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 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 133, and received broader vendor participation in funding markdowns related to liquidating inventory. We also had fewer markdowns in our games business for the 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 of 2010, our net loss improved 27% to $31 million or $0.99 per share, compared to a net loss of $42.4 million or $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 from 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.

Bob Higgins - Trans World Entertainment Corp - Chairman of the Board, CEO
Thank you, John.

2010 was a challenging year in terms of comp sales and operating results. Despite the comp sales decline, we were 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 remains strong with no borrowings on our revolver at year-end and cash at $75 million. Our peak 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 a store achieve an acceptable profit or to close it and generate cash from the liquidation of the inventory. With a core group of stores and a strong balance sheet, 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 seize 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 merchandise to support our future. While we work 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 will close by saying we are confident that we will continue to improve our operating results.