THIRD QUARTER FILING ON FORM 10-Q
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
_X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
NOVEMBER 1, 1997
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT FOR THE TRANSITION PERIOD
FROM ____ TO ____
COMMISSION FILE NUMBER: 0-14818
TRANS WORLD ENTERTAINMENT CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK 14-1541629
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
38 Corporate Circle
Albany, New York 12203
(Address of principal executive offices, including zip code)
(518) 452-1242
(Registrant's telephone number, including area code)
Indicate by a check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for shorter period that the
Registrant was required to file such reports, and (2) has been subject to such
filing requirements for the past 90 days. YES _X_ NO ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $01 par value,
19,718,666 shares outstanding as of December 15, 1997
<PAGE>
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Form 10-Q
Page No.
PART 1. FINANCIAL INFORMATION
Item 1 - Financial Statements (unaudited)
Condensed Consolidated Balance Sheets - November 1, 1997,
February 1, 1997 and November 2, 1996 3
Condensed Consolidated Statements of Income - Thirteen Weeks Ended
and Thirty-Nine Weeks Ended November 1, 1997 and November 2, 1996 5
Condensed Consolidated Statements of Cash Flows - Thirty-Nine Weeks
Ended November 1, 1997 and November 2, 1996 6
Notes to Condensed Consolidated Financial Statements 7
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders 15
Item 6 - Exhibits and Reports on Form 8-K 16
Signatures 16
<PAGE>
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
November 1, February 1, November 2,
1997 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,590 $ 54,771 $ 8,324
Merchandise inventory 216,659 163,509 214,084
Other current assets 9,844 14,654 25,671
----------- ----------- ----------
Total current assets 231,093 232,934 248,079
----------- ----------- ----------
VIDEOCASSETTE RENTAL INVENTORY, net 4,060 4,784 5,926
DEFERRED TAX ASSET 3,926 3,098 430
FIXED ASSETS:
Property, plant and equipment 176,738 169,292 170,288
Less: Fixed asset write-off reserve 5,924 7,571 9,781
Allowances for depreciation and
amortization 101,070 96,747 96,106
----------- ----------- ----------
69,744 64,974 64,401
----------- ----------- ----------
OTHER ASSETS 4,111 4,263 3,558
----------- ----------- ----------
TOTAL ASSETS $ 312,934 $ 310,053 $ 322,394
=========== =========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
(unaudited)
<TABLE>
<CAPTION>
November 1, February 1, November 2,
1997 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 135,454 $ 118,980 $ 116,936
Notes payable 10,707 --- 32,806
Accrued expenses and other 7,632 9,403 4,418
Store closing reserve 9,874 13,747 15,262
Current portion of long-term debt
and capital lease obligations 96 9,557 8,603
----------- ----------- -----------
Total current liabilities 163,763 151,687 178,025
----------- ----------- -----------
LONG-TERM DEBT, less current portion 35,000 43,983 44,912
CAPITAL LEASE OBLIGATIONS, less current portion 6,435 6,507 6,531
OTHER LIABILITIES 6,554 6,514 6,296
----------- ----------- -----------
TOTAL LIABILITIES 211,752 208,691 235,764
----------- ----------- -----------
SHAREHOLDERS' EQUITY:
Preferred stock ($.01 par value; 5,000,000 shares
authorized; none issued) --- --- ---
Common stock ($.01 par value; 20,000,000 shares
authorized; 9,898,478 9,809,594 and 9,783,594 shares
issued, respectively) 99 98 98
Additional paid-in capital 25,010 24,540 24,417
Treasury stock, at cost (40,394 41,394 and 41,394
shares, respectively) (394) (407) (407)
Unearned compensation - restricted stock (193) (245) (144)
Retained earnings 76,660 77,376 62,666
----------- ----------- -----------
TOTAL SHAREHOLDERS' EQUITY 101,182 101,362 86,630
----------- ----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 312,934 $ 310,053 $ 322,394
=========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
-------------------------- --------------------------
November 1, November 2, November 1, November 2,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales $ 114,737 $ 97,583 $ 329,273 $ 300,922
Cost of sales 71,075 61,366 206,821 192,920
----------- ----------- ----------- -----------
Gross profit 43,662 36,217 122,452 108,002
Selling, general and
administrative expenses 37,193 33,899 108,249 100,262
Depreciation and amortization 3,807 3,475 11,035 10,655
----------- ----------- ----------- -----------
Income (loss) from operations 2,662 (1,157) 3,168 (2,915)
Interest expense 1,069 2,657 4,354 8,800
----------- ----------- ----------- -----------
Income (loss) before income taxes 1,593 (3,814) (1,186) (11,715)
Income tax expense (benefit) 614 (1,337) (470) (4,107)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 979 $ (2,477) $ (716) $ (7,608)
=========== =========== =========== ===========
Earnings (loss) per share $ 0.10 $ (0.25) $ (0.07) $ (0.78)
=========== =========== =========== ===========
Weighted average number of
common shares outstanding 9,852 9,741 9,809 9,738
=========== =========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
TRANS WORLD ENTERTAINMENT AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Thirty-Nine Weeks Ended
--------------------------
November 1, November 2,
1997 1996
----------- -----------
<S> <C> <C>
----------- -----------
NET CASH USED BY OPERATING ACTIVITIES: $ (27,016) $ (37,680)
----------- -----------
INVESTING ACTIVITIES:
Acquisition of property and equipment (16,616) (5,672)
Disposal of videocassette rental inventory, net 724 796
----------- -----------
Net cash used by investing activities (15,892) (4,876)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 35,000 ---
Payments of long-term debt and capital lease obligations (53,516) (3,738)
Net increase (decrease) in revolving line of credit 10,707 (32,454)
Proceeds from issuance of common stock 1 1
Increase in additional paid-in capital 470 181
Decrease in treasury stock due to reissuance of shares 13 96
Decrease (increase) in unearned compensation from issuance
of shares of restricted stock 52 (144)
----------- -----------
Net cash used by financing activities (7,273) (36,058)
----------- -----------
Net decrease in cash and cash equivalents (50,181) (78,614)
Cash and cash equivalents, beginning of period 54,771 86,938
----------- -----------
Cash and cash equivalents, end of period $ 4,590 $ 8,324
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Basis of Presentation
The accompanying unaudited financial statements consist of Trans World
Entertainment Corporation and its subsidiaries, (the "Company"), all of which
are wholly owned. All significant intercompany accounts and transactions have
been eliminated. Joint venture investments, none of which are material, are
accounted for using the equity method.
These interim condensed financial statements have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission. The
information furnished in these condensed consolidated financial statements
reflect all normal, recurring adjustments which, in the opinion of management,
are necessary for a fair presentation of such financial statements. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to rules and regulations applicable to interim
financial statements.
These unaudited condensed consolidated financial statements should be read in
conjunction with the audited financial statements included in the Company's
Annual Report on Form 10-K for the fiscal year ended February 1, 1997.
Note 2. Restructuring Charge
In order to streamline operations and close unprofitable store locations, the
Company recorded pre-tax restructuring charges of $35 million in 1995 and $21
million 1994. The restructuring charges include the write-down of assets,
estimated cash payments to landlords for early termination of operating leases
and the cost for returning product to the Company's distribution center and
vendors. The charge also includes estimated legal, lender and consulting
fees, including those that the Company was obligated to pay on behalf of its
lenders while working to renegotiate its credit agreements.
<PAGE>
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 2. Restructuring Charge (cont'd)
In determining the components of the reserves, management analyzed all of the
aspects of closing stores and the costs that are incurred. An analysis of the
amounts comprising the restructuring reserve and the charges against the
reserve for the period from February 1, 1997 through November 1, 1997 are
outlined below (in thousands):
<TABLE>
<CAPTION>
Balance /-----Charges-----\ Balance
as of Y-T-D as of
02/01/97 2nd Qtr 3rd Qtr 11/01/97
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Non-cash write-offs $ 7,671 $ 1,300 $ 570 $ 5,801
Cash outflows 13,647 2,969 681 9,997
-------- -------- -------- --------
Total $ 21,318 $ 4,269 $ 1,251 $ 15,798
======== ======== ======== ========
</TABLE>
Note 3. Seasonality
The Company's business is seasonal in nature, with the highest sales and
earnings occurring in the fourth fiscal quarter.
Note 4. Earnings (Loss) Per Share
Earnings (loss) per share is based on the weighted average number of common
shares outstanding during each fiscal period. Common stock equivalents,
related to stock options, which would have a dilutive effect based on current
market prices, did not have a material effect on earnings (loss) per share in
the periods presented. (See exhibit 11: Statement re computation of per
share earnings)
<PAGE>
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 5. Recently Issued Accounting Standards
Financial Accounting Standards Board Statement No. 128, "Earnings per Share"
("Statement No. 128"), issued in February 1997 and effective for financial
statements for both interim ending after December 15, 1997, establishes and
simplifies standards for computing and presenting earnings per share ("EPS").
Implementation of Statement No. 128 will not have a material impact on the
Company's computation or presentation of EPS, as the Company's common stock
equivalents either have had no material effect on EPS amounts or have been
anti-dilutive with respect to losses.
Financial Accounting Standards Board Statement No. 130, "Reporting
Comprehensive Income" ("Statement No. 130"), issued in June 1997 and effective
for fiscal years beginning after December 15, 1997, establishes standards for
reporting and display of the total of net income and the components of all
other nonowner changes in equity, or comprehensive income, either below net
income(loss) in the statement of operations, in a separate statement of
comprehensive income(loss) or within the statement of changes of stockholders'
equity. The Company has had no significant items of other comprehensive
income.
<PAGE>
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following is an analysis of the Company's results of operations, liquidity
and capital resources. To the extent that such analysis contains statements
which are not of a historical nature, such statements are forward-looking
statements, which involve risks and uncertainties. These risks include, but
are not limited to, changes in the competitive environment for the Company's
products, including the entry or exit of non-traditional retailers of the
Company's products to or from its markets; the release by the music industry
of an increased or decreased number of "hit releases", general economic
factors in markets where the Company's products are sold, and other factors
discussed in the Company's filings with the Securities and Exchange
Commission.
RESULTS OF OPERATIONS
Thirteen Weeks Ended November 1, 1997
Compared to the Thirteen Weeks Ended November 2, 1996
Sales. Total sales increased 18% to $114.7 million for the thirteen weeks
ended November 1, 1997, compared to $97.6 million for the same period last
year. The increase in total sales is due to a combination of higher customer
traffic (which is the result of enhanced merchandising and marketing
strategies and a stronger new release schedule) and the acquisition of
Strawberries on October 8, 1997, which added $4.0 million to sales for the
quarter (90 stores and approximately 346,000 square feet of retail selling
space).
Comparable store sales increased 11.6%, which is measured against last year's
4.3% increase and is the Company's seventh consecutive quarter of comparable
store sales growth.
The Company operated 551 stores and 2.4 million square feet of retail selling
space at the end of the quarter compared to 497 stores and 2.0 million square
feet in 1996.
Gross Profit. Gross profit as a percentage of sales increased to 38.1% in the
third quarter ended November 1, 1997, from 37.1% in the third quarter of 1996.
The increase is the result of a higher initial markon due primarily to a
favorable product mix of higher margin catalog sales.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses ("S,G&A"), expressed as a percentage of sales,
decreased to 32.4% in the thirteen week period ended November 1, 1997,
compared to 34.7% in the same period of 1996, as the Company continues to
leverage its operating expenses against sales.
<PAGE>
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(continued)
Interest Expense. Net interest expense was reduced to $1.1 million for the
quarter compared to $2.7 million in the third quarter of 1996. The decrease
is the result of lower average outstanding balances under the revolving line
of credit, lower outstanding long-term debt and lower interest rates, due to
the refinancing completed in the second quarter. Total debt at the end of the
quarter was approximately $52.2 million compared to last years $92.9 million.
Net Income (Loss). The Company recorded net income of $1.0 million for the
thirteen weeks ended November 1, 1997 compared to a net loss of $2.5 million
for the same period in 1996. The improved performance can be attributed to
the comparable store sales increase, improved gross margin rates, leverage of
SG&A expenses and lower interest expense.
Thirty-Nine Weeks Ended November 1, 1997
Compared to the Thirty-Nine Weeks Ended November 2, 1996
Sales. The Company's total sales increased $28.4 million, or 9%, to $329.3
million for the thirty-nine weeks ended November 1, 1997, compared to $300.9
million for the same period last year. The increase in sales is due to
enhanced merchandising and marketing initiatives combined with an overall
improvement in the music and video specialty retail industry. Additionally,
the acquisition of Strawberries on October 8, 1997, accounted for
approximately $4.0 million of the increase in total sales.
Comparable store sales increased by 8.4% which is measured against last year's
4.6% increase.
Gross Profit. Gross profit as a percentage of sales improved to 37.2% in the
first nine months of 1997, compared 35.9% in 1996. The increase is due to a
higher initial markon and higher purchase discounts combined with a greater
percentage of higher margin catalog sales.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses ("S,G&A"), as a percentage of sales, decreased to
32.9% in the first nine months of 1997 from 33.3% in the first nine months of
1996. The 1996 percentage reflects the receipt of $2.5 million upon the
termination of a business development agreement which was recorded as a
reduction of S,G&A. Excluding the receipt of $2.5 million, S,G&A as a
percentage of sales improved in 1997 from 34.1% in 1996 as the Company
continues to leverage its operating expenses against sales.
<PAGE>
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(continued)
Interest Expense. Net interest expense decreased to $4.4 million in the
thirty-nine week period ended November 1, 1997, from $8.8 million in the same
period of 1996. The decrease is the result of lower average outstanding
balances under the revolving line of credit, lower outstanding long-term debt
and lower interest rates (which are the result of the refinancing completed in
the second quarter).
Net Loss. The Company reduced its net loss to $0.7 million in the thirty-nine
weeks ended November 1, 1997 from a net loss of $7.6 million during the same
period last year. The 1996 loss reflects the receipt of $2.5 million upon the
termination of a business development agreement. Excluding the receipt of
$2.5 million the Company's net loss in 1996 would have been $9.2 million. The
improved performance can be attributed to the comparable store sales increase,
improved gross margin rates, leverage of S,G&A expenses and lower interest
expense.
<PAGE>
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(continued)
LIQUIDITY AND CAPITAL RESOURCES
Liquidity and Sources of Capital. Cash generated from earnings continued to
be the Company's primary source of liquidity during the first nine months of
the fiscal year. The Company had unused lines of credit aggregating
approximately $54.3 million at November 1, 1997.
The Company's working capital at November 1, 1997 was $67.3 million and its
ratio of current assets to current liabilities was 1.4 to 1. During the first
nine months of 1997, the Company's net cash used by operations was $27.0
million, compared to $37.7 million used in the first nine months of 1996. The
most significant uses of cash during the period were $53.2 million for
inventory purchases (substantially all of which occurred in the third quarter
in anticipation of holiday season inventory requirements) including $16.0
million related to the acquisition of existing inventory at 90 Strawberries
locations, offset by an increase in accounts payable of $16.5 million, as the
Company continues to leverage its vendor payables against inventory. Also
during the period, the Company has spent $16.6 million on the acquisition of
property and equipment, $7.8 million to reduce total debt and $5.6 million
relating to the reduction of accrued expenses and store closing reserves.
On July 9, 1997, the Company finalized a new Loan and Security Agreement with
Congress Financial Corporation. The new agreement replaced the Company's
existing debt by making $100 million available to the Company under a new
revolving credit facility, at favorable financing terms.
At a special meeting of shareholders held on November 14, 1997, shareholders
approved an amendment to the Company's Certificate of Incorporation
authorizing up to 50 million shares of common stock. Previously the Company
was authorized to issue up to 20 million shares.
Also on November 14, 1997, the Company's Board of Director's approved a
two-for-one split of the Company's common stock, in the form of a 100% stock
dividend. The stock dividend is payable on December 15, 1997, to shareholders
of record at the close of business on December 1, 1997. Total shares
outstanding increased to 19,718,666 on December 15, 1997. The Board's
decision to split the stock was based on the Company's continued strong
performance and positive outlook for the future. The stock split will bring
the price of the Company's stock to a level that the Company believes is more
desirable to a wider range of investors, thus broadening the stockholder base
and increasing investor liquidity and marketability.
<PAGE>
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(continued)
CAPITAL EXPENDITURES
During the thirty-nine weeks ended November 1, 1997, the Company had capital
expenditures of $16.6 million. The Company has opened or relocated 33 new
stores and closed 51 stores during the period. Additionally, on October 8,
1997, the Company announced it had closed on the purchase of substantially all
of the assets of Strawberries, Inc., a privately-held retailer of pre-recorded
music and video, based in Milford, MA. The purchase added 90 stores and
approximately 346,000 square feet of retail selling space.
PROVISION FOR BUSINESS RESTRUCTURING
The Company is experiencing the earnings and cash flow benefits which are the
result of a comprehensive business restructuring plan that began in the 4th
quarter of 1994. Through the first nine months of 1997, the Company has
closed or relocated a total of 315 stores that were performing below financial
expectations. The Company continues to monitor the financial performance of
its stores and continues to close underperforming stores. The restructuring
is expected to be completed during fiscal 1998. The Company will also open
new stores that meet its standards for projected sales and profitability.
<PAGE>
PART II. OTHER INFORMATION
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
Item 4 - Submission of Matters to a Vote of Security Holders
A) An Annual Meeting of Shareholders of Trans World Entertainment
Corporation was held on Thursday, June 5, 1997.
B) In the case of each individual nominee named below, authority to
vote was withheld with respect to the number of shares shown
opposite their name in Column 1, and each nominee received the
number of votes set opposite their name in Column 2 for election
as director of the Corporation.
-------------------------
Column 1 Column 2
Name of Nominee Withheld Votes for
-------------------- -------------------------
Robert J. Higgins 2,726 9,296,750
Dean S. Adler 3,526 9,295,950
George W. Dougan 4,246 9,295,230
Charlotte G. Fischer 4,726 9,294,750
Isaac Kaufman 5,246 9,294,230
Matthew H. Mataraso 3,226 9,296,250
Dr. Joseph G. Morone 3,526 9,295,950
C) A Special Meeting of Shareholders of Trans World Entertainment
Corporation was held on Friday, November 14, 1997.
D) A proposal to amend Trans World Entertainment Corporation's
Certificate of Incorporation to increase the number of authorized
shares of Common Stock to 50,000,000 shares, was approved as
follows:
FOR - 7,551,676
AGAINST - 1,081,165
ABSTAIN - 17,076
<PAGE>
PART II. OTHER INFORMATION
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
(continued)
Item 6 - Exhibits and Reports on Form 8-K
(A) Exhibits
Exhibit No. Description Page No.
----------- -------------------------------------- --------
11 Statement re computation of per share earnings 17
27 Financial Data Schedule N/A
(electronic filing only)
(B) Reports on Form 8-K
The Company filed a report on form 8-K announcing its acquisition of
the majority of the assets of Strawberries, a privately-held specialty
retailer of pre-recorded music and video.
Omitted from this part II are items which are not applicable or to which the
answer is negative to the periods covered.
SIGNATURES
Pursuant to the requirements of the Securities and 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
December 16, 1997 By: /s/ ROBERT J. HIGGINS
--------------------------
Robert J. Higgins
Chairman, President and Chief Executive Officer
(Principal Executive Officer)
December 16, 1997 By: /s/ JOHN J. SULLIVAN
-------------------------
John J. Sullivan
Senior Vice President-Finance and Chief Financial Officer
(Principal Financial and Chief Accounting Officer)
TRANS WORLD ENTERTAINMENT CORPORATION AND SUBSIDIARIES
Exhibit 11: Statement re computation of per share earnings
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
-------------------------- --------------------------
November 1, November 2, November 1, November 2,
1997 1996 1997 1996
----------- ----------- ----------- -----------
(In thousands except per share data.)
<S> <C> <C> <C> <C>
Primary:
- --------
Weighted average shares outstanding 9,852 9,741 9,809 9,738
Net effect of dilutive stock options
based on the treasury stock method
using the average market price 276 N/A N/A N/A
----------- ----------- ----------- -----------
10,128 9,741 9,809 9,738
=========== =========== =========== ===========
Net income (loss) $979 ($2,477) ($716) ($7,608)
=========== =========== =========== ===========
Per share amount $0.10 ($0.25) ($0.07) ($0.78)
=========== =========== =========== ===========
Fully Diluted:
- --------------
Weighted average shares outstanding 9,852 9,741 9,809 9,738
Net effect of dilutive stock options
based on the Treasury Stock method
using the period end price if higher
than the average market price 284 N/A N/A N/A
----------- ----------- ----------- ----------
Total 10,136 9,741 9,809 9,738
=========== =========== =========== ==========
Net income (loss) $979 ($2,477) ($716) ($7,608)
=========== =========== =========== ===========
Per share amount $0.10 ($0.25) ($0.07) ($0.78)
=========== =========== =========== ===========
</TABLE>
N/A = Not applicable as options would have an anti-dilutive effect.
(1) = Fully diluted per share amounts have been excluded from the condensed
consolidated financial statements, for each period predented, as the
difference between primary and fully diluted per share amounts is immaterial
(less than three percent of earnings per weighted average common share
outstanding).
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS DATA EXTRACTED FROM THE CONDENSED
CONSOLIDATED BALANCE SHEETS AND THE CONDENSED CONSOLIDATED
STATEMENTS OF INCOME, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
<CIK> 0000795212
<NAME> TRANS WORLD ENTERTAINMENT CORPORATION
<MULTIPLIER> 1,000
<CAPTION>
AMOUNT
ITEM DESCRIPTION (IN THOUSANDS, EXCEPT PER SHARE DATA)
- ---------------- -------------------------------------
<S> <C>
<FISCAL-YEAR-END> Jan-31-1998
<PERIOD-START> Feb-02-1997
<PERIOD-END> Nov-01-1997
<PERIOD-TYPE> 9-MOS
<CASH> 4,590
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 216,659
<CURRENT-ASSETS> 231,093
<PP&E> 176,738
<DEPRECIATION> 101,070
<TOTAL-ASSETS> 312,934
<CURRENT-LIABILITIES> 163,763
<BONDS> 41,435
0
0
<COMMON> 99
<OTHER-SE> 101,083
<TOTAL-LIABILITY-AND-EQUITY> 312,934
<SALES> 329,273
<TOTAL-REVENUES> 329,273
<CGS> 206,821
<TOTAL-COSTS> 206,821
<OTHER-EXPENSES> 119,284
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,354
<INCOME-PRETAX> (1,186)
<INCOME-TAX> (470)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (716)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
