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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 7, 1996
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TRANS WORLD ENTERTAINMENT CORPORATION
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(Exact name of registrant as specified in its charter)
New York 0-14818 14-1541629
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification
incorporation) Number)
38 Corporate Circle, Albany, New York 12203
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(Address of principal executive offices) (zip code)
Registrant's telephone number,including area code (518) 452-1242
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Item 5. Other Events
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The Registrant announced four principal developments: (a) the Company will
close approximately 150 underperforming stores over the next two years; (b) a
restructuring charge for its fourth fiscal quarter ended February 3, 1996,
equal to $35,000,000 on a pre-tax basis, $17,000,000 of which is a non-cash
write off of related store assets; (c) forecasted net income for the fourth
fiscal quarter ended February 3, 1996, before the restructuring charge, of
$1.25 to $1.40 per share; and (d) a default and accompanying waiver of certain
financial covenants contained in its senior credit facilities, all as more
fully set forth in the Press Release, dated February 6, 1996 (the "Press
Release") issued by the Registrant. The description herein is qualified in
its entirety by reference to the full text of the Press Release filed as
Exhibit 99 hereto and incorporated herein by reference.
Item 7. Financial Statements and Exhibits
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(c) Exhibits
Number Description Page No.
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99 Press Release, dated February 6, 1996 issued
by Trans World Entertainment Corporation. 3
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRANS WORLD ENTERTAINMENT
CORPORATION
February 7, 1996 By: /s/ ROBERT J. HIGGINS
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Date Robert J. Higgins
President and Director
(Principal Executive Officer)
February 7, 1996 By: /s/ JOHN J. SULLIVAN
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Date John J. Sullivan
Senior Vice President - Finance
(Chief Financial and
Accounting Officer)
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EXHIBIT 99
FROM: Trans World Entertainment Corporation
38 Corporate Circle
Albany, NY 12203
MWW/Strategic Communications, Inc.
Public Relations - (201) 507-9500
Contact: Michael W. Kempner E-mail: mkempner @mww.com
Carreen Winters E-mail: cwinters @mww.com
TRANS WORLD ENTERTAINMENT CORPORATION ANNOUNCES PLANS TO CLOSE UNDERPERFORMING
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STORES
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STRATEGIC PLAN TO IMPROVE PROFITABILITY AND MAINTAIN INDUSTRY LEADERSHIP
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POSITION
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ALBANY, NY, February 6, 1996 -- Trans World Entertainment Corporation
(Nasdaq:TWMC) today announced that as part of its plan to return the Company
to historical levels of profitability, it will close approximately 150
underperforming stores over the next two years. These closings are in
addition to the 180 stores closed in 1995. After the closings the Company
will operate approximately 400 stores.
"Trans World has a core of strong, profitable locations. We expect this
continued focus on our best stores to build on the improvements demonstrated
by our holiday performance and maximize our profitability within the framework
of today's competitive retail environment," said Trans World Chairman and
Chief Executive Officer Robert J. Higgins. "This strategic move will position
the Company with the most productive stores, allowing us to better serve our
customers and maintain our position as an industry leader."
"One year ago we began implementing a plan to improve the Company's
performance which included some new merchandising initiatives, a renewed focus
on customer service and the elimination of some underperforming locations,"
added Higgins. "We have learned from experience that focusing on our
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TRANS WORLD STORE CLOSINGS/TAKE 2
strongest markets and most profitable locations has a significant impact, and
will be a key to building on the progress made last year. We will minimize
the impact of the store closings on our employees through normal attrition and
by placing the majority of our associates in other stores within the Company."
As a result of the store closings, the Company will take a restructuring
charge of $35 million in the fourth quarter of the fiscal year ended February
3, 1996. Approximately $17 million of the charge is a non-cash write off of
related store assets. The Company currently forecasts net income for the
fourth quarter of fiscal 1995, before the impact of the restructuring charge,
of $1.25 to $1.40 per share. The $35 million restructuring charge, after
income taxes, will reduce the fourth quarter profit by approximately $23
million, or $2.38 per share. The Company expects to report a net loss for the
quarter after the restructuring charge of $.98 to $1.13. The Company will
realize significant benefits from the elimination of the operating losses
associated with these stores as scheduled closings are completed, as well as
generate significant working capital which will be used to reduce debt and to
explore future business opportunities.
As a result of the restructuring charge, the Company is in technical
default of certain financial covenants contained in its senior credit
facilities. The Company has received waivers for the defaults from its
lenders and is working with its bank and noteholder groups to restructure the
applicable credit facilities.
Trans World Entertainment Corporation is one of the nation's largest
specialty retailers of prerecorded music and video products, operating 542
stores under several names, including Record Town, Tape World, For Your
Entertainment, Saturday Matinee and Coconuts Music & Movies.
