8-K

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): November 15, 2012

TRANS WORLD ENTERTAINMENT
CORPORATION

(Exact name of registrant as specified in its charter)

New York	0-14818	14-1541629
(State or other jurisdiction of incorporation or organization)	(Commission file number)	(I.R.S. Employer Identification No.)

38 Corporate Circle,
Albany, New York 12203
(Address of principal executive offices)

(518) 452-1242
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On November 15, 2012, Trans World Entertainment Corporation issued a press release announcing its financial results for its fiscal third quarter ended October 27, 2012. A copy of Trans World Entertainment Corporation’s press release is furnished with this report as Exhibit 99.1, and is incorporated herein by reference.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K is being furnished under Item 2.02 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act.

ITEM 7.01. REGULATION FD DISCLOSURE

Attached hereto as Exhibit 99.2 is the transcript for the earnings conference call of Trans World Entertainment Corporation held on November 15, 2012. The information in this Current Report on Form 8-K, including the exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section. Furthermore, such information, including the exhibit attached hereto, shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Certain information contained in this Current Report on Form 8-K, including information in Exhibit 99.2 hereto, is forward-looking information based on current expectations and plans that involve risks and uncertainties. Forward-looking information includes, among other things, statements concerning results of operations and Trans World Entertainment Corporation’s strategies. Trans World Entertainment Corporation cautions that there are factors that can cause actual results to differ materially from the forward-looking information that has been provided. The reader is cautioned not to put undue reliance on this forward-looking information, which is not a guarantee of future performance and is subject to a number of uncertainties and other factors, many of which are outside the control of Trans World Entertainment Corporation; accordingly, there can be no assurance that such suggested results will be realized. For a list of Trans World Entertainment Corporation’s risk factors, see the Company’s Annual Filing on Form 10-K with the Securities and Exchange Commission for the year ended January 28, 2012.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS

          (c) EXHIBITS. The following are furnished as Exhibits to this Report:

Exhibit No.	Description
99.1	Trans World Entertainment Corporation Press Release dated November 15, 2012.
99.2	Trans World Entertainment Corporation Transcript for Earnings Call held on November 15, 2012.

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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
Date: November 16, 2012	/s/ John Anderson
	John Anderson
	Acting Chief Financial Officer

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Trans World Entertainment Corporation Press Release dated November 15, 2012.
99.2	Trans World Entertainment Corporation Transcript of Earnings Call held on November 15, 2012.

EX-99.1

Exhibit 99.1

	Contact: Trans World Entertainment John Anderson Acting Chief Financial Officer	Contact: Financial Relations Board Marilynn Meek (mmeek@frbir.com)
	(518) 452-1242	(212) 827-3773
38 Corporate Circle
Albany, NY 12203

www.twec.com NEWS RELEASE

TRANS WORLD ENTERTAINMENT ANNOUNCES THIRD QUARTER RESULTS

Net Loss Reduced By 51%

          Albany, NY, November 15, 2012 — Trans World Entertainment Corporation (Nasdaq: TWMC) today reported financial results for its third quarter ended October 27, 2012. For the third quarter of 2012, the Company reported a $2.3 million decrease in its net loss to $2.2 million, or a loss of $0.07 per diluted share, compared to a net loss of $4.5 million, or a loss of $0.14 per diluted share, for the same period last year.

          Comparable store sales for the quarter were down 2% compared to the same quarter last year. Total sales for the quarter decreased 17% to $91.8 million compared to $110.0 million in 2011. During the quarter, the Company operated an average of 378 stores compared to 440 stores last year, a 14% decline.

          “The third quarter marked our 11th consecutive quarter of improved operating results,” said Robert J. Higgins, Chairman and Chief Executive Officer of Trans World Entertainment. “We’re moving in the right direction and look forward to the remainder of 2012 and beyond.”

          Gross profit for the quarter was $34.7 million, or 37.9% of sales, as compared to $40.7 million, or 37.0%, of sales for the same period last year. The 90 basis point increase in gross profit as a percentage of sales was due to higher margin rates across the majority of our product categories.

          Selling, general and administrative expenses (“SG&A expenses”) decreased 18% for the quarter to $35.4 million compared to $43.0 million for the comparable period last year. The reduction in SG&A expenses was due to the closing of underperforming stores and continued effective expense management. As a percentage of sales, SG&A expenses were 38.6% in the quarter compared to 39.1% for the same period last year.

          For the thirty-nine weeks ended October 27, 2012, the Company reported a $13.1 million decrease in its net loss to $1.3 million, or a loss of $0.04 per diluted share, compared to a net loss of $14.3 million, or a loss of $0.46 per diluted share, for the same period last year. For the thirty-nine weeks ended October 27, 2012, comparable store sales were flat as compared to last year. Total sales for the thirty-nine weeks ended October 27, 2012 decreased 16% to $295.1 million, compared to $349.5 million for the same period in 2011.

          Gross profit for the thirty-nine weeks ended October 27, 2012 was $112.4 million, or 38.1% of sales, compared to $128.9 million, or 36.9%, of sales for the same period last year. For the thirty-nine

weeks ended October 27, 2012, SG&A expenses decreased 20% to $108.9 million compared to $136.1 million in the comparable period last year. As a percentage of sales, SG&A expenses improved by 200 basis points to 36.9% from 38.9% for the same period last year.

          Cash on hand at the end of the quarter was $59.9 million, compared to $19.0 million at the end of the third quarter last year. The Company did not require any borrowings under its line of credit at any point during fiscal 2012 and fiscal 2011. Inventory was $178.3 million at the end of the quarter, versus $223.5 million at the end of the third quarter last year, a reduction of 20%.

          Trans World will host a teleconference call today, Thursday, November 15, 2012, at 10:00 AM ET to discuss its financial results. Interested parties can listen to the simultaneous webcast on the Company’s corporate website, www.twec.com.

          Trans World Entertainment is a leading specialty retailer of entertainment products, including video, music, electronics, trend, video games and related products. The Company operates retail stores in the United States, the District of Columbia, the U.S. Virgin Islands, and Puerto Rico, primarily under the names f.y.e. for your entertainment and Suncoast and on the web at www.fye.com, www.wherehouse.com, and www.secondspin.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.

—    table to follow —

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TRANS WORLD ENTERTAINMENT CORPORATION
Financial Results

STATEMENTS OF OPERATIONS:
(in thousands, except per share data)
	Thirteen Weeks Ended												Thirty-nine Weeks Ended
	October 27, 2012			% to Sales			October 29, 2011			% to Sales			October 27, 2012			% to Sales			October 29, 2011			% to Sales
Net sales	$	91,769					$	109,996					$	295,094					$	349,483
Cost of sales		57,032			62.1	%		69,344			63.0	%		182,724			61.9	%		220,550			63.1	%
Gross profit		34,737			37.9	%		40,652			37.0	%		112,370			38.1	%		128,933			36.9	%
Selling, general and administrative expenses		35,417			38.6	%		43,049			39.1	%		108,928			36.9	%		136,112			38.9	%
Depreciation and amortization		948			1.0	%		1,345			1.2	%		2,774			0.9	%		4,666			1.3	%
Income (loss) from operations		(1,628	)		-1.7	%		(3,742	)		-3.4	%		668			0.2	%		(11,845	)		-3.4	%
Interest expense, net		513			0.6	%		774			0.7	%		1,805			0.6	%		2,399			0.7	%
Income (loss) before income taxes		(2,141	)		-2.3	%		(4,516	)		-4.1	%		(1,137	)		-0.4	%		(14,244	)		-4.1	%
Income tax expense (benefit)		47			0.1	%		(5	)		0.0	%		141			0.0	%		90			0.0	%
Net income (loss)	$	(2,188	)		-2.4	%	$	(4,511	)		-4.1	%	$	(1,278	)		-0.4	%	$	(14,334	)		-4.1	%
Basic income (loss) per common share:
Basic income (loss) per share	$	(0.07	)				$	(0.14	)				$	(0.04	)				$	(0.46	)
Weighted average number of common shares outstanding - basic		31,555						31,454						31,543						31,445
Diluted income (loss) per common share:
Diluted income (loss) per share	$	(0.07	)				$	(0.14	)				$	(0.04	)				$	(0.46	)
Weighted average number of common shares outstanding - diluted		31,555						31,454						31,543						31,445
SELECTED BALANCE SHEET CAPTIONS:													October 27,						October 29,
(in thousands, except store data)													2012						2011
Cash and cash equivalents													$	59,931					$	19,017
Merchandise inventory														178,332						223,528
Fixed assets (net)														15,264						17,968
Accounts payable														65,002						78,539
Borrowings under line of credit														—						—
Long-term debt, less current portion														2,250						4,399
Stores in operation, end of period														376						440

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EX-99.2

Exhibit 99.2

Trans World Entertainment’s Q3 2012 Results - Earnings Call Transcript
November 15, 2012

Executives

Bob Higgins - Chairman & Chief Executive Officer

John Anderson - Acting Chief Financial Officer

Analysts

William Myers - Miller Asset Management

Harsha Gowda - BlueShore

Trans World Entertainment Corporation (TWMC) Q3 2012 Earnings Call November 15, 2012 10:00 AM ET

Operator

Welcome to the Trans World Entertainment Third Quarter 2012 Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions). As a reminder, this conference is being recorded.

I would now like to introduce your host for today’s presentation, Mr. Bob Higgins, Chairman and CEO of Trans World Entertainment. Sir, you may begin.

Bob Higgins - Chairman & Chief Executive Officer

Thank you, Howard. Good morning. Thank you for joining us as we discuss as we discuss our third quarter and year-to-date results. On the call with me today are, Mike Honeyman, our President and Chief Operating Officer, and John Anderson, our Acting Chief Financial Officer.

I am very pleased to announce our 11^th consecutive quarter of improved operating results, driven by continued improvement in our gross margin rate and reduced SG&A expenses.

For the third quarter, our net loss improved by $2.3 million, or 51% to a net loss of $2.2 million from a net loss of $4.5 million in third quarter of last year. Year-to-date, our net loss improved approximately $13 million or 92% to a net loss of $1.3 million from a net loss of $14.3 million during the same period last year.

For the third quarter, our comp store sales were down 2%. Total sales for the quarter were $91.8 million, a decrease of 17% compared to last year as our average stores in operation declined by 14%.

Now, I’ll touch on our sales performance by category for the quarter. Video comp sales increased 6%. Video represented 45% of our business during the quarter versus 42% last year. The comp sales increase for the quarter was driven by new release led by Avengers and Hunger Games as well as continued strong performance in our catalog business.

Music comp sales declined 14%. New releases were down considerably in the third quarter versus last year. Music category represented 31% of our business for the quarter, compared to 35% last year.

Electronics comp sales increased 2%. Electronics represented 10% of our business for the quarter, compared to 9% last year. Trend comp sales increased 10%. Trend represented 10% of our business for the quarter, compared to 9% last year. Video games comps sales were down 20%. Game sales represented 4% of our business for the quarter compared to 5%, last year.

Now John will take you through financial highlights for the quarter. John?

John Anderson - Acting Chief Financial Officer

Thanks Bob. Good morning. As Bob mentioned, our net loss for the quarter improved $2.3 million to a loss of $2.2 million, or a loss of $0.07 per diluted share as compared to the last year’s net loss of $4.5 million, or a loss of $0.14 per diluted share. Year-to-date, our net loss improved by approximately $13 million to $1.3 million from a net loss of $14.3 million in the same period for 2011.

EBITDA improved $1.7 million, or 71% for the quarter to a loss of $680,000 from last year’s loss of $2.4 million. Year-to-date, EBITDA improved $10.6 million to earnings of $3.4 million, compared to last year’s loss of $7.2 million.

Our gross margin rate for the quarter increased 90 basis points to 37.9% of sales from 37% of sales last year. The increase in gross profit as a percentage of sales was due to higher margin rates across the majority of our product categories.

SG&A expenses were $35.4 million, a reduction of 18% from last year’s third quarter. SG&A expenses as a percent of sales were 38.6%, as compared to 39.1% for the same period last year. The decrease in SG&A expenses was driven by the closing of underperforming stores and continued focus on effective expense management.

Net interest expense was $513,000 in the quarter versus $774,000 last year as we are realizing the benefit of our amended credit facility.

We ended the quarter with cash of $60 million compared to $90 million last year and did not require any borrowings under our line of credit at any point during the year. Year-over-year, we have lowered our inventory by $45 million and finished the quarter with $178 million in inventory, 20% below last year’s $223 million.

We ended the quarter with 376 stores and 2.3 million square feet in operation, versus last year’s 440 stores and 2.9 million square feet, a 15% decline in store count.

Now, I’ll turn it back over to Bob.

Bob Higgins - Chairman & Chief Executive Officer

Thanks, John. We continue to improve our operating results during the third quarter. Year-to-date, we’ve reduced our net loss by approximately $13 million or 91%. We continue to make significant progress and our results reflect that.

Our comp sales were driven by a strong performance in Video and continued improvement in our Electronics and Trend categories.

The improvement in our operating results have been driven by continued higher gross margin rates in the majority of our merchandise categories and through reductions in operating expenses. We’ve been able to reduce operating expenses by challenging each and every component of our business to improve and become more efficient, while at the same time investing in people, technology and merchandise to support our future.

We continue to streamline operations, improve processes and reduce expenses. Year-to-date, we’ve opened or relocated eight stores. In 2013, we expect to capitalize on additional new store opening opportunities. As John mentioned, we ended the quarter with cash of $60 million, more than triple our cash balance last year and without any borrowings on our line of credit at any point this year.

As we focus on our all important holiday season, our strategy is to continuing to challenge every aspect of our business to improve and to deliver better value and an exceptional shopping experience to our customers. In addition, we will continue to invest in our growth categories and to aggressively seize opportunities to drive our sales and operating profits. We’re moving in the right direction and look forward to the holiday season and beyond.

Now, I’d like to open up the call to questions. Howard, could you do that for us?

Question-and-Answer Session
Operator

Yes, Sir. (Operator Instructions). Our first question or comment comes from the line of William Myers. Your line is open.

William Myers - Miller Asset Management

Hi, and congratulations on the quarter.

Bob Higgins - Chairman & Chief Executive Officer

Thank you.

William Myers - Miller Asset Management

Could you comment on any effects from Hurricane Sandy?

Bob Higgins - Chairman & Chief Executive Officer

We had some effect from Hurricane Sandy, but it’s really didn’t happen in our quarter, so the damage is probably a total of about $400,000 in sales, so we expect to get some of that back, so we don’t think it have much effect at all on us, in particular it was mainly in the New York area, we don’t have any New York City stores anymore, but Long Island was affected and New Jersey was affected more than anything and a little bit in Baltimore area.

William Myers - Miller Asset Management

Glad to hear you didn’t suffer too much from that. And, my only other question is, if you could comment on games. The industry seems to be down. Do you think that your reduced revenues were just a reflection of the industry, is there anything else going on there?

Bob Higgins - Chairman & Chief Executive Officer

Yeah. We think it was more of a reflection of the industry. And, as evidenced not to talk about November, but this particular week, Call of Duty is out, and it was out a week earlier last year, so we are seeing very good results on this week, but we got hurt on the last week. It looks like it’s doing very well and we’ll be very successful.

William Myers - Miller Asset Management

Thank you.

Operator

Thank you. Our next question or comment comes from the line of Harsha Gowda from BlueShore. Your line is open.

Harsha Gowda - BlueShore

So, I have a few questions. First of all, can you just give us a little bit more detail on your growth strategy going forward?

Bob Higgins - Chairman & Chief Executive Officer

Yes. We are going to have a number of stores opening next year. We don’t want to say exactly the amount, because we don’t know yet, but the landlords have indicated as I said on my last call that there is really value in the category and we feel that we’ll open a fair number of stores next year and also the closings are going to be a lot less as we go forward. We’ll always closing unprofitable store, or something that’s not successful for us, but in general that’s become a minor issue right now.

Harsha Gowda - BlueShore

Why is it that you are looking to open stores when we are not really seeing much comp store overall for the year comp store sales growth?

Bob Higgins - Chairman & Chief Executive Officer

We feel that there is a number of malls that definitely need our category and we fell that we can open it first year and have a very profitable store and then comp up after that.

Harsha Gowda - BlueShore

Okay. And, my second, it’s more of a statement than a question at the end, but the situation that we see, pretty long-term shareholders now I think held within with you for last three, four years, we see this whole transformation and I think it really comes down to how well you and your management team saw the decline nature of the business and very proactively you managed this decline by cutting stores and the cost. And, these measures have definitely succeeded very dramatically and now this looks like it’s going to be the second year of profitability for Trans World, and especially after several years of losses and now the company has accumulated very large cash balances and continues to add significantly.

I think, probably by the end of this year, you are going to have well over your market cap in cash. And, as early shareholders in this recovery, we would like to recognize the strategic moves you made and the potential of the company. And, now that your strategy has succeeded, it’s very discerning for us that, number one; the public markets have failed miserably to adequately value. It is very profitable and cash generative company even at its bare minimum liquidation value.

So, the question for you is, what is the plan that you can do in the very near-term now that strategy has succeeded to remedy this situation for your shareholders, because right now we feel that our patients and our good judgment has not been rewarded at all, and we see that there needs to be something done very, very soon and we would like to hear what is it that you can do, because again, we can’t really depend on the markets to do anything for us.

Bob Higgins - Chairman & Chief Executive Officer

Yes. In the last conference, I said that we have a board meeting coming up in October, and we’d be discussing it. And, we are well aware of the timetable that we are under no decision has been made yet on a dividend, but we are well aware of the timetable and we know that from an investors’ point of view I think anyway the tax aren’t going down.

Harsha Gowda - BlueShore

Now they are going to go up significantly, I am sure.

Bob Higgins - Chairman & Chief Executive Officer

And, so we do understand though all that, so hopefully we’ll be doing something. The board will be doing something in the near future.

Harsha Gowda - BlueShore

You know just to end that point, Bob. We need some sort of liquidity event, because we are pretty significant shareholders and we feel very gratified that we recognized your potential and the management team’s potential.

The markets are not, there’s no liquidity in the stock due to your large holding, and definitely a dividend would be greatly appreciated as long as it’s very significant and I think that the other alternatives also considered in the near-term just to rationalize the value of this company both, for yourself as a majority shareholder, but also for minority such as ourselves.

Bob Higgins - Chairman & Chief Executive Officer

Okay. Now, your comments have not gone on deaf ears, so just I’ll let you know that.

Harsha Gowda - BlueShore

Okay. I am glad to hear that and definitely I think the dividend tax rates are going to jump very, very significantly. So, thank you very much and great quarter again.

Bob Higgins - Chairman & Chief Executive Officer

Thank you.

Operator

(Operator Instructions). I am showing no additional audio questions at this time, sir.

Bob Higgins - Chairman & Chief Executive Officer

Okay. Thank you, Howard. I would like to take this opportunity to thank everyone for their dedication to our company, our customers, vendors and shareholders and especially our Trans World associates.

I’d like to wish everyone a happy and safe holiday season and we look forward to talking to you about our fourth quarter and annual results on March 7, so have a great holiday. Thank you very much.

Operator

Ladies and gentlemen, thank you for participating in today’s conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day.