February 10, 2006
Mr. William Choi
Accounting Branch Chief
Securities and Exchange Commission
Washington, DC 20549
RE: | Trans World Entertainment Form 10-K for the Fiscal Year Ended January 29, 2005 |
| File Number 0-14818 |
Dear Mr. Choi:
This letter is submitted on behalf of Trans World Entertainment (“Trans World Entertainment” or the “Company”) in response to the comments of the Staff of the Division of Corporation Finance (the “Staff”) as set forth in your letter to the Company dated January 31, 2006. For your convenience the Staff’s comments and the responses thereto are set forth sequentially below.
Consolidated Financial Statements
Note 1. Nature of Operations and Summary of Significant Accounting Policies
Gift Certificates, page 39
1. We note that you estimate breakage based on the historical relationship of the redemption of gift cards redeemed to gift cards sold over a certain period of time. Please tell us your basis in GAAP for recognizing revenue before either performance or a legal release from the liability as contemplated by SFAS No.140. In doing so, tell us whether all of your gift cards and certificates are redeemable for cash and carry expiration dates and whether and how your accounting policies differ with respect to gift cards and certificates that do and do not carry expiration dates. Please also tell us whether you recognize breakage upon sale of the gift cards and certificates over the term of your performance obligation and your basis in GAAP for doing so. We generally do not believe that any breakage should be recognized at the point of purchase. In your response, please provide historical evidence that demonstrates to us that the demand for future performance with respect to the estimated breakage recognized is remote and that the estimate is based on a large population of homogenous transactions. Consider providing us with a schedule that reflects the following information for an appropriate historical period:
• the number and dollar amount of gift cards purchased by year;
• the number, dollar amount and percentage of gift cards redeemed in the year of purchase and in each subsequent year;
• the number, dollar amount and percentage of gift cards outstanding at the end of the year of purchase and each subsequent year; and
1
• the breakage recognized on a quarterly basis for the historical periods presented in the filing.
Finally, tell us where breakage is classified in your statements of operations.
COMPANY RESPONSE:
We sell gift cards that are redeemable only for merchandise and have no expiration date and have considered the requirements of Statement of Financial Accounting Standards (“SFAS”) No. 140, “Accounting and Servicing of Financial Assets and Extinguishment of Liabilities” in the evaluation of our liability of gift cards. We derecognize our card liability when either customers redeem cards (at which point we record revenue) or the Company determines it does not have a legal obligation to remit unredeemed cards to the relevant jurisdictions and the likelihood of the cards being redeemed becomes remote (at which point we record breakage as a credit to selling, general and administrative expenses).
Our accounting for gift cards is based on estimating the Company’s liability for future card redemptions as of a reporting period end. In response to the Staff’s comments, we have completed a historical analysis of our gift card liability. A summary of our analysis is presented and discussed below. In summary, our estimated liability is equal to two years of unredeemed cards, plus an amount for outstanding cards that may possibly be redeemed for the cumulative look back period, exclusive of the last two years. As mentioned above, the Company has considered the guidance within SFAS No. 140, but has determined there is a remote chance that customer will require performance on the remaining card balances not included in the liability and this is recorded as breakage.
We considered Emerging Issues Task Force (“EITF”) No. 01-9, “Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor’s Products)” in establishing our accounting for gift cards, which defines breakage as “the portion or percentage of customers eligible to qualify for an offer who ultimately will not earn and/or claim an incentive award or consideration (such as rebates or refunds) from a vendor.” We believe our treatment is analogous with EITF No. 01-9 in that the measurement of our gift card liability is based on the estimated number of customers that will ultimately redeem the gift cards (that is, breakage is considered as it can be reasonably estimated). Our ability to reasonably and reliably estimate the liability is based on our historical experience with gift cards and similar types of arrangements and the existence of a large volume of relatively homogeneous transactions.
We further considered SFAS No. 48, “Revenue Recognition When Right of Return Exists”, when estimating the percentage of card balances where performance is deemed remote. Our percentage is based on a history of gift card sales, actual redemptions and unredeemed cards for a period of more than ten years reflecting a large, homogeneous population of transactions. Our estimate is not susceptible to significant external factors and the circumstances around card sales and redemptions have not changed significantly over time. We believe that this analogous view is consistent with the guidance presented within the interpretative response to question 1 presented in Staff Accounting Bulletin No. 104, “Revenue Recognition,” topic 13.A.4(a).
The following table presents the amounts of purchases and redemptions of gifts cards for a cumulative ten year period and the three most recent years and demonstrates the percentage of purchases over redemptions to card purchases:
2
(000) omitted
|
|
|
| Redemptions |
| Purchases over Redemptions |
| |||||||
Period |
| Purchases |
| Amount |
| % |
| Amount |
| % |
| |||
Cumulative- |
|
|
|
|
|
|
|
|
|
|
| |||
10 Year |
| $ | 312,583 |
| $ | 273,230 |
| 87.4 | % | $ | 39,353 |
| 12.6 | % |
2004 |
| 36,995 |
| 32,806 |
| 88.7 | % | 4,189 |
| 11.3 | % | |||
2003 |
| 37,238 |
| 32,466 |
| 87.2 | % | 4,772 |
| 12.8 | % | |||
2002 |
| 36,047 |
| 32,493 |
| 90.1 | % | 3,554 |
| 9.9 | % | |||
The above table demonstrates that the Company has experienced a historical redemption percentage of 87.4% over the ten year period ended January 29, 2005 (fiscal 2004).
The actual percentage used by the Company to recognize breakage is less than the historical percentage of purchases over redemptions to card purchases as the Company believes it is possible that some card balances older than two years may still be redeemed. The historical breakage recognized by the Company reflects the percentage of card balances where performance is deemed remote. This is shown in the following table:
|
| 2004 |
| 2003 |
| 2002 |
| |||
|
|
|
|
|
|
|
| |||
Cumulative gift card sales through period ending two years prior to reporting period (e.g. cumulative sales through 2002 in the 2004 calculation) |
| $ | 256,288 |
| $ | 220,241 |
| $ | 177,707 |
|
|
|
|
|
|
|
|
| |||
Percentage amount considered remote |
| 10.3 | % | 9.9 | % | 10.2 | % | |||
|
|
|
|
|
|
|
| |||
Cumulative breakage |
| $ | 26,383 |
| $ | 21,705 |
| $ | 18,194 |
|
Annual breakage |
| $ | 4,678 |
| $ | 3,511 |
| $ | 3,540 |
|
Our assessment of the estimated gift card liability includes consideration of the historical percentage of gift cards whose redemption is remote. The following analysis is a summary of the gift card liability recorded as of January 29, 2005:
2004 gift card purchases over redemptions |
| $ | 4,189 |
|
2003 gift card purchases over redemptions |
| 4,772 |
| |
Subtotal |
| $ | 8,961 |
|
|
|
|
| |
Possible redemptions: |
|
|
| |
|
|
|
| |
Cumulative gift card sales through 2002 |
| $ | 256,288 |
|
% of possible redemptions |
| 3.3% | (*) | |
Liability for possible redemptions |
| $ | 8,563 |
|
|
|
|
| |
Gift card liability |
| $ | 17,524 |
|
3
(*) Percentage is calculated as follows:
Total gift card sales |
| 100.0 | % |
Historical redemption% - prior 10 years |
| (86.4 | ) |
(1993 – 2002) |
|
|
|
Remote redemption% |
| (10.3 | ) |
% of possible redemptions |
| 3.3 | % |
The Company began recording breakage on a quarterly basis in 2004 after reviewing the matter in conjunction with its efforts to comply with Section 404 of the Sarbanes Oxley Act. Breakage recognized on a quarterly basis (pre-tax) for 2004 is as follows (000’s):
|
| Fiscal 2004 |
| |
First quarter |
| $ | 289 |
|
Second quarter |
| 368 |
| |
Third quarter |
| 321 |
| |
Fourth quarter |
| 3,700 |
| |
Breakage recognized during fiscal years 2003 and 2002 was recorded in the fourth quarter. Management calculated the impact on reported amounts included in its filing for the 2003 and 2002 quarters as if quarterly breakage had been recorded and determined the changes to be inconsequential as demonstrated in the following table.
|
| Fiscal 2003 |
| Fiscal 2002 |
| ||||||||||||||||||||
|
| Proforma |
| Reported |
| Proforma |
| Reported |
| Proforma |
| Reported |
| Proforma |
| Reported |
| ||||||||
Quarter 1 |
| $ | (4,958 | ) | $ | (5,085 | ) | $ | (0.13 | ) | $ | (0.13 | ) | $ | (18,734 | ) | $ | (18,874 | ) | $ | (0.47 | ) | $ | (0.47 | ) |
Quarter 2 |
| $ | (2,781 | ) | $ | (2,913 | ) | $ | (0.07 | ) | $ | (0.08 | ) | $ | (6,868 | ) | $ | (7,003 | ) | $ | (0.17 | ) | $ | (0.17 | ) |
Quarter 3 |
| $ | (5,803 | ) | $ | (5,912 | ) | $ | (0.16 | ) | $ | (0.16 | ) | $ | (14,654 | ) | $ | (14,760 | ) | $ | (0.37 | ) | $ | (0.37 | ) |
Quarter 4 |
| $ | 36,609 |
| $ | 36,977 |
| $ | 0.98 |
| $ | 0.99 |
| $ | (5,214 | ) | $ | (4,833 | ) | $ | (0.13 | ) | $ | (0.12 | ) |
Annual |
| $ | 23,067 |
| $ | 23,067 |
| $ | 0.60 |
| $ | 0.60 |
| $ | (45,470 | ) | $ | (45,470 | ) | $ | (1.13 | ) | $ | (1.13 | ) |
Management further considered SAB 99 in its determination that the quarterly differences for 2003 and 2002 were inconsequential. Among other reasons, by not presenting these quarterly changes, management would not:
• mask a change in earnings or other trends;
• change a loss into income or vice versa;
• hide a failure to meet analysts’ consensus expectations;
• concern a segment or other portion of the Company’s business that has been identified as playing a significant role in the Company’s operations or profitability;
• affect the Company’s compliance with loan covenants or other contractual requirements;
• affect management’s compensation; or
• conceal an unlawful transaction.
4
The Company does not believe that the changes in certain financial statement line items, would change or influence the judgment of a reasonable person relying on the Company’s previously filed reports. As such, it is improbable that restatement would result in a change in an investors’ view of the Company’s valuation. Similarly, these amounts would not significantly change balances, classifications or trends as previously discussed by management in public reports.
In conclusion, the Company believes its accounting for gift cards has been consistently applied and evaluated in consideration of generally accepted accounting principles and our consolidated financial statements accurately reflect our gift card transactions, as well as estimate our associated redemption liability.
Note 4. Fixed Assets, page 42
2. We note your disclosures on pages 13, 25, 37, and 43 regarding the correction of lease accounting errors and that the cumulative effect of the error was recorded in fiscal year 2004. It appears that your prior period statements of cash flows and balance sheet have not been revised to conform to your current presentation for construction allowances. Tell us why you did not restate your historical statements of cash flows to reflect construction allowances in operating activities. Additionally with regard to your lease accounting errors, please provide us with your qualitative and quantitative assessment of materiality for the quarterly and annual periods presented which supports your conclusion that these adjustments are not material to your historical financial statements and that no restatements are necessary. In your response, please provide a table showing the previously reported and “as adjusted” amounts for each applicable cash flow, balance sheet, and statement of operations line item. The “As adjusted” column should reflect your financial statements as if all lease accounting errors and misclassifications have been corrected. Refer to SAB Topics 5:F and 1:M.
COMPANY RESPONSE:
We have provided schedules as an attachment showing previously reported amounts and “as adjusted” amounts for each applicable cash flow, balance sheet, and statement of operations line item. The “as adjusted” column reflects amounts as if all lease accounting errors and misclassifications had been retroactively applied. The corrections, individually and in the aggregate, do not significantly alter amounts reported for the prior years. For each year presented:
• Reported earnings per share would not change by more than $0.02 or 2.2%, in the annual consolidated statement of operations;
• Reported current assets, total assets, current liabilities or total liabilities would not change by more than 4.0%, in the year-end consolidated balance sheets;
• Reported net cash provided by (used in) operating activities or net cash used by investing activities would not change by more than $1.7 million;
• Cash balances would not change;
• Similarly, quarterly reported amounts would not change significantly;
5
The Company believes further that the lease accounting adjustments were not material following its analysis of all relevant considerations in accordance with the guidance set forth in SAB 99. Among other reasons, by not restating previously reported periods, the Company:
• did not mask a change in earnings or other trends;
• did not change a loss into income or vice versa;
• did not hide a failure to meet analysts’ consensus expectations;
• did not concern a segment or other portion of the Company’s business that has been identified as playing a significant role in the Company’s operations or profitability;
• did not affect the Company’s compliance with loan covenants or other contractual requirements;
• did not affect (increase) management’s compensation; and
• did not conceal of an unlawful transaction.
The Company does not believe that the changes in certain financial statement line items, as set forth in the aforementioned schedule, would change or influence the judgment of a reasonable person relying on the Company’s previously filed reports. As such, it is improbable that restatement would result in a change in an investors’ view of the Company’s valuation. Similarly, these amounts would not significantly change balances, classifications or trends as previously discussed by management in public reports.
Consequently, management believes that the consolidated financial statements as presented in the Company’s Annual Report on Form 10-K, taken together with the disclosures, do not omit or obscure any material information and do not require restatement.
Form 8-K filed August 11, 2005
3. We note that you disclose the per-share impacts of an income tax benefit and a state tax charge. We also note that similar disclosure is included in your Form 8-K filed on November 10, 2005. As required by Release 33-8176, please disclose the following information in future filings:
• the reasons why management believes that presentation of the non-GAAP financial measures provide useful information to investors regarding your financial condition and results of operations; and
• to the extent material, the additional purposes, if any, for which management uses the non-GAAP financial measures that are not otherwise disclosed.
COMPANY RESPONSE:
Management will comply with the requirements of Release 33-8176 in its future filings.
**********
6
In addition, in connection with responding to the Staff’s comments, we acknowledge the following:
• The Company is responsible for the adequacy and the accuracy of the disclosure in the filing;
• Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and
• The Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
Please contact the undersigned (telephone number 518-452-1242) as soon as practicable with any questions or further comments you may have concerning this matter with a copy to the parties mentioned below. Your assistance in this matter is greatly appreciated.
| Very Truly Yours, | |
|
| |
| /s/ John J. Sullivan |
|
|
| |
| John Sullivan | |
| Executive Vice President and Chief Financial |
CC: Mark Holtzman, KPMG LLP via fax 518-689-4724
Gary Brooks, Cahill Gordon & Reindel LLP via fax 212-378-2406
7
Trans World Entertainment
Lease Accounting Adjustment - As Reported and As Adjusted
|
| Fiscal 2004 |
| Fiscal 2003 |
| Fiscal 2002 |
| |||||||||
|
| As Reported |
| As Reported |
| As Adjusted |
| As Reported |
| As Adjusted |
| |||||
|
| 1/29/2005 |
| 1/31/2004 |
| 1/31/2004 |
| 2/1/2003 |
| 2/1/2003 |
| |||||
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|
| |||||
Cash |
| $ | 229,768 |
| 191,922 |
| $ | 191,922 |
| 197,050 |
| $ | 197,050 |
| ||
Accounts receivable |
| 6,202 |
| 9,182 |
| 9,284 |
| 10,191 |
| 10,141 |
| |||||
Merchandise inventory |
| 431,246 |
| 424,783 |
| 424,783 |
| 378,005 |
| 378,005 |
| |||||
Prepaid expenses and other |
| 6,804 |
| 6,700 |
| 6,700 |
| 5,482 |
| 5,482 |
| |||||
Current deferred taxes |
| 15,526 |
| 7,349 |
| 7,349 |
| 4,977 |
| 4,977 |
| |||||
Current assets |
| 689,546 |
| 639,936 |
| 640,038 |
| 595,705 |
| 595,655 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Fixed assets, net |
| 130,196 |
| 125,641 |
| 138,206 |
| 155,417 |
| 171,699 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Deferred taxes |
| 25,039 |
| 39,964 |
| 40,373 |
| 40,667 |
| 40,764 |
| |||||
Other assets |
| 14,872 |
| 12,217 |
| 12,217 |
| 11,607 |
| 11,607 |
| |||||
Total assets |
| $ | 859,653 |
| $ | 817,758 |
| $ | 830,834 |
| $ | 803,396 |
| $ | 819,725 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Accounts payable |
| $ | 358,396 |
| $ | 306,298 |
| $ | 306,298 |
| $ | 326,959 |
| $ | 326,959 |
|
Income taxes payable |
| 8,592 |
| 25,689 |
| 25,689 |
| 13,418 |
| 13,418 |
| |||||
Accrued expenses and other |
| 43,712 |
| 54,079 |
| 56,349 |
| 35,060 |
| 37,918 |
| |||||
Current portion of long term debt |
| 448 |
| — |
| — |
| — |
| — |
| |||||
Current portion of capital leases |
| 332 |
| 395 |
| 395 |
| 1,640 |
| 1,640 |
| |||||
Current liabilities |
| 411,480 |
| 386,461 |
| 388,731 |
| 377,077 |
| 379,935 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Long term debt |
| 5,060 |
| — |
| — |
| — |
| — |
| |||||
Capital lease obligations, less current portion |
| 6,977 |
| 7,465 |
| 7,465 |
| 7,860 |
| 7,860 |
| |||||
Deferred rent and other long term liabilities |
| 31,813 |
| 24,648 |
| 36,198 |
| 26,355 |
| 40,073 |
| |||||
Total liabilities |
| 455,330 |
| 418,574 |
| 432,394 |
| 411,292 |
| 427,868 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Preferred stock |
| — |
| — |
| — |
| — |
| — |
| |||||
Common stock |
| 550 |
| 542 |
| 542 |
| 540 |
| 540 |
| |||||
Additional paid in capital |
| 292,922 |
| 288,272 |
| 288,272 |
| 287,402 |
| 287,402 |
| |||||
Unearned compensation - restricted stock |
| (46 | ) | (23 | ) | (23 | ) | (116 | ) | (116 | ) | |||||
Treasury stock at cost |
| (186,298 | ) | (146,055 | ) | (146,055 | ) | (129,103 | ) | (129,103 | ) | |||||
Accumulated other comprehensive loss |
| (1,094 | ) | — |
| — |
| — |
| — |
| |||||
Retained earnings |
| 298,289 |
| 256,448 |
| 255,704 |
| 233,381 |
| 233,134 |
| |||||
Total shareholders’ equity |
| 404,323 |
| 399,184 |
| 398,440 |
| 392,104 |
| 391,857 |
| |||||
Total liabilities and shareholders’ equity |
| $ | 859,653 |
| $ | 817,758 |
| $ | 830,834 |
| $ | 803,396 |
| $ | 819,725 |
|
|
| 2004 QUARTERS |
| ||||||||||||||||
|
| As Reported |
| As Adjusted |
| As Reported |
| As Adjusted |
| As Reported |
| As Adjusted |
| ||||||
|
| 5/1/2004 |
| 5/1/2004 |
| 7/31/2004 |
| 7/31/2004 |
| 10/30/2004 |
| 10/30/2004 |
| ||||||
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Cash |
| $ | 88,458 |
| $ | 88,458 |
| $ | 39,927 |
| $ | 39,927 |
| $ | 18,658 |
| $ | 18,658 |
|
Accounts receivable |
| 6,193 |
| 6,193 |
| 8,587 |
| 8,587 |
| 6,337 |
| 6,337 |
| ||||||
Merchandise inventory |
| 442,630 |
| 442,630 |
| 422,209 |
| 422,209 |
| 459,246 |
| 459,246 |
| ||||||
Prepaid expenses and other |
| 5,287 |
| 5,287 |
| 5,476 |
| 5,476 |
| 5,849 |
| 5,849 |
| ||||||
Income taxes receivable |
| — |
| — |
| — |
| — |
| 3,829 |
| 3,829 |
| ||||||
Current deferred taxes |
| 8,070 |
| 8,070 |
| 10,271 |
| 10,271 |
| 8,657 |
| 8,657 |
| ||||||
Current assets |
| 550,638 |
| 550,638 |
| 486,470 |
| 486,470 |
| 502,576 |
| 502,576 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Fixed assets, net |
| 126,025 |
| 138,065 |
| 122,839 |
| 134,251 |
| 121,088 |
| 131,873 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Deferred taxes |
| 39,112 |
| 39,651 |
| 39,292 |
| 39,933 |
| 31,386 |
| 32,130 |
| ||||||
Other assets |
| 14,906 |
| 14,906 |
| 14,081 |
| 14,081 |
| 14,063 |
| 14,063 |
| ||||||
Total assets |
| $ | 730,681 |
| $ | 743,260 |
| $ | 662,682 |
| $ | 674,735 |
| $ | 669,113 |
| $ | 680,642 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Accounts payable |
| $ | 242,975 |
| $ | 242,975 |
| $ | 196,460 |
| $ | 196,460 |
| $ | 224,777 |
| $ | 224,777 |
|
Income taxes payable |
| 15,306 |
| 15,306 |
| 1,760 |
| 1,760 |
| 3,940 |
| 3,940 |
| ||||||
Accrued expenses and other |
| 42,289 |
| 44,608 |
| 37,388 |
| 39,755 |
| 35,965 |
| 38,381 |
| ||||||
Current portion of long term debt |
| — |
| — |
| 436 |
| 436 |
| 442 |
| 442 |
| ||||||
Current portion of capital leases |
| 407 |
| 407 |
| 418 |
| 418 |
| 431 |
| 431 |
| ||||||
Current liabilities |
| 300,977 |
| 303,296 |
| 236,462 |
| 238,829 |
| 265,555 |
| 267,971 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Long term debt |
| — |
| — |
| 5,289 |
| 5,289 |
| 5,177 |
| 5,177 |
| ||||||
Capital lease obligations, less current portion |
| 7,359 |
| 7,359 |
| 7,250 |
| 7,250 |
| 7,137 |
| 7,137 |
| ||||||
Deferred rent and other long term liabilities |
| 23,866 |
| 35,018 |
| 22,756 |
| 33,509 |
| 13,891 |
| 24,246 |
| ||||||
Total liabilities |
| 332,202 |
| 345,673 |
| 271,757 |
| 284,877 |
| 291,760 |
| 304,531 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Preferred stock |
| — |
| — |
| — |
| — |
| — |
| — |
| ||||||
Common stock |
| 544 |
| 544 |
| 545 |
| 545 |
| 546 |
| 546 |
| ||||||
Additional paid in capital |
| 288,964 |
| 288,964 |
| 289,220 |
| 289,220 |
| 289,672 |
| 289,672 |
| ||||||
Unearned compensation - restricted stock |
| (6 | ) | (6 | ) | (54 | ) | (54 | ) | (50 | ) | (50 | ) | ||||||
Treasury stock at cost |
| (149,930 | ) | (149,930 | ) | (167,001 | ) | (167,001 | ) | (176,425 | ) | (176,425 | ) | ||||||
Retained earnings |
| 258,907 |
| 258,015 |
| 268,215 |
| 267,148 |
| 263,610 |
| 262,368 |
| ||||||
Total shareholders’ equity |
| 398,479 |
| 397,587 |
| 390,925 |
| 389,858 |
| 377,353 |
| 376,111 |
| ||||||
Total liabilities and shareholders’ equity |
| $ | 730,681 |
| $ | 743,260 |
| $ | 662,682 |
| $ | 674,735 |
| $ | 669,113 |
| $ | 680,642 |
|
|
| 2003 QUARTERS |
| ||||||||||||||||
|
| As Reported |
| As Adjusted |
| As Reported |
| As Adjusted |
| As Reported |
| As Adjusted |
| ||||||
|
| 5/3/2003 |
| 5/3/2003 |
| 8/2/2003 |
| 8/2/2003 |
| 11/1/03 |
| 11/1/03 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Cash |
| $ | 62,016 |
| $ | 62,016 |
| $ | 44,868 |
| $ | 44,868 |
| $ | 19,840 |
| $ | 19,840 |
|
Accounts receivable |
| 11,401 |
| 11,401 |
| 11,822 |
| 11,822 |
| 10,823 |
| 10,823 |
| ||||||
Merchandise inventory |
| 401,678 |
| 401,678 |
| 371,413 |
| 371,413 |
| 509,360 |
| 509,360 |
| ||||||
Prepaid expenses and other |
| 5,701 |
| 5,701 |
| 5,519 |
| 5,519 |
| 5,649 |
| 5,649 |
| ||||||
Current deferred taxes |
| 4,721 |
| 4,721 |
| 5,309 |
| 5,309 |
| 8,898 |
| 8,898 |
| ||||||
Current assets |
| 485,517 |
| 485,517 |
| 438,931 |
| 438,931 |
| 554,570 |
| 554,570 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Fixed assets, net |
| 147,503 |
| 162,844 |
| 140,301 |
| 154,751 |
| 135,452 |
| 149,010 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Deferred taxes |
| 36,388 |
| 36,590 |
| 35,718 |
| 35,998 |
| 36,267 |
| 36,593 |
| ||||||
Other assets |
| 11,294 |
| 11,294 |
| 10,929 |
| 10,929 |
| 12,160 |
| 12,160 |
| ||||||
Total assets |
| $ | 680,702 |
| $ | 696,245 |
| $ | 625,879 |
| $ | 640,609 |
| $ | 738,449 |
| $ | 752,333 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Accounts payable |
| $ | 222,219 |
| $ | 222,219 |
| $ | 189,018 |
| $ | 189,018 |
| $ | 277,293 |
| $ | 277,293 |
|
Income taxes payable |
| 3,701 |
| 3,701 |
| 1,478 |
| 1,478 |
| — |
| — |
| ||||||
Borrowings under line of credit |
| — |
| — |
| — |
| — |
| 12,108 |
| 12,108 |
| ||||||
Accrued expenses and other |
| 33,021 |
| 35,732 |
| 31,708 |
| 34,272 |
| 51,291 |
| 53,708 |
| ||||||
Current portion of capital leases and long term debt |
| 955 |
| 955 |
| 470 |
| 470 |
| 409 |
| 409 |
| ||||||
Current liabilities |
| 259,896 |
| 262,607 |
| 222,674 |
| 225,238 |
| 341,101 |
| 343,518 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Capital lease obligations, less current portion |
| 7,765 |
| 7,765 |
| 7,668 |
| 7,668 |
| 7,568 |
| 7,568 |
| ||||||
Deferred rent and other long term liabilities |
| 25,851 |
| 39,027 |
| 22,056 |
| 34,690 |
| 25,563 |
| 37,655 |
| ||||||
Total liabilities |
| 293,512 |
| 309,399 |
| 252,398 |
| 267,596 |
| 374,232 |
| 388,741 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Preferred stock |
| — |
| — |
| — |
| — |
| — |
| — |
| ||||||
Common stock |
| 541 |
| 541 |
| 541 |
| 541 |
| 542 |
| 542 |
| ||||||
Additional paid in capital |
| 287,532 |
| 287,532 |
| 288,010 |
| 288,010 |
| 288,382 |
| 288,382 |
| ||||||
Unearned compensation - restricted stock |
| (76 | ) | (76 | ) | (348 | ) | (348 | ) | (303 | ) | (303 | ) | ||||||
Treasury stock at cost |
| (129,103 | ) | (129,103 | ) | (140,104 | ) | (140,104 | ) | (143,874 | ) | (143,874 | ) | ||||||
Retained earnings |
| 228,296 |
| 227,952 |
| 225,382 |
| 224,914 |
| 219,470 |
| 218,845 |
| ||||||
Total shareholders’ equity |
| 387,190 |
| 386,846 |
| 373,481 |
| 373,013 |
| 364,217 |
| 363,592 |
| ||||||
Total liabilities and shareholders’ equity |
| $ | 680,702 |
| $ | 696,245 |
| $ | 625,879 |
| $ | 640,609 |
| $ | 738,449 |
| $ | 752,333 |
|
Trans World Entertainment
Lease Accounting Adjustment - As Reported and As Adjusted
NOTE: Given immateriality of impact on the annual 2/1/03 results ($79K), analysis was NOT performed separately on the quarterly information.
|
| Fiscal 2004 |
| Fiscal 2003 |
| Fiscal 2002 |
| Fiscal 2001 |
| Fiscal 2000 |
| ||||||||||||||||||||
|
| As Reported |
| As Adjusted |
| As Reported |
| As Adjusted |
| As Reported |
| As Adjusted |
| As Reported |
| As Adjusted |
| As Reported |
| As Adjusted |
| ||||||||||
|
| 1/29/2005 |
| 1/29/2005 |
| 1/31/2004 |
| 1/31/2004 |
| 2/1/2003 |
| 2/1/2003 |
| 2/2/2002 |
| 2/2/2002 |
| 2/3/2001 |
| 2/3/2001 |
| ||||||||||
Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Sales |
| $ | 1,365,133 |
| $ | 1,365,133 |
| $ | 1,330,626 |
| $ | 1,330,626 |
| $ | 1,281,869 |
| $ | 1,281,869 |
| $ | 1,388,032 |
| $ | 1,388,032 |
| $ | 1,414,589 |
| $ | 1,414,589 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Cost of sales |
| 869,999 |
| 869,999 |
| 842,726 |
| 842,726 |
| 815,071 |
| 815,071 |
| 935,256 |
| 935,256 |
| 917,354 |
| 917,354 |
| ||||||||||
Gross profit |
| 495,134 |
| 495,134 |
| 487,900 |
| 487,900 |
| 466,798 |
| 466,798 |
| 452,776 |
| 452,776 |
| 497,235 |
| 497,235 |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Selling, general and administrative expenses |
| 450,162 |
| 449,009 |
| 459,441 |
| 460,250 |
| 465,893 |
| 466,153 |
| 422,737 |
| 422,876 |
| 416,990 |
| 416,935 |
| ||||||||||
Goodwill impairment charge |
| — |
| — |
| — |
| — |
| 40,914 |
| 40,914 |
| — |
| — |
| — |
| — |
| ||||||||||
Income (loss) from operations |
| 44,972 |
| 46,125 |
| 28,459 |
| 27,650 |
| (40,009 | ) | (40,269 | ) | 30,039 |
| 29,900 |
| 80,245 |
| 80,300 |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Interest expense |
| 2,444 |
| 2,444 |
| 2,147 |
| 2,147 |
| 2,349 |
| 2,349 |
| 2,477 |
| 2,477 |
| 3,128 |
| 3,128 |
| ||||||||||
Other income |
| (1,039 | ) | (1,039 | ) | (718 | ) | (718 | ) | (1,231 | ) | (1,231 | ) | (2,120 | ) | (2,120 | ) | (6,543 | ) | (6,543 | ) | ||||||||||
Income (loss) before income taxes, cumulative effect of change in accounting principle and extraordinary gain - unallocated negative goodwill |
| 43,567 |
| 44,720 |
| 27,030 |
| 26,221 |
| (41,127 | ) | (41,387 | ) | 29,682 |
| 29,543 |
| 83,660 |
| 83,715 |
| ||||||||||
Income tax expense |
| 4,892 |
| 5,301 |
| 8,302 |
| 7,990 |
| (9,341 | ) | (9,426 | ) | 12,891 |
| 12,831 |
| 43,510 |
| 43,531 |
| ||||||||||
Income (loss) before cumulative effect of change in accounting principle and extraordinary gain - unallocated negative goodwill |
| 38,675 |
| 39,419 |
| 18,728 |
| 18,231 |
| (31,786 | ) | (31,961 | ) | 16,791 |
| 16,712 |
| 40,150 |
| 40,184 |
| ||||||||||
Extraordinary gain - unallocated negative goodwill, net of income taxes |
| 3,166 |
| 3,166 |
| 4,339 |
| 4,339 |
| — |
| — |
| — |
| — |
| — |
| — |
| ||||||||||
Cumulative effect of a change in accounting principle, net of income taxes |
| — |
| — |
| — |
| — |
| (13,684 | ) | (13,684 | ) | — |
| — |
| — |
| — |
| ||||||||||
Net income |
| $ | 41,841 |
| $ | 42,585 |
| $ | 23,067 |
| $ | 22,570 |
| $ | (45,470 | ) | $ | (45,645 | ) | $ | 16,791 |
| $ | 16,712 |
| $ | 40,150 |
| $ | 40,184 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Basic Earnings Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Earnings per share before cumulative effect of change in accounting principle and extraordinary gain - unallocated negative goodwill |
| $ | 1.12 |
| $ | 1.14 |
| $ | 0.50 |
| $ | 0.49 |
| $ | (0.79 | ) | $ | (0.79 | ) | $ | 0.40 |
| $ | 0.40 |
| $ | 0.84 |
| $ | 0.84 |
|
Extraordinary gain - unallocated negative goodwill, net of income taxes |
| $ | 0.09 |
| $ | 0.09 |
| $ | 0.12 |
| $ | 0.12 |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
|
Cumulative effect of a change in accounting principle net of income taxes |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | (0.34 | ) | $ | (0.34 | ) | $ | — |
| $ | — |
| $ | — |
| $ | — |
|
Basic earnings per share |
| $ | 1.21 |
| $ | 1.23 |
| $ | 0.62 |
| $ | 0.60 |
| $ | (1.13 | ) | $ | (1.13 | ) | $ | 0.40 |
| $ | 0.40 |
| $ | 0.84 |
| $ | 0.84 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Weighted average shares - basic |
| 34,531 |
| 34,531 |
| 37,422 |
| 37,422 |
| 40,224 |
| 40,224 |
| 41,938 |
| 41,938 |
| 47,597 |
| 47,597 |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Diluted Earnings Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Earnings per share before cumulative effect of change in accounting principle and extraordinary gain - unallocated negative goodwill |
| $ | 1.07 |
| $ | 1.09 |
| $ | 0.49 |
| $ | 0.48 |
| $ | (0.79 | ) | $ | (0.79 | ) | $ | 0.39 |
| $ | 0.39 |
| $ | 0.83 |
| $ | 0.83 |
|
Extraordinary gain - unallocated negative goodwill, net of income taxes |
| $ | 0.09 |
| $ | 0.09 |
| $ | 0.11 |
| $ | 0.11 |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
|
Cumulative effect of a change in accounting principle net of income taxes |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | (0.34 | ) | $ | (0.34 | ) | $ | — |
| $ | — |
| $ | — |
| $ | — |
|
Diluted earnings per share |
| $ | 1.15 |
| $ | 1.17 |
| $ | 0.60 |
| $ | 0.59 |
| $ | (1.13 | ) | $ | (1.13 | ) | $ | 0.39 |
| $ | 0.39 |
| $ | 0.83 |
| $ | 0.83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Weighted average shares - diluted |
| 36,296 |
| 36,296 |
| 38,209 |
| 38,209 |
| 40,224 |
| 40,224 |
| 42,553 |
| 42,553 |
| 48,498 |
| 48,498 |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Total assets |
| 859,653 |
| 859,653 |
| 817,758 |
| 830,834 |
| 803,396 |
| 819,725 |
| 935,418 |
| 953,564 |
| 1,002,002 |
| 1,021,138 |
| ||||||||||
Current portion of long term obligations |
| 780 |
| 780 |
| 395 |
| 395 |
| 1,640 |
| 1,640 |
| 4,711 |
| 4,711 |
| 5,702 |
| 5,702 |
| ||||||||||
Long term obligations |
| 12,037 |
| 12,037 |
| 7,465 |
| 7,465 |
| 7,860 |
| 7,860 |
| 9,500 |
| 9,500 |
| 13,767 |
| 13,767 |
| ||||||||||
Shareholders’ equity |
| 404,323 |
| 404,323 |
| 399,184 |
| 398,440 |
| 392,104 |
| 391,857 |
| 448,066 |
| 448,241 |
| 448,822 |
| 448,919 |
|
|
| 2004 QUARTERS |
| ||||||||||||||||||||||
|
| As Reported |
| As Adjusted |
| As Reported |
| As Adjusted |
| As Reported |
| As Adjusted |
| As Reported |
| As Adjusted |
| ||||||||
|
| 5/1/2004 |
| 5/1/2004 |
| 7/31/2004 |
| 7/31/2004 |
| 10/30/2004 |
| 10/30/2004 |
| 1/29/2005 |
| 1/29/2005 |
| ||||||||
Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Sales |
| $ | 304,483 |
| $ | 304,483 |
| $ | 277,182 |
| $ | 277,182 |
| $ | 270,013 |
| $ | 270,013 |
| $ | 513,455 |
| $ | 513,455 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Cost of sales |
| 191,178 |
| 191,178 |
| 174,144 |
| 174,144 |
| 170,045 |
| 170,045 |
| 334,632 |
| 334,632 |
| ||||||||
Gross profit |
| 113,305 |
| 113,305 |
| 103,038 |
| 103,038 |
| 99,968 |
| 99,968 |
| 178,823 |
| 178,823 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Selling, general and administrative expenses |
| 109,695 |
| 109,972 |
| 108,899 |
| 109,176 |
| 108,863 |
| 109,140 |
| 122,705 |
| 120,720 |
| ||||||||
Income (loss) from operations |
| 3,610 |
| 3,333 |
| (5,861 | ) | (6,138 | ) | (8,895 | ) | (9,172 | ) | 56,118 |
| 58,103 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Interest expense |
| 317 |
| 317 |
| 407 |
| 407 |
| 578 |
| 578 |
| 103 |
| 103 |
| ||||||||
Income (loss) before income taxes, cumulative effect of change in accounting principle and extraordinary gain - unallocated negative goodwill |
| 3,293 |
| 3,016 |
| (6,268 | ) | (6,545 | ) | (9,473 | ) | (9,750 | ) | 56,015 |
| 58,000 |
| ||||||||
Income tax expense |
| 1,252 |
| 1,150 |
| (13,397 | ) | (13,499 | ) | (4,299 | ) | (4,401 | ) | 21,336 |
| 22,051 |
| ||||||||
Income (loss) before extraordinary gain - unallocated negative goodwill |
| 2,041 |
| 1,866 |
| 7,129 |
| 6,954 |
| (5,174 | ) | (5,349 | ) | 34,679 |
| 35,949 |
| ||||||||
Extraordinary gain - unallocated negative goodwill, net of income taxes |
| 418 |
| 418 |
| 2,178 |
| 2,178 |
| 570 |
| 570 |
| — |
| — |
| ||||||||
Net income |
| $ | 2,459 |
| $ | 2,284 |
| $ | 9,307 |
| $ | 9,132 |
| $ | (4,604 | ) | $ | (4,779 | ) | $ | 34,679 |
| $ | 35,949 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Basic Earnings Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Earnings per share before extraordinary gain - unallocated negative goodwill |
| $ | 0.06 |
| $ | 0.05 |
| $ | 0.20 |
| $ | 0.20 |
| $ | (0.15 | ) | $ | (0.15 | ) | $ | 1.04 |
| $ | 1.08 |
|
Extraordinary gain - unallocated negative goodwill, net of income taxes |
| $ | 0.01 |
| $ | 0.01 |
| $ | 0.06 |
| $ | 0.06 |
| $ | 0.01 |
| $ | 0.01 |
| $ | — |
| $ | — |
|
Basic earnings per share |
| $ | 0.07 |
| $ | 0.06 |
| $ | 0.26 |
| $ | 0.26 |
| $ | (0.14 | ) | $ | (0.14 | ) | $ | 1.04 |
| $ | 1.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Weighted average shares - basic |
| 35,981 |
| 35,981 |
| 35,100 |
| 35,100 |
| 33,812 |
| 33,812 |
| 33,232 |
| 33,232 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Diluted Earnings Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Earnings per share before extraordinary gain - unallocated negative goodwill |
| $ | 0.06 |
| $ | 0.05 |
| $ | 0.19 |
| $ | 0.19 |
| $ | (0.15 | ) | $ | (0.15 | ) | $ | 0.98 |
| $ | 1.02 |
|
Extraordinary gain - unallocated negative goodwill, net of income taxes |
| $ | 0.01 |
| $ | 0.01 |
| $ | 0.06 |
| $ | 0.06 |
| $ | 0.01 |
| $ | 0.01 |
| $ | — |
| $ | — |
|
Diluted earnings per share |
| $ | 0.07 |
| $ | 0.06 |
| $ | 0.25 |
| $ | 0.25 |
| $ | (0.14 | ) | $ | (0.14 | ) | $ | 0.98 |
| $ | 1.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Weighted average shares - diluted |
| 37,609 |
| 37,609 |
| 36,855 |
| 36,855 |
| 33,812 |
| 33,812 |
| 35,226 |
| 35,226 |
|
|
| 2003 QUARTERS |
| ||||||||||||||||||||||
|
| As Reported |
| As Adjusted |
| As Reported |
| As Adjusted |
| As Reported |
| As Adjusted |
| As Reported |
| As Adjusted |
| ||||||||
|
| 5/3/2003 |
| 5/3/2003 |
| 8/2/2003 |
| 8/2/2003 |
| 11/1/2003 |
| 11/1/2003 |
| 1/31/2004 |
| 1/31/2004 |
| ||||||||
Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Sales |
| $ | 273,402 |
| $ | 273,402 |
| $ | 246,746 |
| $ | 246,746 |
| $ | 268,506 |
| $ | 268,506 |
| $ | 541,972 |
| $ | 541,972 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Cost of sales |
| 175,831 |
| 175,831 |
| 150,209 |
| 150,209 |
| 172,199 |
| 172,199 |
| 344,487 |
| 344,487 |
| ||||||||
Gross profit |
| 97,571 |
| 97,571 |
| 96,537 |
| 96,537 |
| 96,307 |
| 96,307 |
| 197,485 |
| 197,485 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Selling, general and administrative expenses |
| 105,946 |
| 106,148 |
| 104,650 |
| 104,852 |
| 109,203 |
| 109,405 |
| 139,642 |
| 139,845 |
| ||||||||
Income (loss) from operations |
| (8,375 | ) | (8,577 | ) | (8,113 | ) | (8,315 | ) | (12,896 | ) | (13,098 | ) | 57,843 |
| 57,640 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Interest expense |
| 159 |
| 159 |
| 342 |
| 342 |
| 549 |
| 549 |
| 379 |
| 379 |
| ||||||||
Income (loss) before income taxes and extraordinary gain - unallocated negative goodwill |
| (8,534 | ) | (8,736 | ) | (8,455 | ) | (8,657 | ) | (13,445 | ) | (13,647 | ) | 57,464 |
| 57,261 |
| ||||||||
Income tax expense |
| (3,449 | ) | (3,527 | ) | (5,542 | ) | (5,620 | ) | (5,342 | ) | (5,420 | ) | 22,635 |
| 22,557 |
| ||||||||
Income (loss) before extraordinary gain - unallocated negative goodwill |
| (5,085 | ) | (5,209 | ) | (2,913 | ) | (3,037 | ) | (8,103 | ) | (8,227 | ) | 34,829 |
| 34,704 |
| ||||||||
Extraordinary gain - unallocated negative goodwill, net of income taxes |
| — |
| — |
| — |
| — |
| 2,191 |
| 2,191 |
| 2,148 |
| 2,148 |
| ||||||||
Net income |
| $ | (5,085 | ) | $ | (5,209 | ) | $ | (2,913 | ) | $ | (3,037 | ) | $ | (5,912 | ) | $ | (6,036 | ) | $ | 36,977 |
| $ | 36,852 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Basic Earnings Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Earnings per share before extraordinary gain - unallocated negative goodwill |
| $ | (0.13 | ) | $ | (0.13 | ) | $ | (0.08 | ) | $ | (0.08 | ) | $ | (0.22 | ) | $ | (0.22 | ) | $ | 0.96 |
| $ | 0.96 |
|
Extraordinary gain - unallocated negative goodwill, net of income taxes |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 0.06 |
| $ | 0.06 |
| $ | 0.06 |
| $ | 0.06 |
|
Basic earnings per share |
| $ | (0.13 | ) | $ | (0.13 | ) | $ | (0.08 | ) | $ | (0.08 | ) | $ | (0.16 | ) | $ | (0.16 | ) | $ | 1.02 |
| $ | 1.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Weighted average shares - basic |
| 38,920 |
| 38,920 |
| 37,969 |
| 37,969 |
| 36,625 |
| 36,625 |
| 36,170 |
| 36,170 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Diluted Earnings Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Earnings per share before extraordinary gain - unallocated negative goodwill |
| $ | (0.13 | ) | $ | (0.13 | ) | $ | (0.08 | ) | $ | (0.08 | ) | $ | (0.22 | ) | $ | (0.22 | ) | $ | 0.93 |
| $ | 0.93 |
|
Extraordinary gain - unallocated negative goodwill, net of income taxes |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 0.06 |
| $ | 0.06 |
| $ | 0.06 |
| $ | 0.06 |
|
Diluted earnings per share |
| $ | (0.13 | ) | $ | (0.13 | ) | $ | (0.08 | ) | $ | (0.08 | ) | $ | (0.16 | ) | $ | (0.16 | ) | $ | 0.99 |
| $ | 0.98 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Weighted average shares - diluted |
| 38,920 |
| 38,920 |
| 37,969 |
| 37,969 |
| 36,625 |
| 36,625 |
| 37,471 |
| 37,471 |
|
Trans World Entertainment
Lease Accounting Adjustment - As Reported and As Adjusted
|
| Fiscal 2004 |
| Fiscal 2003 |
| Fiscal 2002 |
| ||||||||||||
|
| As Reported |
| As Adjusted |
| As Reported |
| As Adjusted |
| As Reported |
| As Adjusted |
| ||||||
|
| 1/29/2005 |
| 1/29/2005 |
| 1/31/2004 |
| 1/31/2004 |
| 2/1/2003 |
| 2/1/2003 |
| ||||||
Consolidated Statements of Cash Flows |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Net income |
| $ | 41,841 |
| $ | 42,585 |
| $ | 23,067 |
| $ | 22,570 |
| $ | (45,470 | ) | $ | (45,645 | ) |
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Depreciation and amortization |
| 39,796 |
| 38,560 |
| 40,539 |
| 43,894 |
| 42,476 |
| 45,553 |
| ||||||
Amortization of lease valuations |
| (844 | ) | (844 | ) | (893 | ) | (893 | ) | (148 | ) | (148 | ) | ||||||
Stock compensation programs |
| 90 |
| 90 |
| 143 |
| 143 |
| 368 |
| 368 |
| ||||||
Loss on disposal of fixed assets |
| 2,848 |
| 2,848 |
| 2,544 |
| 2,928 |
| 2,834 |
| 3,176 |
| ||||||
Loss on impairment of fixed assets |
| — |
| — |
| 3,682 |
| 3,682 |
| — |
| — |
| ||||||
Write off of investments in unconsolidated affiliates |
| — |
| — |
| — |
| — |
| 9,311 |
| 9,311 |
| ||||||
Deferred tax expense (benefit) |
| 6,948 |
| 7,357 |
| (4,106 | ) | (4,418 | ) | (9,877 | ) | (10,184 | ) | ||||||
Goodwill impairment charge |
| — |
| — |
| — |
| — |
| 40,914 |
| 40,914 |
| ||||||
Cumulative effect of change in accounting principle, net of income taxes |
| — |
| — |
| — |
|
|
| 13,684 |
| 13,684 |
| ||||||
Extraordinary gain, net of income taxes |
| (3,166 | ) | (3,166 | ) | (4,339 | ) | (4,339 | ) | — |
| — |
| ||||||
Changes in operating assets and liabilities, net of effects of acquisitions: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Accounts receivable |
| 2,980 |
| 3,082 |
| 1,009 |
| 857 |
| (3,052 | ) | (3,002 | ) | ||||||
Merchandise inventory |
| (4,009 | ) | (4,009 | ) | 5,275 |
| 5,275 |
| 8,428 |
| 8,428 |
| ||||||
Prepaid expenses and other |
| (104 | ) | (104 | ) | (1,218 | ) | (1,218 | ) | 1,298 |
| 1,298 |
| ||||||
Other assets |
| (2,730 | ) | (2,730 | ) | (353 | ) | (353 | ) | 771 |
| 771 |
| ||||||
Accounts payable |
| 52,098 |
| 52,098 |
| (20,661 | ) | (20,661 | ) | (51,943 | ) | (51,943 | ) | ||||||
Income taxes payable |
| (15,151 | ) | (15,151 | ) | 12,479 |
| 12,479 |
| (12,399 | ) | (12,399 | ) | ||||||
Accrued expenses and other |
| (10,442 | ) | (12,712 | ) | 12,849 |
| 12,261 |
| 784 |
| 784 |
| ||||||
Deferred rent and other long term liabilities |
| (4,224 | ) | (1,973 | ) | (3,134 | ) | (5,150 | ) | 154 |
| (1,178 | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Net cash provided (used) by operating activities |
| 105,931 |
| 105,931 |
| 66,883 |
| 67,057 |
| (1,867 | ) | (212 | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Purchases of fixed assets |
| (33,398 | ) | (33,398 | ) | (16,989 | ) | (17,163 | ) | (40,331 | ) | (41,986 | ) | ||||||
Purchase of investments in unconsildated affiliates |
| (2,000 | ) | (2,000 | ) | (37,044 | ) | (37,044 | ) | (577 | ) | (577 | ) | ||||||
Proceeds from sale of fixed assets |
| — |
| — |
| — |
| — |
| 34 |
| 34 |
| ||||||
Net cash used by investing activities |
| (35,398 | ) | (35,398 | ) | (54,033 | ) | (54,207 | ) | (40,874 | ) | (42,529 | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Proceeds from long term debt |
| 5,760 |
| 5,760 |
| — |
| — |
| — |
| — |
| ||||||
Payments of long term debt |
| (252 | ) | (252 | ) | — |
| — |
| — |
| — |
| ||||||
Payments of capital lease obligations |
| (551 | ) | (551 | ) | (1,640 | ) | (1,640 | ) | (4,711 | ) | (4,711 | ) | ||||||
Payments for purchases of treasury stock |
| (40,247 | ) | (40,247 | ) | (16,952 | ) | (16,952 | ) | (11,301 | ) | (11,301 | ) | ||||||
Proceeds from exercise of stock options |
| 2,603 |
| 2,603 |
| 614 |
| 614 |
| 255 |
| 255 |
| ||||||
Net cash used by financing activities |
| (32,687 | ) | (32,687 | ) | (17,978 | ) | (17,978 | ) | (15,757 | ) | (15,757 | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Net decrease in cash and cash equivalents |
| 37,846 |
| 37,846 |
| (5,128 | ) | (5,128 | ) | (58,498 | ) | (58,498 | ) | ||||||
Cash and cash equivalents, beginning of the year |
| 191,922 |
| 191,922 |
| 197,050 |
| 197,050 |
| 255,548 |
| 255,548 |
| ||||||
Cash and cash equivalents, end of the year |
| 229,768 |
| 229,768 |
| 191,922 |
| 191,922 |
| 197,050 |
| 197,050 |
| ||||||
|
| 2004 QUARTERS |
| ||||||||||
|
| As Reported |
| As Adjusted |
| As Reported |
| As Adjusted |
| As Reported |
| As Adjusted |
|
|
| 13 Weeks |
| 13 Weeks |
| 26 Weeks |
| 26 Weeks |
| 39 Weeks |
| 39 Weeks |
|
|
| 5/1/2004 |
| 5/1/2004 |
| 7/31/2004 |
| 7/31/2004 |
| 10/30/2004 |
| 10/30/2004 |
|
Consolidated Statements of Cash Flows |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided (used) by operating activities |
| (89,434 | ) | (89,043 | ) | (118,972 | ) | (118,190 | ) | (128,495 | ) | (127,322 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of fixed assets |
| (9,686 | ) | (10,077 | ) | (15,590 | ) | (16,372 | ) | (22,602 | ) | (23,775 | ) |
Purchase of investments in unconsolidated affiliates |
| — |
| — |
| (2,000 | ) | (2,000 | ) | (2,000 | ) | (2,000 | ) |
Net cash used by investing activities |
| (9,686 | ) | (10,077 | ) | (17,590 | ) | (18,372 | ) | (24,602 | ) | (25,775 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings under line of credit |
| — |
| — |
| — |
| — |
| 3,940 |
| 3,940 |
|
Proceeds from long term debt |
| — |
| — |
| 5,760 |
| 5,760 |
| 5,760 |
| 5,760 |
|
Payments of long term debt |
| — |
| — |
| (35 | ) | (35 | ) | (141 | ) | (141 | ) |
Payments of capital lease obligations |
| (94 | ) | (94 | ) | (192 | ) | (192 | ) | (292 | ) | (292 | ) |
Payments for purchases of treasury stock |
| (3,875 | ) | (3,875 | ) | (20,946 | ) | (20,946 | ) | (30,362 | ) | (30,362 | ) |
Proceeds from exercise of stock options |
| 328 |
| 328 |
| 683 |
| 683 |
| 928 |
| 928 |
|
Net cash used by financing activities |
| (3,641 | ) | (3,641 | ) | (14,730 | ) | (14,730 | ) | (20,167 | ) | (20,167 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
| (102,761 | ) | (102,761 | ) | (151,292 | ) | (151,292 | ) | (173,264 | ) | (173,264 | ) |
Cash and cash equivalents, beginning of the year |
| 191,219 |
| 191,219 |
| 191,219 |
| 191,219 |
| 191,922 |
| 191,922 |
|
Cash and cash equivalents, end of the year |
| 88,458 |
| 88,458 |
| 39,927 |
| 39,927 |
| 18,658 |
| 18,658 |
|
|
| 2003 QUARTERS |
| ||||||||||
|
| As Reported |
| As Adjusted |
| As Reported |
| As Adjusted |
| As Reported |
| As Adjusted |
|
|
| 13 Weeks |
| 13 Weeks |
| 26 Weeks |
| 26 Weeks |
| 39 Weeks |
| 39 Weeks |
|
|
| 5/3/2003 |
| 5/3/2003 |
| 8/2/2003 |
| 8/2/2003 |
| 11/1/2003 |
| 11/1/2003 |
|
Consolidated Statements of Cash Flows |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided (used) by operating activities |
| (131,525 | ) | (131,482 | ) | (133,532 | ) | (133,446 | ) | (136,013 | ) | (135,884 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of fixed assets |
| (2,901 | ) | (2,944 | ) | (6,665 | ) | (6,751 | ) | (12,156 | ) | (12,285 | ) |
Purchase of investments in unconsolidated affiliates |
| — |
| — |
| — |
| — |
| (25,600 | ) | (25,600 | ) |
Net cash used by investing activities |
| (2,901 | ) | (2,944 | ) | (6,665 | ) | (6,751 | ) | (37,756 | ) | (37,885 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings under line of credit |
| — |
| — |
| — |
| — |
| 12,108 |
| 12,108 |
|
Payments of capital lease obligations |
| (780 | ) | (780 | ) | (1,362 | ) | (1,362 | ) | (1,523 | ) | (1,523 | ) |
Payments for purchases of treasury stock |
| — |
| 0 |
| (11,001 | ) | (11,001 | ) | (14,771 | ) | (14,771 | ) |
Proceeds from exercise of stock options |
| 172 |
| 172 |
| 378 |
| 378 |
| 745 |
| 745 |
|
Net cash used by financing activities |
| (608 | ) | (608 | ) | (11,985 | ) | (11,985 | ) | (3,441 | ) | (3,441 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
| (135,034 | ) | (135,034 | ) | (152,182 | ) | (152,182 | ) | (177,210 | ) | (177,210 | ) |
Cash and cash equivalents, beginning of the year |
| 197,050 |
| 197,050 |
| 197,050 |
| 197,050 |
| 197,050 |
| 197,050 |
|
Cash and cash equivalents, end of the year |
| 62,016 |
| 62,016 |
| 44,868 |
| 44,868 |
| 19,840 |
| 19,840 |
|
|
| 2002 QUARTERS |
| ||||||||||
|
| As Reported |
| As Adjusted |
| As Reported |
| As Adjusted |
| As Reported |
| As Adjusted |
|
|
| 13 Weeks |
| 13 Weeks |
| 26 Weeks |
| 26 Weeks |
| 39 Weeks |
| 39 Weeks |
|
|
| 5/4/2002 |
| 5/4/2002 |
| 8/3/2002 |
| 8/3/2002 |
| 11/2/2002 |
| 11/2/2002 |
|
Consolidated Statements of Cash Flows |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided (used) by operating activities |
| (187,045 | ) | (186,631 | ) | (203,840 | ) | (203,012 | ) | (216,731 | ) | (215,489 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of fixed assets |
| (5,253 | ) | (5,667 | ) | (16,944 | ) | (17,772 | ) | (32,370 | ) | (33,612 | ) |
Purchase of investments in unconsildated affiliates |
| — |
| — |
| (860 | ) | (860 | ) | (891 | ) | (891 | ) |
Disposal of videocassette inventory, net of purchases |
| 528 |
| 528 |
| 528 |
| 528 |
| — |
| — |
|
Net cash used by investing activities |
| (4,725 | ) | (5,139 | ) | (17,276 | ) | (18,104 | ) | (33,261 | ) | (34,503 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings under line of credit |
| — |
| — |
| — |
| — |
| 26,314 |
| 26,314 |
|
Payments of capital lease obligations |
| (1,513 | ) | (1,513 | ) | (2,877 | ) | (2,877 | ) | (3,897 | ) | (3,897 | ) |
Payments for purchases of treasury stock |
| (3,022 | ) | (3,022 | ) | (5,498 | ) | (5,498 | ) | (7,066 | ) | (7,066 | ) |
Proceeds from exercise of stock options |
| 203 |
| 203 |
| 427 |
| 427 |
| 256 |
| 256 |
|
Net cash used by financing activities |
| (4,332 | ) | (4,332 | ) | (7,948 | ) | (7,948 | ) | 15,607 |
| 15,607 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
| (196,102 | ) | (196,102 | ) | (229,064 | ) | (229,064 | ) | (234,385 | ) | (234,385 | ) |
Cash and cash equivalents, beginning of the year |
| 254,943 |
| 254,943 |
| 254,943 |
| 254,943 |
| 254,943 |
| 254,943 |
|
Cash and cash equivalents, end of the year |
| 58,841 |
| 58,841 |
| 25,879 |
| 25,879 |
| 20,558 |
| 20,558 |
|