Trans World Corporation Reports 2012 Fourth Quarter and Year End Financial Results

Company to Host Conference Call at 2:00 PM ET

Year 2012 versus 2011 Financial Highlights

• Income from continuing operations, before income taxes, increased by 9.5% to $3.7 million, from approximately $3.4 million in 2011;
• Revenue from continuing operations decreased 1.4% to $36.0 million, from $36.5 million a year ago;
• Income from continuing operations (after income taxes of approximately $2.1 million) was $1.6 million, or $0.18 per diluted share, compared with approximately $3.2 million, or $0.36 per diluted share, in the prior year period, which did not have such corporate tax on gaming income, plus had lower gaming tax rates;
• EBITDA from continuing operations decreased 3.8% to $5.7 million, from $5.9 million a year ago; and
• Stockholders’ equity at December 31, 2012 was approximately $41.2 million, or $4.56 per diluted share, compared with $37.2 million, or $4.16 per diluted share, at December 31, 2011.

Fourth Quarter 2012 versus Fourth Quarter 2011 Financial Highlights

• Income from continuing operations before income taxes was approximately $1.3 million versus approximately $1.4 million in the same period a year ago, a decrease of 7.1%;
• Revenue from continuing operations increased 1.2% to approximately $9.6 million, from approximately $9.5 million, a year ago this period;
• Income from continuing operations (after income taxes of $802,000) was $394,000, or $0.04 per diluted share, compared with approximately $1.1 million, or $0.12 per diluted share, in the prior year period, which was not subject to corporate tax on gaming income and had lower gaming tax rates; and
• EBITDA from continuing operations decreased 9.6% to approximately $1.7 million, from approximately $1.9 million, largely from higher gaming taxes.

NEW YORK--(BUSINESS WIRE)--Trans World Corporation (“TWC” or the “Company”) (OTC: TWOC), a premier owner and operator of casinos and a hotel in Europe, today reported financial results for its fourth quarter and year ended December 31, 2012.

Mr. Rami Ramadan, Chief Executive Officer of TWC, noted, “Despite the negative impact of the new tax laws that took effect in 2012, we remained profitable, our 10^th consecutive year now. Thanks to improved operational efficiencies and lower overhead expenses, with roughly the same level of total revenue as in 2011, we were able to absorb approximately $4.3 million in additional taxes, of which $2.4 million were in gaming taxes and approximately $1.9 million were in foreign income taxes. Further, our operations also overcame a decline in business volume during the second quarter, when we experienced lower than average attendance at our casinos as a result of the 2012 Euro Cup Championship. Attendance levels quickly returned to normal once the tournament ended, and our revenues remained steady for the remainder of the year. As for the top line, we continued to develop and enhance marketing and promotional programs at our casinos throughout the year, focusing, primarily, on internal and customer-oriented loyalty rewards programs. These programs have proven to be cost effective and have the dual benefit of increasing the time players spend at the tables and slots as well as retaining existing, and attracting new, quality players.”

Operational Review

Year 2012:

Total revenue for the year ended December 31, 2012 decreased 1.4% to $36.0 million, from $36.5 million a year ago, principally, as a result of lower live-game revenue, which was partially offset by improved slot business. Income from continuing operations before income taxes rose 9.5% to $3.7 million, from approximately $3.4 million in the prior year, due, notably, to lower overhead and depreciation expenses.

As TWC previously reported, the Czech government passed amendments in 2011, which became effective on January 1, 2012, that changed the tax rates on gaming revenues to a new, flat gaming tax of 20.0% of gross gaming revenue and imposed a 19% corporate income tax on casino operations. Consequently, gaming taxes and fees for the Company effectively rose to 21.0% of gross gaming revenue in 2012, from 15.6% of gross gaming revenue a year ago.

The Company accrued approximately $2.1 million as a provision for foreign income taxes for the year ended December 31, 2012, which reduced income from continuing operations after taxes to $1.6 million, or $0.18 per diluted share, compared with a tax provision of $199,000 and income from continuing operations after taxes of approximately $3.2 million, or $0.36 per diluted share, for the prior year. The 2012 tax provision includes $505,000 of deferred income taxes.

EBITDA from continuing operations decreased 3.8% to $5.7 million, from $5.9 million in 2011, principally due to the aforementioned higher gaming tax burden. A table reconciling EBITDA, a non-GAAP (Generally Accepted Accounting Principles) financial measure, to the appropriate GAAP measure is included with the Company’s financial information below.

Q4 2012:

Fourth quarter revenue from TWC’s continuing operations was approximately $9.6 million, up 1.2% from the approximate $9.5 million generated in the same quarter a year ago. The increase was largely due to improvements in slot revenues, which were up 13.0%.

Income from continuing operations before income taxes for the last quarter of 2012 decreased 8.6%, to approximately $1.3 million, versus approximately $1.4 million for the same quarter in 2011. The decrease was attributable to higher gaming tax rates, which went into effect in 2012 and increased gaming taxes by 55% for the quarter versus the fourth quarter of 2011.

Income from continuing operations after income taxes of $802,000 was $394,000, or $0.04 per diluted share, versus approximately $1.1 million, or $0.12 per diluted share, after income taxes of $199,000, for the same quarter a year ago, which was not subject to material income taxes.

EBITDA from continuing operations was approximately $1.7 million in the fourth quarter of 2012, compared with approximately $1.9 million in the prior year quarter, a 9.6% decrease, principally due to the higher tax burden.

Outlook for 2013

Mr. Ramadan concluded, “TWC is committed to maximizing shareholder value, improving operational efficiencies and providing our patrons with the highest level of service. We will continue to seek opportunities in the hospitality and gaming arena, including potential strategic acquisitions or partnerships throughout Europe. However, we will remain selective and will only move forward in a manner that is accretive and adds value to our shareholders. TWC’s capital position has improved dramatically over the past year, thus we believe that TWC is well-positioned for growth.”

Stock Repurchase Program Update

In November 2012, TWC’s Board of Directors approved a stock repurchase program, in accordance with the retirement method, authorizing the repurchase of up to 500,000 shares of the Company's common stock over a 12-month period. The Company and its Board believe that by implementing this repurchase program they can demonstrate to TWC’s shareholders their confidence in the long-term prospects of the Company.

The Company has since repurchased 34,900 shares of common stock at an average stock price of $2.63, arriving at 8,836,735 outstanding shares, as of December 31, 2012.

Balance Sheet Highlights

The Company had cash of approximately $6.9 million at December 31, 2012 compared with $5.6 million at December 31, 2011. Total assets at the end of the year reached $51.0 million, from approximately $50.5 million in 2011. Stockholders’ equity at December 31, 2012 improved to approximately $41.2 million, or $4.56 per diluted share, from $37.2 million, or $4.16 per diluted share, at December 31, 2011. The Company lowered its long term debt less current maturities to approximately $1.4 million at December 31, 2012 from approximately $3.1 million at December 31, 2011.

Conference Call

The Company will discuss these results in a conference call later today at 2:00 PM ET.

The dial-in numbers are:
Live Participant Dial In (Toll Free):	877-407-9037
Live Participant Dial In (International):	201-493-6738

The conference call will also be webcast live. To listen to the call, please go to the Investor Relations section of Trans World’s website at www.transwc.com, or click on the following link:
http://transwc.equisolvewebcast.com/

About Trans World Corporation

Trans World Corporation, founded in 1993, is a publicly traded, US corporation with all of its gaming and hotel operations in Europe. Additional information about TWC and its Czech subsidiaries, American Chance Casinos and Hotel Savannah, can be found at www.transwc.com, www.american-chance-casinos.com and www.hotel-savannah.com.

The press release herein contains certain forward-looking statements and data. For this purpose, any statements and data contained herein that are not historical fact may be deemed to be forward-looking data. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipates,” “estimates,” or “continue” or comparable terminology or the negative thereof are intended to identify certain forward-looking statements. These statements, by their nature, involve substantial risks and uncertainties, both known and unknown, and actual results may differ materially from any future results expressed or implied by such forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statements or data whether as a result of new information, future events or otherwise.

TRANS WORLD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) Years Ended December 31, 2012 and 2011 (in thousands, except for share data)
	Years Ended December 31,				Three Months Ended December 31,
	2012		2011		2012		2011
					(Unaudited)		(Unaudited)
REVENUES	$	36,021	$	36,532	$	9,593	$	9,479
OPERATING EXPENSES:
Cost of revenues		19,358		18,956		5,070		4,692
Depreciation and amortization		1,728		2,150		427		487
Selling, general and administrative		10,961		11,651		2,845		2,931
		32,047		32,757		8,342		8,110
INCOME FROM CONTINUING OPERATIONS, before other expense and foreign income taxes		3,974		3,775		1,251		1,369
OTHER INCOME (EXPENSES):
Interest income				1				1
Interest expense		(251)		(388)		(42)		(81)
Foreign exchange loss		(13)		(1)		(13)		(1)
		(264)		(388)		(55)		(81)
INCOME FROM CONTINUING OPERATIONS, before
foreign income taxes		3,710		3,387		1,196		1,288
FOREIGN INCOME TAXES		(2,069)		(199)		(802)		(199)
INCOME FROM CONTINUING OPERATIONS		1,641		3,188		394		1,089
DISCONTINUED OPERATIONS, gain (loss) from operation of
discontinued Rozvadov Casino, net of tax		162		(225)		(38)		(49)
NET INCOME		1,803		2,963		356		1,040
Other comprehensive income (loss), foreign currency
translation adjustments, net of taxes		1,875		(1,858)		1,221		(3,636)
COMPREHENSIVE INCOME	$	3,678	$	1,105	$	1,577	$	(2,596)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		8,870,129		8,871,637		8,865,645		8,871,637
Diluted		9,025,176		8,935,189		9,020,691		8,935,189
EARNINGS PER COMMON SHARE:
From continuing operations:
Basic	$	0.18	$	0.36	$	0.04	$	0.12
Diluted	$	0.18	$	0.36	$	0.04	$	0.12
From discontinued operations:
Basic	$	0.02	$	(0.03)	$	(0.00)	$	(0.01)
Diluted	$	0.02	$	(0.03)	$	(0.00)	$	(0.01)

TRANS WORLD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS December 31, 2012 and December 31, 2011 (in thousands, except for share data)
ASSETS
	December 31, 2012		December 31, 2011
CURRENT ASSETS:
Cash	$	6,887	$	5,636
Prepaid expenses		316		719
Notes receivable, current portion		663		413
Other current assets		262		284
Assets held for sale				900
Total current assets		8,128		7,952
PROPERTY AND EQUIPMENT, less accumulated depreciation of
$12,877 and $11,108, respectively		34,067		33,068
OTHER ASSETS:
Goodwill		6,396		6,119
Notes receivable, less current portion		-		609
Deposits and other assets		2,439		2,723
Total other assets		8,835		9,451
	$	51,030	$	50,471
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Long-term debt, current maturities	$	1,836	$	3,490
Capital lease, current portion		55		37
Accounts payable		804		548
Interest payable		15		49
Czech gaming tax accrual		1,943		3,905
Foreign income tax accrual		1,480		84
Accrued expenses and other current liabilities		1,612		1,726
Liabilities related to assets held for sale				207
Total current liabilities		7,745		10,046
LONG-TERM LIABILITIES:
Long-term debt, less current maturities		1,376		3,065
Capital lease, less current portion		134		81
Deferred foreign tax liability		581		76
Total long-term liabilities		2,091		3,222
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value, 4,000,000 shares authorized,
none issued
Common stock, $.001 par value, 20,000,000 shares authorized,
8,836,735 shares in 2012 and 8,871,635 in 2011, issued and outstanding		9		9
Additional paid-in capital		52,454		52,141
Accumulated other comprehensive income		7,562		5,687
Accumulated deficit		(18,831)		(20,634)
Total stockholders' equity		41,194		37,203
	$	51,030	$	50,471

Reconciliation of Non-GAAP Measures to GAAP

The below table reconciles EBITDA, a non-GAAP (Generally Accepted Accounting Principles) financial measure, to the appropriate GAAP measure. The Company believes that EBITDA, a non-GAAP financial measure, provides useful information to its investors as well as to others who might be interested in purchasing shares of TWC common stock. This belief is based on conversations and meetings TWC’s management has had with its investors where the substance of these talks has centered around historical and prospective EBITDA measurements. Based on management’s observations, it appears that, even though the EBITDA measurement is not “GAAP,” it does enhance investors’ understanding of the Company’s business. In short, this performance measurement gives an analytic view of the Company’s operational earnings on a cash-basis, excluding the impact of debt obligations and (non-cash) depreciation and amortization.

TRANS WORLD CORPORATION AND SUBSIDIARIES EBITDA Reconciliation Three and 12 months Ended December 31, 2012 and 2011 (in thousands)
	Years Ended December 31,				Three Months Ended December 31,
	2012		2011		2012		2011
					unaudited		unaudited
NET INCOME	$	1,803	$	2,963	$	356	$	1,040
less: discontinued operations		(162)		225		38		49
Add back: Interest expense, net		251		387		42		80
Add back: Foreign exchange gain (loss)		13		1		13		1
Add back: Foreign income taxes		2,069		199		802		199
Add back: Depreciation and amortization expense		1,728		2,150		427		487
EBITDA	$	5,702	$	5,925	$	1,678	$	1,856
EBITDA margin (EBITDA / Revenues)		15.8%		16.2%		17.5%		19.6%