Trans World Entertainment Announces Acceleration of Unvested Stock Options

ALBANY, N.Y., Dec. 20 /PRNewswire-FirstCall/ — Trans World Entertainment
Corporation (Nasdaq: TWMC) announced today that it has accelerated the vesting
of previously granted unvested options awarded annually to employees and
officers under the Company’s Stock Option Plans which had exercise prices
greater than $10.00 per share. Options to purchase approximately 2.3 million
shares became exercisable immediately, representing approximately 24% of total
options outstanding, as a result of the vesting acceleration.

The decision to accelerate vesting of these stock options was made
primarily to avoid recognizing compensation cost in the Consolidated Statement
of Operations in future financial statements upon the adoption of Statement of
Financial Accounting Standards No.123 (revised 2004), Share-Based Payment
(“SFAS 123R”), which, when effective, will require all share-based payments to
employees, including grants of employee stock options, to be recognized on the
Company’s financial statements based on their fair values. SFAS 123R will
become effective for the Company beginning January 29, 2006.

The acceleration of the vesting of these underwater stock options will
reduce the amounts recognized by the Company as share-based compensation
expense, net of income taxes, by approximately $2.4 million in 2006, $1.9
million in 2007, $1.2 million in 2008, and $0.4 million in 2009.

Trans World Entertainment is a leading specialty retailer of music, video
and video game products. The Company operates 800 retail stores in 46 states,
the District of Columbia, the U.S. Virgin Islands, Puerto Rico and e-commerce
sites, http://www.fye.com, http://www.coconuts.com, http://www.wherehouse.com
and http://www.secondspin.com. In addition to its mall locations, operated
primarily under the f.y.e brand, the Company also operates freestanding
locations under the names Coconuts Music and Movies, Strawberries Music,
Wherehouse, CD World, Spec’s, Second Spin, Streetside Records, and Planet
Music.

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.

SOURCE Trans World Entertainment Corporation

CONTACT:
John J. Sullivan, EVP, Chief Financial Officer,
Trans World Entertainment,
+1-518-452-1242;
Richard Tauberman of MWW Group,
,
+1-201-507-9500,
for Trans World Entertainment
Corporation