Trans World Entertainment Announces Fourth Quarter and Fiscal Year 2007 Results

Trans World Entertainment Announces Fourth Quarter and Fiscal Year 2007 Results

ALBANY, N.Y., March 6 /PRNewswire-FirstCall/ -- Trans World Entertainment Corporation (NASDAQ:TWMC) today reported financial results for its fourth quarter and fiscal year ended February 2, 2008.

For the fourth quarter, total sales decreased 23% to $451.5 million compared to $586.7 million in 2006. Comparable store sales for the quarter decreased 12%. The fourth quarter of 2006 contained fourteen weeks compared to thirteen weeks in 2007.

For the fourth quarter of 2007, the Company recorded a net loss of $66.0 million, or $2.12 per share. This year's fourth quarter results included a non-cash tax expense of $43.4 million, or $1.39 per share for the quarter, to establish a full valuation allowance against the Company's deferred tax assets, pursuant to Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes". The deferred tax valuation allowance relates to accounting requirements in situations where a company experiences a cumulative pre-tax loss in its most recent three fiscal years. Additionally, this year's fourth quarter results included a non-cash impairment charge to write down certain long-lived assets, pursuant to SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", totaling $30.7 million or $0.99 per share for the quarter. For the fourth quarter of 2006 net income was $37.8 million or $1.17 per diluted share.

For fiscal year 2007, total sales decreased 14% to $1.266 billion compared to $1.471 billion in 2006. Comparable store sales for fiscal year 2007 decreased 8%. Fiscal year 2006 contained fifty-three weeks compared to fifty- two weeks in 2007.

Net loss for fiscal 2007 was $99.4 million, or $3.20 per share. For fiscal year 2006, net income was $11.7 million, or $0.36 per diluted share.

Trans World Entertainment is a leading specialty retailer of entertainment software, including music, video and video games and related products. The Company operates over 800 retail stores in the United States, the District of Columbia, the U.S. Virgin Islands, and Puerto Rico, primarily under the names f.y.e. for your entertainment and Suncoast and on the web at www.fye.com, www.wherehouse.com, www.secondspin.com, www.samgoody.com and www.suncoast.com.

Certain statements in this release set forth management's intentions, plans, beliefs, expectations or predictions of the future based on current facts and analyses. Actual results may differ materially from those indicated in such statements. Additional information on factors that may affect the business and financial results of the Company can be found in filings of the Company with the Securities and Exchange Commission.

                   TRANS WORLD ENTERTAINMENT CORPORATION                             Financial Results    STATEMENTS OF OPERATION:    (in millions, except per share data)                           Thirteen and Fourteen                              Weeks Ended (1)        Fiscal Year Ended (2)                        Feb. 2, % to  Feb. 3,% to Feb. 2,  % to  Feb. 3, % to                         2008   Sales  2007  Sales  2008   Sales  2007  Sales    Net sales            $451.5        $586.7     $1,265.7     $1,471.2    Cost of sales         299.4   66.3% 382.9 65.3%  819.9  64.8% 952.0  64.7%   Gross profit          152.1   33.7% 203.8 34.7%  445.8  35.2% 519.2  35.3%    Selling, general and    administrative    expenses             111.7   24.7% 137.0 23.3%  433.2  34.2% 482.4  32.8%    Impairment charge      30.7    6.8%     -  0.0%   30.7   2.4%    -    0.0%    Depreciation and    amortization           9.9    2.2%   9.3  1.7%   37.2   3.0%  36.8   2.5%   (Loss) income from    operations            (0.2)   0.0%  57.5  9.7%  (55.3) -4.4%   0.0   0.0%    Other income           (0.3)   0.0%  (0.4)-0.1%   (0.4)  0.0%  (4.4) -0.3%   Interest expense        1.3    0.3%   1.4  0.2%    6.5   0.5%   5.5   0.4%    (Loss) income before    income taxes,    extraordinary    gain - unallocated    goodwill              (1.2)  -0.3%  56.5  9.6%  (61.4) -4.9%  (1.1) -0.1%    Income tax expense    (benefit)             64.8   14.3%  24.1  4.1%   38.0   3.0%  (2.1) -0.2%    (Loss) income before    extraordinary gain -    unallocated goodwill (66.0) -14.6%  32.4  5.5%  (99.4) -7.9%   1.0   0.1%    Extraordinary gain -    unallocated negative    goodwill, net of income    taxes                    -    0.0%   5.4  0.9%      -   0.0%  10.7   0.7%    Net (loss) income    $(66.0) -14.6% $37.8  6.4% $(99.4) -7.9% $11.7   0.8%     Basic (loss) earnings    per common share:   (Loss) earnings per    common share before    extraordinary gain -    unallocated negative    goodwill            $(2.12)        $1.05      $( 3.20)      $0 .03    Extraordinary gain -    unallocated negative    goodwill, net of    income taxes             -          0.18            -         0.35    Basic (loss) earnings    per common share    $(2.12)        $1.23       $(3.20)       $0.38    Weighted average    number of common    shares outstanding    31.1          30.9         31.0        30.8    Diluted (loss) earnings    per common share:   (Loss) earnings per    common share before    extraordinary gain -    unallocated negative    goodwill            $(2.12)        $1.00       $(3.20)      $0.03    Extraordinary gain -    unallocated negative    goodwill, net of    income taxes             -          0.17            -        0.33    Diluted (loss)    earnings per common    share               $(2.12)        $1.17       $(3.20)      $0.36    Weighted average    number of common    shares - diluted      31.1          32.4         31.0        32.0                                                 February 2, February 3,   SELECTED BALANCE SHEET CAPTIONS:               2008        2007   (in millions, except store data)   Cash and cash equivalents                     $74.7      $118.6   Merchandise inventory                         440.2       504.9   Fixed assets (net)                             82.2       138.3   Accounts payable                              237.8       311.4   Long-term debt and capital lease    obligations, less current portion             12.6        16.1    Stores in operation                             813         992    (1) - The fourth fiscal quarter ended February 2, 2008 contains 13 weeks.         The fourth fiscal quarter ended February 3, 2007 contains 14 weeks.    (2) - The fiscal year ended February 2, 2008 contains 52 weeks.         The fiscal year ended February 3, 2007 contains 53 weeks.  

First Call Analyst:
FCMN Contact:

Source: Trans World Entertainment Corporation

CONTACT: John J. Sullivan, EVP, Chief Financial Officer, Trans World
Entertainment, +1-518-452-1242; or Richard Tauberman, MWW Group,
+1-201-964-2408, rtauberman@mww.com

Web site: http://www.twec.com/

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Profile: International Entertainment