Trans World Entertainment Reports Third Quarter Results

ALBANY, N.Y.–(BUSINESS WIRE)–Nov. 8, 2000–Trans World
Entertainment Corporation (Nasdaq National Market:TWMC) today
announced total sales of $265.6 million for its third quarter ended
October 28, 2000, compared to $276.0 million for the same period last
year.

The net loss before one-time charges was $3.1 million or ($0.06)
per share, compared to net income of $3.8 million or $0.07 per share,
in the comparable 1999 quarter. The one-time charges which totaled
$13.1 million, resulted from an $11.0 million reserve for IRS claims
and a $2.1 million write-off of an investment in an internet business.
The IRS claims result from a court decision disallowing the deduction
of interest expenses related to corporate owned life insurance
policies (COLI) taken by Camelot Music prior to Trans World’s
acquisition of Camelot. After these charges, net loss for the quarter
was $15.6 million, or ($0.32) per share.

Comparable store sales in the third quarter of 2000 decreased 4%.
Gross profit as a percentage of sales decreased to 34.5% of sales
compared to 35.1% in the third quarter of 1999. Selling, general &
administrative expenses, including the $2.1 million charge, increased
to 34.0% of sales from 29.4% in the third quarter of 1999.

“We are disappointed with the sales for the third quarter, which
were impacted by the weakness of the new release schedule,” commented
Robert J. Higgins, Trans World’s Chairman and Chief Executive Officer.
“We are seeing positive trends in the fourth quarter, and our stores
are prepared for a strong holiday season. We continue to have
confidence in our ability to deliver strong sales and earnings in the
fourth quarter.”

Sales for the thirty-nine week period ended October 28, 2000 were
$861.2 million, compared to $840.3 million for the same period last
year. Net income before one-time charges for the thirty-nine week
period was $12.4 million, or $0.25 per share, compared to $0.8
million, or $0.02 per share, in the comparable 1999 period. Results
for last year’s thirty-nine week period include a $25.7 million
one-time pre-tax charge for costs related to the Camelot merger.

Trans World Entertainment is a leading specialty retailer of music
and video products. The Company operates retail stores in 46 states,
the District of Columbia, the U.S. Virgin Islands, Puerto Rico and an
e-commerce site, www.twec.com. Mall locations include Camelot, Record
Town, The Wall, Disc Jockey and Saturday Matinee and F.Y.E.
Freestanding locations include Coconuts Music and Movies, Strawberries
Music, Spec’s and Planet Music.

Certain statements in this report 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


INCOME STATEMENTS:
(in millions, except per share data)

                                  Thirteen Weeks Ended
                       --------------------------------------------
                       October 28,    % to   October 30,    % to
                           2000      Sales       1999      Sales
                       --------------------------------------------

Sales                     $265.6                $276.0

Cost of sales              173.9    65.5%        179.0    64.9%
                       --------------------------------------------
Gross profit                91.7    34.5%         97.0    35.1%

Selling, general and
   administrative 
   expenses                 90.2    34.0%         81.3    29.4%

Camelot merger costs                 0.0%

Depreciation and 
  amortization               9.1     3.4%          9.3     3.4%
                       --------------------------------------------
Income (loss) 
  from operations           (7.6)   -2.9%          6.4     2.3%

Interest expense 
  (income)                  (0.5)   -0.2%         (0.1)    0.0%
                       --------------------------------------------
Income (loss) before 
  income taxes              (7.1)   -2.7%          6.5     2.4%

Income tax expense 
  (benefit)                  8.5     3.2%          2.7     1.0%
                       --------------------------------------------

NET INCOME (LOSS)         ($15.6)   -5.9%         $3.8     1.4%
                       ============================================

Basic earnings per 
common share:
Earnings (loss) 
  per share               ($0.32)                $0.07
                       =============         =============
Weighted average 
  number of
  common shares 
  outstanding               48.4                  52.8
                       =============         =============

Diluted earnings per 
common share:
Earnings (loss) 
  per share               ($0.32)                $0.07
                       =============         =============
Weighted average 
  number of
  common shares 
  outstanding               48.4                  54.0
                       =============         =============


SELECTED BALANCE SHEET CAPTIONS:
(in millions, except store data)

Cash and cash equivalents
Merchandise inventory
Fixed assets (net)
Accounts payable
Long-term debt and capital 
  lease obligations, less 
  current portion

Stores in operation


                                    Thirty Nine Weeks Ended
                       -----------------------------------------------
                       October 28,    % to      October 30,    % to
                          2000        Sales        1999        Sales
                       -----------------------------------------------

Sales                    $861.2                   $840.3

Cost of sales             554.7       64.4%        535.8       63.8%
                       --------------------------------------------

Gross profit              306.5       35.6%        304.5       36.2%

Selling, general and
   administrative 
   expenses               264.7       30.7%        249.9       29.7%

Camelot merger costs                   0.0%         25.7        3.0%

Depreciation and 
  amortization             26.3        3.1%         26.7        3.2%
                       --------------------------------------------

Income (loss) from 
  operations               15.5        1.8%          2.2        0.3%

Interest expense 
  (income)                 (2.5)      -0.3%          0.8        0.1%
                       --------------------------------------------

Income (loss) before 
  income taxes             18.0        2.1%          1.4        0.2%

Income tax expense 
  (benefit)                17.9        2.1%          0.6        0.1%
                       --------------------------------------------

NET INCOME (LOSS)          $0.1        0.0%         $0.8        0.1%
                       ============================================

Basic earnings per 
common share:
Earnings (loss) 
  per share               $0.00                    $0.02
                       =============         =============

Weighted average 
  number of
  common shares 
  outstanding              48.8                     52.3
                       =============         =============

Diluted earnings per 
common share:
Earnings (loss) 
  per share               $0.00                    $0.02
                       =============         =============

Weighted average 
  number of
  common shares 
  outstanding              49.7                     53.2
                       =============         =============


SELECTED BALANCE 
SHEET CAPTIONS:
(in millions, 
except store data)

Cash and cash equivalents $72.7                    $86.7
Merchandise inventory     471.8                    495.7
Fixed assets (net)        139.1                    141.8
Accounts payable          259.9                    313.5
Long-term debt and 
  capital lease 
  obligations, less 
  current portion          15.2                     19.7

Stores in operation         935                      980