Trans World Entertainment Updates Fiscal Year 2005 Results

ALBANY, N.Y., April 13 /PRNewswire-FirstCall/ — Trans World Entertainment
Corporation (Nasdaq: TWMC) today updated financial results for its fourth
quarter and full fiscal year 2005. These results replace those previously
issued by the Company in its release dated March 9, 2006.

Subsequent to its March 9, 2006 release, the Company identified and
evaluated the realization of an additional deferred income tax asset that
resulted in a recorded tax benefit of $2.0 million. After giving effect to the
recognition of the associated tax asset, income before cumulative effect of a
change in accounting principle for the fourth quarter of 2005 was
$22.3 million or $0.71 per diluted share and net income was $20.0 million or
$0.64 per diluted share. For the full fiscal year 2005, income before
cumulative effect of a change in accounting principle was $2.9 million or
$0.09 per diluted share and net income was $0.6 million, or $0.02 per diluted
share.

Trans World Entertainment is a leading specialty retailer of music, video
and video game products. The Company operates over 1,100 retail stores in the
United States, the District of Columbia, the U.S. Virgin Islands, Puerto Rico.
The Company operates mall stores under the f.y.e., Sam Goody and Suncoast
brands and freestanding locations under the names Coconuts Music and Movies,
Strawberries Music, Wherehouse, Sam Goody, Spec’s and Second Spin. The Company
also operates on the web at http://www.fye.com, http://www.coconuts.com,
http://www.wherehouse.com, http://www.secondspin.com, http://www.samgoody.com
and http://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

    INCOME STATEMENTS:

    (in millions,
     except per
     share data)
                           As adjusted                 As Reported
                     Thirteen Weeks Ended          Thirteen Weeks Ended
                       January 28,  % to  January 28,  % to  January 29,  % to
                             2006  Sales        2006  Sales        2005  Sales

    Sales                  $458.6            $458.6             $513.5

    Cost of sales           307.4   67.0%     307.4   67.0%      334.7   65.2%
    Gross profit            151.2   33.0%     151.2   33.0%      178.8   34.8%

    Selling, general and
     administrative
     expenses               106.7   23.3%     106.7   23.3%      113.1   22.0%

    Depreciation
     and amortization         8.8    1.9%       8.8    1.9%        9.6    1.9%
    Income from operations   35.7    7.8%      35.7    7.8%       56.1   10.9%

    Other income             (0.6)  -0.1%      (0.6)  -0.1%       (0.5)  -0.1%

    Interest expense          1.0    0.1%       1.0    0.1%        0.6    0.1%
    Income before income taxes,
     extraordinary gain
     - unallocated goodwill
     and cumulative effect
     of change in
     accounting principle    35.3    7.8%      35.3    7.8%       55.9   10.9%

    Income tax expense       13.0    2.9%      15.0    3.4%       21.3    4.1%

    Income before extraordinary
     gain - unallocated
     goodwill and cumulative
     effect of change in
     accounting principle   $22.3    4.9%     $20.3    4.4%      $34.7    6.8%

    Extraordinary gain
     - unallocated negative
     goodwill, net of income
     taxes of $0 and
     $2.0 million for fiscal
     2005 and 2004,
     respectively              --    0.0%        --    0.0%         --    0.0%
    Cumulative effect of
     change in accounting
     principle, net of income
     taxes of $1.5 million
     and $0 for fiscal 2005
     and 2004, respectively  (2.3)  -0.5%      (2.3)  -0.5%         --    0.0%

    Net income (loss)       $20.0    4.4%     $18.0    3.9%      $34.7    6.8%

    Basic earnings (loss) per
     common share:

    Earnings per share before
     extraordinary gain
     - unallocated negative
     goodwill and cumulative
     effect of change in
     accounting principle,
     net of income taxes    $0.72             $0.65              $1.04

    Extraordinary gain
     - unallocated negative
     goodwill, net of income
     taxes of $0 and
     $2.0 million for
     fiscal 2005 and
     2004 respectively        $--               $--                $--

    Cumulative effect of
     change in accounting
     principle, net of
     income taxes of
     $1.5 million and $0
     for fiscal 2005 and
     2004 respectively     $(0.07)           $(0.07)               $--

    Basic earnings (loss)
     per common share       $0.65             $0.58              $1.04

    Weighted average number
     of common shares
     outstanding             30.8              30.8               33.2

    Diluted earnings (loss)
     per common share:

    Earnings per share before
     extraordinary gain
     - unallocated negative
     goodwill and cumulative
     effect of change in
     accounting principle,
     net of income taxes    $0.71             $0.64              $0.98

    Extraordinary gain
     - unallocated negative
     goodwill, net of
     income taxes of
     $0 and $2.0 million
     for fiscal 2005
     and 2004 respectively    $--               $--                $--

    Cumulative effect of
     change in accounting
     principle, net of
     income taxes of
     $1.5 million and $0
     for fiscal 2005 and
     2004 respectively     $(0.07)           $(0.07)               $--

    Diluted earnings (loss)
     per common share       $0.64             $0.57              $0.98

    Weighted average number
     of common shares
     outstanding             31.5              31.4               35.2


    (in millions,
     except per
     share data)
                           As adjusted                 As Reported
                       Fiscal Year Ended             Fiscal Year Ended
                       January 28,  % to  January 28,  % to  January 29,  % to
                             2006  Sales        2006  Sales        2005  Sales

    Sales                $1,238.5          $1,238.5           $1,365.1

    Cost of sales           806.9   65.1%     806.9   65.1%      870.0   63.7%
    Gross profit            431.6   34.9%     431.6   34.9%      495.1   36.3%

    Selling, general and
     administrative
     expenses               392.8   31.7%     392.8   31.7%      415.7   30.5%

    Depreciation and
     amortization            34.0    2.8%      34.0    2.8%       34.5    2.5%
    Income from operations    4.8    0.4%       4.8    0.4%       44.9    3.3%

    Other income             (2.2)  -0.1%      (2.2)  -0.1%       (1.0)  -0.1%

    Interest expense          3.0    0.2%       3.0    0.2%        2.4    0.2%
    Income before income
     taxes, extraordinary
     gain - unallocated
     goodwill and cumulative
     effect of change in
     accounting principle     4.0    0.3%       4.0    0.3%       43.5    3.2%

    Income tax expense        1.1    0.1%       3.1    0.2%        4.9    0.4%

    Income before
     extraordinary gain
     - unallocated goodwill
     and cumulative effect
     of change in
     accounting principle    $2.9    0.2%      $0.9    0.1%      $38.6    2.8%

    Extraordinary gain
     - unallocated negative
     goodwill, net of income
     taxes of $0 and
     $2.0 million for
     fiscal 2005 and 2004,
     respectively              --    0.0%        --    0.0%        3.2    0.3%
    Cumulative effect of
     change in accounting
     principle, net of
     income taxes of
     $1.5 million and $0
     for fiscal 2005 and
     2004, respectively      (2.3)  -0.2%      (2.3)  -0.2%         --   0.0%

    Net income (loss)        $0.6    0.0%     $(1.4)  -0.1%      $41.8   3.1%

    Basic earnings (loss)
     per common share:
    Earnings per share
     before extraordinary
     gain - unallocated
     negative goodwill and
     cumulative effect of
     change in accounting
     principle, net of
     income taxes           $0.09             $0.03              $1.12

    Extraordinary gain
     - unallocated negative
     goodwill, net of income
     taxes of $0 and
     $2.0 million for
     fiscal 2005 and 2004
     respectively             $--               $--              $0.09

    Cumulative effect of
     change in accounting
     principle, net of income
     taxes of $1.5 million
     and $0 for fiscal 2005
     and 2004 respectively $(0.07)           $(0.07)               $--

    Basic earnings (loss)
     per common share       $0.02            $(0.04)             $1.21

    Weighted average number
     of common shares
     outstanding             32.0              32.0               34.5

    Diluted earnings
     (loss) per
     common share:

    Earnings per share
     before extraordinary
     gain - unallocated
     negative goodwill and
     cumulative effect of
     change in accounting
     principle, net of
     income taxes           $0.09             $0.03              $1.06

    Extraordinary gain
     - unallocated negative
     goodwill, net of
     income taxes of $0 and
     $2.0 million for
     fiscal 2005 and
     2004 respectively        $--               $--              $0.09

    Cumulative effect of
     change in accounting
     principle, net of
     income taxes of
     $1.5 million and $0
     for fiscal 2005 and
     2004 respectively     $(0.07)           $(0.07)               $--

    Diluted earnings (loss)
     per common share       $0.02            $(0.04)             $1.15

    Weighted average number
     of common shares
     outstanding             32.1              32.0               36.3

    SELECTED BALANCE SHEET
     CAPTIONS:
    (in millions, except
     store data)
    Cash and cash equivalents                $197.2             $229.8
    Merchandise inventory                     402.7              431.2
    Fixed assets (net)                        132.5              130.2
    Accounts payable                          322.8              358.4
    Long-term debt and capital
     lease obligations,
     less current portion                      19.5               12.0

    Stores in operation                         782                810

SOURCE Trans World Entertainment Corporation

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