs, the growth of appliance retail sales, the speed at which individual retail stores reach profitability, and other factors discussed in the Company's filings with the Securities and Exchange Commission. Visit our web sites at http://www.arcainc.com/ and http://www.appliancesmart.com/ . Appliance Recycling Centers of America, Inc. and Subsidiaries CONSOLIDATED STATEMENT OF OPERATIONS 1st Quarter 2006 Results (000's omitted except for share amounts) Three months ended April 1 April 2 2006 2005 Revenues Retail $15,837 $14,911 Recycling 1,763 1,754 Byproduct 316 244 Total revenues 17,916 16,909 Cost of Revenues 12,692 11,806 Gross profit 5,224 5,103 Selling, General & Administrative Expenses 5,665 5,338 Operating loss (441) (235) Other Expense Other expense (3) (2) Interest expense (234) (196) Loss before provision for income taxes (678) (433) Provision for (Benefit of) Income Taxes - - Net loss $(678) $(433) Basic Loss per Common Share $(0.16) $(0.10) Diluted Loss per Common Share $(0.16) $(0.10) Basic Weighted Average No. of Common Shares Outstanding 4,322 4,144 Diluted Weighted Average No. of Common Shares Outstanding 4,322 4,144 Appliance Recycling Centers of America, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEET As of April 1, 2006 (000's) April 1, December 31, 2006 2005 (Unaudited) Assets Current Assets Cash and cash equivalents $2,614 $2,095 Receivables - net of allowance of $252,000 2,063 2,896 Inventories, net of reserves of $255,000 and $379,000 respectively 12,746 11,900 Deferred income taxes 393 393 Other current assets 296 449 Total Current Assets 18,112 17,733 Property and Equipment, at cost Land 1,140 2,050 Building and Improvements 2,220 4,501 Equipment 6,320 6,299 9,680 12,850 Less accumulated depreciation 6,195 6,798 Net property and equipment 3,485 6,052 Asset Held for Sale, Net 2,437 - Other assets 357 356 Restricted cash 50 350 Total Assets $24,441 $24,491 Liabilities and Shareholders' Equity Current Liabilities Line of credit $6,357 $6,125 Current maturities of long term obligations 399 262 Accounts payable 4,499 3,868 Accrued expenses 3,343 3,541 Income taxes payable 58 58 Total Current Liabilities 14,656 13,854 Long-Term Obligations, less current maturities 4,626 4,823 Deferred Income Tax Liabilities 393 393 Total Liabilities 19,675 19,070 Shareholders' Equity Common stock, no par value; authorized 10,000,000 shares; issued and outstanding 4,328,000 and 4,320,000 shares respectively 14,863 14,840 Accumulated Deficit (10,097) (9,419) Total Shareholders' Equity 4,766 5,421 Total Liabilities and Shareholders' Equity $24,441 $24,491 DATASOURCE: Appliance Recycling Centers of America, Inc. CONTACT: Edward R. (Jack) Cameron (CEO), +1-952-930-9000, or Linda A. Koenig (CFO), +1-952-930-9000, both of Appliance Recycling Centers of America, Inc., or Richard G. Cinquina, of Equity Market Partners, +1-904-261-2210 Web site: http://www.appliancesmart.com/ http://www.arcainc.com/

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