Trans World Entertainment Updates Fourth Quarter and Fiscal Year 2006 Results

ALBANY, N.Y., April 12 /PRNewswire-FirstCall/ — Trans World Entertainment
Corporation (Nasdaq: TWMC) today updated financial results for its fourth
quarter and full fiscal year 2006, which had been previously issued by the
Company in its release dated March 1, 2007.

Subsequent to its March 1, 2007 release, the Company settled certain
outstanding matters related to the acquisition of substantially all of the net
assets of Musicland Holding Corp., resulting in a $1.8 million increase in the
extraordinary gain, net of tax, recorded in 2006. Additionally, the Company
updated its income tax provision for the year. Income before extraordinary
gain for the fourth quarter of 2006 was $32.4 million, or $1.00 per diluted
share and net income was $37.8 million, or $1.17 per diluted share. For the
full fiscal year 2006, income before extraordinary gain was $1.0 million, or
$0.03 per diluted share and net income was $11.7 million, or $0.36 per diluted
share. The Company previously reported full fiscal year 2006 net income of
$10.2 million, or $0.32 per diluted share.

Trans World Entertainment is a leading specialty retailer of entertainment
software, including music, home video and video games and related products.
The Company operates nearly 1,000 retail stores in the United States, the
District of Columbia, the U.S. Virgin Islands, and Puerto Rico under various
brands. The Company is in the process of re-branding the majority of its
stores (Coconuts Music and Movies, Strawberries Music, Wherehouse, Sam Goody
and Spec’s) to the name f.y.e. for your entertainment. The Company also
operates over 130 video only stores primarily under the Suncoast brand 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

    INCOME STATEMENTS:             As Adjusted           As Reported
    (in millions, except per     Fourteen Weeks     Fourteen and Thirteen
    share data)                     Ended (1)           Weeks Ended (1)

                                 February       February       January
                                    3,    % to     3,    % to    28,    % to
                                   2007   Sales   2007   Sales   2006   Sales
    Sales                         $586.7         $586.7         $458.6

    Cost of sales                  382.9  65.3%   382.9  65.3%   307.4  67.0%
    Gross profit                   203.8  34.7%   203.8  34.7%   151.2  33.0%

    Selling, general and
     administrative expenses       137.0  23.3%   137.0  23.3%   106.7  23.3%

    Depreciation and amortization    9.3   1.7%     9.3   1.7%     8.8   1.9%
    Income from operations          57.5   9.7%    57.5   9.7%    35.7   7.8%

    Other income                    (0.4) -0.1%    (0.4) -0.1%    (0.6) -0.1%

    Interest expense                 1.4   0.2%     1.4   0.2%     1.0   0.1%
    Income (loss) before income
     taxes, extraordinary gain -
     unallocated goodwill and
     cumulative effect of change
     in accounting principle        56.5   9.6%    56.5   9.6%    35.3   7.8%

    Income tax expense (benefit)    24.1   4.1%    23.7   4.0%    13.0   2.8%

    Income before extraordinary
     gain - unallocated goodwill
     and cumulative effect of
     change in accounting
     principle                     $32.4   5.5%   $32.8   5.6%   $22.3   5.0%

    Extraordinary gain -
     unallocated negative
     goodwill, net of income
     taxes                           5.4   0.9%     3.6   0.6%     -     0.0%
    Cumulative effect of change
     in accounting principle, net
     of income taxes                 -     0.0%     -     0.0%    (2.3) -0.5%

    Net income                     $37.8   6.4%   $36.4   6.2%   $20.0   4.5%

    Basic earnings per common
     share:
    Earnings per share before
     extraordinary gain -
     unallocated negative
     goodwill and cumulative
     effect of change in
     accounting principle, net of
     income taxes                  $1.05          $1.06          $0.72

    Extraordinary gain -
     unallocated negative
     goodwill, net of income
     taxes                          0.18           0.12            -

    Cumulative effect of change
     in accounting principle, net
     of income taxes                 -              -            (0.07)

    Basic earnings per common
     share                         $1.23          $1.18          $0.65

    Weighted average number of
     common shares outstanding      30.9           30.9           30.8

    Diluted earnings per common
     share:
    Earnings per share before
     extraordinary gain -
     unallocated negative
     goodwill and cumulative
     effect of change in
     accounting principle, net of
     income taxes                  $1.00          $1.01          $0.71

    Extraordinary gain -
     unallocated negative
     goodwill, net of income
     taxes                          0.17           0.11            -

    Cumulative effect of change
     in accounting principle, net
     of income taxes                 -              -            (0.07)

    Diluted earnings per common
     share                         $1.17          $1.12          $0.64

    Weighted average number of
     common shares outstanding      32.4           32.4           31.5


    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


    (1) - The fourth fiscal quarter ended February 3, 2007 contains 14 weeks.
           The fourth fiscal quarter ended January 28, 2006 contains 13
           weeks.

    (2) - The fiscal year ended February 3, 2007 contains 53 weeks.
           The fiscal year ended January 28, 2006 contains 52 weeks.



                      TRANS WORLD ENTERTAINMENT CORPORATION
                                Financial Results

    INCOME STATEMENTS:      As Adjusted                As Reported
    (in millions, except
    per share data)     Fiscal Year Ended (2)      Fiscal Year Ended (2)


                            February         February         January
                               3,     % to      3,     % to     28,     % to
                              2007    Sales    2007    Sales    2006    Sales
    Sales                   $1,471.2         $1,471.2         $1,238.5

    Cost of sales              952.0  64.7%     952.0  64.7%     806.9  65.1%
    Gross profit               519.2  35.3%     519.2  35.3%     431.6  34.9%

    Selling, general and
     administrative
     expenses                  482.4  32.8%     482.4  32.8%     392.8  31.7%

    Depreciation and
     amortization               36.8   2.5%      36.8   2.5%      34.0   2.8%
    Income from operations       0.0   0.0%       0.0   0.0%       4.8   0.4%

    Other income                (4.4) -0.3%      (4.4) -0.3%      (2.2) -0.2%

    Interest expense             5.5   0.4%       5.5   0.4%       3.0   0.3%
    Income (loss) before
     income taxes,
     extraordinary gain -
     unallocated goodwill
     and cumulative effect
     of change in
     accounting principle       (1.1) -0.1%      (1.1) -0.1%       4.0   0.3%

    Income tax expense
     (benefit)                  (2.1) -0.2%      (2.4) -0.2%       1.1   0.1%

    Income before
     extraordinary gain -
     unallocated goodwill
     and cumulative effect
     of change in
     accounting principle       $1.0   0.1%      $1.3   0.1%      $2.9   0.2%

    Extraordinary gain -
     unallocated negative
     goodwill, net of
     income taxes               10.7   0.7%       8.9   0.6%       -     0.0%
    Cumulative effect of
     change in accounting
     principle, net of
     income taxes                -     0.0%       -     0.0%      (2.3) -0.2%

    Net income                 $11.7   0.8%     $10.2   0.7%      $0.6   0.0%

    Basic earnings per
     common share:
    Earnings per share
     before extraordinary
     gain - unallocated
     negative goodwill and
     cumulative effect of
     change in accounting
     principle, net of
     income taxes              $0.03            $0.04            $0.09

    Extraordinary gain -
     unallocated negative
     goodwill, net of
     income taxes               0.35             0.29              -

    Cumulative effect of
     change in accounting
     principle, net of
     income taxes                -                -              (0.07)

    Basic earnings per
     common share              $0.38            $0.33            $0.02

    Weighted average number
     of common shares
     outstanding                30.8             30.8             32.0

    Diluted earnings per
     common share:
    Earnings per share
     before extraordinary
     gain - unallocated
     negative goodwill and
     cumulative effect of
     change in accounting
     principle, net of
     income taxes              $0.03            $0.04            $0.09

    Extraordinary gain -
     unallocated negative
     goodwill, net of
     income taxes               0.33             0.28              -

    Cumulative effect of
     change in accounting
     principle, net of
     income taxes                -                -              (0.07)

    Diluted earnings per
     common share              $0.36            $0.32            $0.02

    Weighted average number
     of common shares
     outstanding                32.0             32.0             32.1


    SELECTED BALANCE SHEET
     CAPTIONS:
    (in millions, except
     store data)
    Cash and cash
     equivalents              $118.6           $118.6           $197.2
    Merchandise inventory      504.9            504.9            402.7
    Fixed assets (net)         138.9            138.9            132.5
    Accounts payable           311.4            311.3            307.7
    Long-term debt and
     capital lease
     obligations, less
     current portion            16.1             16.1             19.5

    Stores in operation          992              992              782


    (1) - The fourth fiscal quarter ended February 3, 2007 contains 14 weeks.
           The fourth fiscal quarter ended January 28, 2006 contains 13
           weeks.

    (2) - The fiscal year ended February 3, 2007 contains 53 weeks.
           The fiscal year ended January 28, 2006 contains 52 weeks.

SOURCE:
Trans World Entertainment

CONTACT:
John J. Sullivan
EVP
Chief Financial Officer of Trans World
Entertainment
+1-518-452-1242

Rich Tauberman of MWW Group
+1-201-507-9500