Trans World Corporation Reports 2013 Fourth Quarter and Year End Financial Results

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, 2013.

Mr. Rami Ramadan, Chief Executive Officer of TWC, noted, "We’ve had an excellent year, despite a challenging first half that was plagued by inclement weather, as we posted year-over-year growth in revenue and net income. Throughout the year 2013, our customers continued to gravitate towards slot games, and as a result, we saw a 5.3% increase in slot revenues, supported by a 19.8% improvement in slot attendance. Slot revenues represented 54.0% of the Company’s total revenue for the year, a 2.0 percentage point increase over 2012. Live game revenue decreased by 3.2%, primarily due to lower live game attendance levels that were, to a larger degree, negatively affected by the harsh winter weather experienced in the first quarter as well as severe spring flooding during the second quarter of the year, the severity of which also caused economic damage to the German region that we serve. These events hampered our customers’ ability to visit our casinos, thereby reducing the level of gaming activities. However, we were extremely pleased to see that our live game attendance rose 4.4% in the fourth quarter, largely due to contribution from the recently expanded and renovated casino at Ceska Kubice.”

Year 2013 Review:

Total revenue for the year ended December 31, 2013 increased to approximately $36.5 million, from $36.0 million a year ago, primarily due to significant increases in slot revenue and related attendance. Income from continuing operations before income taxes decreased to $3.4 million, from $3.7 million in the prior year, primarily due to an increase of $341,000 in value-added taxes (VAT) incurred on the Company’s expenses, when compared with the prior year, as mentioned above.

As a result of the higher VAT expenses and resulting lower taxable income base, the Company accrued a provision for foreign income taxes of approximately $1.1 million for the year ended December 31, 2013, representing a 47.6% decrease versus the prior year which had included a one-time charge of $505,000 in foreign deferred income taxes. Net income for the year ended December 31, 2013 increased 32.6% to approximately $2.4 million, or $0.26 per diluted share, from $1.8 million, or an equivalent of $0.20 per diluted share, for the previous year.

EBITDA from continuing operations for the year ended December 31, 2013 decreased to approximately $5.1 million from $5.7 million for the year ended 2012, primarily, due to the proportionally higher VAT expenses. 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 2013 Review:

Fourth quarter 2013 revenue from TWC’s continuing operations was $10.4 million, an increase of 8.5% from approximately $9.6 million generated in the same quarter a year ago. Income from continuing operations before income taxes increased 20.8% to $1.4 million, as compared with approximately $1.2 million for the same period a year ago.

Foreign income taxes for the fourth quarter 2013, decreased to $434,000, as compared with $802,000 for the same period of the prior year, which had included a one-time charge of $505,000 for deferred income tax related to adjustments for foreign book tax differences on fixed assets. The decrease was also attributable to the shift toward a heavier VAT burden, which consequently reduced the taxable income base. Net income was $1.0 million or $0.11 per diluted share for the fourth quarter of 2013, an increase of 184.0% as compared with $356,000, or $0.04 per diluted share, for the fourth quarter of 2012.

EBITDA from continuing operations increased 10.5% to approximately $1.9 million in the fourth quarter of 2013, compared with approximately $1.7 million in the prior year quarter.

Outlook for 2014

Mr. Ramadan concluded, "In the year ahead, we will continue to focus on improving operational efficiencies, as well as continue to focus our efforts on attracting a higher-wagering clientele and retaining these players. In addition, management will continue to explore opportunities in the hospitality and gaming arenas, including potential strategic acquisitions or partnerships throughout Europe. We believe that the re-launching of the Ceska Kubice Casino and continued profitability of our two other casinos, combined with a virtually debt-free balance sheet, will enable us to pursue lucrative growth opportunities in the future.”

Stock Repurchase Program Update

In November 2013, TWC’s Board of Directors extended the stock repurchase program for another year. The Company and its Board believe that the continuation of this program reflects their ongoing commitment to increase shareholders’ value and further demonstrates their confidence in the long-term prospects of the Company.

During the course of the program, the Company has repurchased 61,500 shares of common stock at an average stock price of $2.75, decreasing the total of outstanding shares to 8,810,135, as of December 31, 2013.

Balance Sheet Highlights

At December 31, 2013, the Company had cash of approximately $6.3 million compared with approximately $6.9 million at December 31, 2012. Stockholders’ equity at December 31, 2013 improved to approximately $41.9 million, or $4.63 per diluted share, from $41.2 million, or $4.56 per diluted share, at December 31, 2012.

On July 4, 2013, given the Company’s excess cash flow from operations, TWC retired its remaining bank loan, which was due to mature on November 4, 2013. With the full payoff of this loan, the Company has no bank debt and only a residual municipal loan debt of $138,000 on its books, which was retired on January 16, 2014.

Conference Call

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

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/q4-2013

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 can be found at www.transwc.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.

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.