Bob Higgins – CEO Tom Seaver - CFO Mike Honeyman – President and COO

William Myers – Miller Asset Management Harsha Gowda – Blue Shore Capital

Good day, ladies and gentlemen. And welcome to Trans World Entertainment Fourth Quarter 2011 Results 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 be given at that time. (Operator Instructions). As a reminder, today’s conference call is being recorded. I would now like to turn the conference over to your host, Mr. Bob Higgins, Chairman and CEO. Please begin.

Thank you, Sean. Good morning. On the call with me today is Mike Honeyman, our President and Chief Operating Officer, and Tom Seaver, our Chief Financial Officer. Tom joined the company in late November, and has over 20 years of experience with Albany International, most recently as Vice President of Strategic Planning. He brings Trans World strong financial and strategic expertise, as well as demonstrated excellence in operational and process improvement. We’re happy to have Tom on board and look forward to working with him. Now I’d like to thank you for joining us as we discuss our fourth quarter and full-year results. I’m pleased to announce that for the eighth consecutive quarter, we’ve driven improvement in our operating result. And with that continued improvement, we were able to deliver our first profitable fiscal year since 2006. Our return to profitability reflects the commitment, hard work, and ability of our associates to execute our strategy. Net income for the fourth quarter improved $4.1 million to $16.5 million, a 34% improvement over last year. For fiscal 2011, our bottom line improved by over $33 million to a net income of $2.2 million from a net loss of $31 million in 2010. Total sales in the fourth quarter decreased 17% to $193 million as our average stores in operations also declined 17%. Our Comp store sales for the quarter were down 1% compared to last year. Now let me touch on our performance by category for the fourth quarter. Video comp sales decreased 3%, and Video represented 43% of our business during the quarter versus 44 last year.. Music comps declined 10%. The music category represented 30% of our business for the quarter, compared to 33 last year. Electronics comp increased 23%, electronics sales represent 11% of our total business for the quarter compared to 8% last year. Trend comp increased 26%. Trended sales represented 10% of our business for the quarter compared to 8% last year. Video game comps were down 13%, game sales represented 6% of our business for the quarter, compared to 7% last year. During the quarter we carried games in 110 stores. Tom will now take you through financial highlights for the quarter and the year. Tom?

Thanks Bob, good morning everyone. I’ll first address our quarterly results, and then I’ll discuss the year results. As Bob mentioned, our net income for the quarter improved $4.1 million to $16.5 million or $0.51 per diluted share, a 34% improvement over last year’s net income of $12.4 million or $0.38 per share. EBITDA improved $800,000 for the quarter to $18.7 million, a 5% improvement over last year’s EBITDA $17.9 million. Our gross margin rate for the quarter increased 200-basis points to 35.8% of net sales from 33.8% last year. The increase in gross profit as a percentage of sales was due to higher margin rates across all of our product categories. SG&A expenses were $50.5 million, a reduction of 16% on total sales, decline of 17%. SG&A as a percentage of sales to 26.2% compared to a 26.1% last year. The decrease in SG&A expenses was driven by the closing of under-performing stores, and continued focus on effective expense management. Net interest expense was $790,000 for the quarter versus $915,000 last year. Now I will comment on our full-year results. Total sales for the year decreased 17% to $543 million from $652 million last year, as our average number of stores in operation also declined 17%. Our comp store sales for the full year were down 2% compared to last year, and our net income for the year improved by over $33 million to $2.2 million, or $0.07 per diluted share versus last year’s net loss of $31 million or $0.99 per share. EBITDA improved $25.8 million for the year to $11.5 million as compared to last year’s EBITDA loss of $14.3 million. Our gross margin rate for the year increased 290 basis points to 36.5% of sales, from 33.6% last year. The increase in gross profit as a percentage of sales was due to higher margin rates across all of our products. SG&A expenses were $186.6 million, a reduction of 20% on a total sales decline of 17%, resulting in a 140 basis points decrease as a percentage of sales, to 34.4% this year from 35.8% last year. Net interest expense was $3.2 million versus $3.3 million last year. The company did not require any borrowing under its line of credit at any point during the entire year. We ended the year with cash of $89 million, compared to $75 million last year. And year-over-year, we have lowered our inventory by $43 million, and finished the year with $191 million in inventory, 18% below last year’s $234 million. On a per-square-foot basis, this is $75 versus $74 last year. We also ended the year with 390 stores and 2.6 million square feet in operation, versus last year’s 460 stores and 3.1 million square feet. Now I will turn it back to Bob.

Thanks, Tom. After several years of disappointing results, 2011 marked the return to profitability for our company. We have made significant progress and our results reflect that. Our Comp sales performance demonstrates our ability to offset declines in video and music, with strong comp increases in our emerging categories of electronics and trend. In fact, for the fourth quarter, these two categories combined, represented 21% of our business and had a 25% comp increase as we continue to strengthen the product mix in these categories. The improvement in our operating results has been driven by continued higher gross margin rates in all of our merchandise categories, and 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, as demonstrated by our continued leveraging of our SG&A expenses. As Tom mentioned, we ended the year with cash of $89 million and without any borrowings on our line of credit. In fact, we did not have any borrowings outstanding on our line of credit at any point during the year, while improving our operating results, we continue to focus on the management of inventory and cash. As we head in to 2012, our strategy is to focus on continuing to challenge every aspect of our business, and to improve and to deliver better value and exceptional shopping experience to our customers. In addition, we will continue to invest in our growth categories and aggressively cease opportunities to drive our sales and operating profits. We’re moving in the right direction, and we look forward to 2012. Now Sean, I’d like to open the call to any questions anyone has.

(Operator instructions). I have a question from William Meyers with Miller Asset Management. Please go head. William Myers – Miller Asset Management: Hi, and congratulations on getting in the black for the year.

Thank you very much. William Myers – Miller Asset Management: Could you talk a little bit about whether Blu-ray versus DVD for video is a significant trend at this point? It was a couple of years ago, what are you seeing now and what’s the outlook for Blu-ray sales?

Well, Blu-ray has a lot to do with the category. The manufacturer – the studios are really trying to get the customer to switch to Blu-ray and have done a lot in that. They’re taking down the prices quite quickly after release if they don’t see it moving as well as they expected it to. They’re also pricing the catalog very aggressively. So we expect to have a decent year in Blu-ray this year and we’ve also done very well in DVD, especially compared to the industry. William Myers – Miller Asset Management: Okay. And just one more question. How do you see rents going forward? Are you seeing – have you been able to negotiate when you have renewed leases, negotiate lower rents and do you expect that trend to continue or where is that going do you think?

We still think the landlords have some issues in filling up their centers and we feel that we’ll still be able to, you know, we’re the only national player in the business so we still feel we’ll be able to negotiate the terms and conditions that we need to move forward. William Myers – Miller Asset Management: Okay. I appreciate you allowing me to ask a question. Thank you.

Thank you.

Our next question comes from Harsha Gowda with Blue Shore. Please go ahead with your question. Harsha Gowda – Blue Shore Capital: Good morning, gentlemen.

Good morning, Harsha. Harsha Gowda – Blue Shore Capital: I just wanted to congratulate you on a stupendous performance in such a challenging environment. I have a few questions for you. Number one, I was reading about how you’re planning to close down, I believe, 40 or 50 stores in some sort of article in January. I don’t know if the number that you’ve quoted, out of 390 stores accounts for that planned closures or is that, you know, excluding those?

That does account for those closures. Harsha Gowda – Blue Shore Capital: Okay, great. The second question I have for you is more general, just to get your perspective, is what is the plan going forward, especially since you are closing stores pretty aggressively and obviously very well and you now are, you know, you mentioned how you’re sitting on 89 million of cash and you weren’t – you didn’t have to use your credit lines in 2011. What is the plan, are you thinking about anything such as dividends or share buybacks or anything like that since it does look like you are carrying a lot of excess liquidity?

Yes, the $90 million that we have at the end of the year is our highest cash position, but we think we’ll probably, depending on what we do strategically, we’ll probably have 35 to $40 million in cash at the end of each quarter this year, other than the fourth quarter. And we’re – we are not looking at a stock buyback right now and we’re not looking at a dividend right now. But it doesn’t mean that there aren’t opportunities for us to invest our cash such as expansion of certain product lines that can benefit, we’ve got great real estate and we can expand certain product lines that will do well for us and give a good return. And we constantly, as [inaudible] asked about the real estate, we constantly are meeting with landlords and seeing what the opportunities are there – out there for new stores as well as what we have to do in closing stores. But the thing I like to stress, you know, we’re pretty well beyond the closing of store and we don’t think that we’ll have many more. Not that you don’t always have a few challenges in some store closings, but we don’t think it will be a big number anymore. Harsha Gowda – Blue Shore Capital: Great. That’s – great performance again. Thank you.

Thank you.

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

Okay, well, what I’d like to do, Sean, is I’d just like to take the opportunity to thank everyone for their dedication to our company, which includes our customers, our vendors and shareholders, especially our hardworking Trans World associates, those individuals who’s dedication and customer focus made 2011 the profitable year it was. And we will look forward to talking on our results of our first quarter conference call which will take place on May 17 for everyone out there. Thank you very much.

Thank you. Ladies and gentlemen, thank your participation in today’s conference. This does conclude the conference. You may now disconnect. Good day.