Bob Higgins – Chairman and CEO John Sullivan – EVP, CFO and Secretary

William Myers – Miller Asset Management

Good day ladies and gentlemen, and welcome to Trans World Entertainment Fourth Quarter 2010 Conference call. At this time, all lines 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 call is being recorded. I would now like to turn the conference over to your host today, Bob Higgins, Chairman and CEO of Trans World Entertainment. Please begin.

Thank you, Sean. Good morning everyone. On the call with me today are Mike Honeyman, our President and Chief Operating Officer; and John Sullivan, our Chief Financial Officer. Thank you for joining us today as we share our 2010 results. Our January business had a little impact on the comp sales, results we reported in our holiday sales press release. Fourth quarter comp store sales were down 6%. By category, our fourth quarter comp sales were flat in video and down 5% in music. However, I would like to point out that both categories outperformed the industry. The video game comp sales decreased 38% during the fourth quarter. As of year-end, a 127 of our stores carried games. During last year’s fourth quarter, we were liquidating games in over 200 stores. Our other categories which include electronic, accessories, and trend were down 6% for the quarter. Positive comp sales in electronics were offset by declines in accessories and trend. For the fiscal year of 2010, total sales were $652 million and comp store sales decreased 4%. For the year, our comp sales in the video category were up 1% and represented 44% of our total business versus 42% in 2009. Comp sales in music were down 4% and represented 36% of our total business compared to 35% in 2009. Comp sales in video games were down 38%. Games represented 6% of our total business compared to 9% in 2009. As I mentioned before, we carried games in 200 fewer stores this year than last year. Our other categories electronics, accessories and trend were flat for the year and represented 15% of our total business, the same percentage as 2009. Now John will review our fourth quarter and annual results in more detail.

Thank you Bob. Good morning. I will first address our quarterly results and then discuss our annual results. For the fourth quarter of 2010, the company recorded net income of $12.4 million or $0.38 per share. This compares to net income of $11.4 million or $0.36 per share in the fourth quarter of 2009 which included a one-time tax benefit of $12.6 million. For the quarter, income from operations improved $13.9 million to $13.3 million compared to a loss from operations of $600,000 in the fourth quarter of 2009. Included in this year’s fourth quarter results is a non-cash charge of $2 million which is the result of recording an impairment charge against certain long lived assets. Included in last year’s fourth quarter results is an impairment charge of $3.6 million. After adjusting for the impairment charge, our EBITDA for the quarter improved a 159% to $17.9 million this year, compared to $6.9 million last year. Our gross margin rate for the fourth quarter was 33.8% compared to 27.9% last year, an improvement of 590 basis points. This resulted from better management in our gross margin in each category. In addition, this year we closed 60 fewer stores than last year, 73 stores versus a 133, and received broader vendor participation in funding markdowns related to liquidating inventory. We also had fewer markdowns in our game business than last year, when we exited the business in 200 stores. SG&A for the quarter was 26.1% of sales compared to 25.6% of sales last year. Interest expense was $900,000 in the quarter versus $600,000 last year. The increase is primarily due to the amortization of loan origination fees related to the three year extension we signed in April. In addition, interest expense also increased due to a 55 basis point increase in our unused commitment fee. For the full fiscal year 2010, our net loss improved 27% to $31 million or $0.99 per share, compared to a net loss of $42.4 million or a $1.35 per share in 2009. For fiscal year 2010, the loss from operations improved $25.4 million to $27.3 million, compared to a loss from operations of $52.7 million in 2009. Annual gross margin was 33.6% compared to last year’s 32.1%. SG&A dollars were $233.6 million that was 35.8% of sales, compared to $295.6 million or 36.3% to sales last year. EBITDA for the year improved 58% to a loss of $14.2 million, compared to last year’s loss of $33.9 million. Interest expense was $3.4 million compared to $2.7 million last year. Looking at our year-end balance sheet for 2010, we finished the year with cash of $75 million, compared to $72 million last year. Our year-end inventory position was $234 million, a 12% decrease than last year’s $267 million. During the fourth quarter, we closed 73 stores ending the year with 460 stores occupying 3.1 million square feet. This compares to 557 stores and 3.8 million square feet at the end of 2009. Now let me turn it back to Bob to discuss our business outlook.

Thank you John. 2010 was a challenging year in terms of comp sales and operating results. Despite the comp sales decline, we’re able to reduce our loss from operations $25 million, a 48% improvement. And this was done through improved gross margin and lower SG&A expenses. In addition, our financial position remained strong with no borrowings on our revolver at year-end and cash of $75 million. Our PIK [ph] borrowings which occurred in November of each year were $31.5 million this year compared to $89 million last year. Our inventory leverage improved to 55% from 49% at the end of ‘09. Our real estate strategy has allowed us to either reduce rents to help us store achieve and acceptable profit or to close it and generate cash from the liquidation of the inventory. With the core group of stores and the strong balance, we saw an improvement in our operating results during 2010. 2011 is a key year for us to improve our performance on a per store basis through capitalizing on the foundation we have built, to deliver better value, control expenses and drive additional bottom line contribution. We will aggressively cease opportunities to improve our operating results. We have been and are continuing to thoroughly evaluate all aspects of our business by challenging each and every component of our business to improve and become more efficient. While at the same time, we are committed to investing in people, technology and merchandize to support our future. While we want to improve our results, we continue to focus on the management of inventory and cash to provide the needed capital as we work through our transition. I’ll close by saying we are confident, that we will continue to improve our operating results. And now before I open the call to questions, I’d like to take this opportunity to thank all of our associates, our vendors and our customers. Now Sean, I’d like to open up the call to questions.

Thank you. (Operator Instructions) One moment please. I have a question from William Myers with Miller Asset Management. Please go ahead with your question. William Myers – Miller Asset Management: Yes, thank you. I just wanted to check on your cost of sales for the recent quarter, as a percentage of net sales was down, it’s I think down to 66% or so and last year it had been 72% or so. So could you just give us some color on that improvement?

Sure. A lot of it has to do as I commented in my remarks that we had a greater vendor participation in closing stores and liquidating the inventory on top of closing 60 fewer stores. That was probably worth about 200 basis points of the difference. In our go-forward stores, we enjoyed an increase in gross margin in just about all of the categories, which is probably worth about another 200 basis points. And we took fewer markdowns this year versus last year, when we – last year we exited the game business in about 200 stores and took some significant markdowns. William Myers – Miller Asset Management: Okay, thank you.

I am not showing any other questions in the queue at this time.

Okay, I’d like to thank everybody for their time today. We look forward to reporting out on you on our first quarter results. And again thank you for all your support.

Thank you. Ladies and gentlemen, thank you for your, I’m sorry go ahead.

I just want to thank you Sean for your help today.

Thank you. Ladies and gentlemen, thank you for your participants in today’s conference. Everyone may disconnect. Have a wonderful day.