Rick's Cabaret International, Inc. Reports Net Income Of $1,031,727 For Third Quarter, Up 62 Percent Over 2006; Earnings Are 17 Cents vs. 13 Cents

HOUSTON-(August 14, 2007)-Rick's Cabaret International, Inc. [NASDAQ:RICK] operator of upscale gentlemen's clubs, today reported net income of $1,031,727 for its third quarter ending June 30, 2007, an increase of 62 percent over the $635,857 reported for the three months ended June 30, 2006. Net income per basic share was 17 cents, compared with 13 cents in the previous year.

Income before income taxes for same-location-same-period of nightclub operations increased 42 percent to $1,901,468 in the third quarter this year, from $1,338,462 for same period last year.

Rick's Cabaret had consolidated total revenues of $8,446,351 for the quarter, compared to consolidated total revenues of $6,251,181 for the three months ended June 30, 2006, an increase of 35 percent that was primarily attributable to $1,601,224 generated by new nightclubs in San Antonio, Austin, and Fort Worth, Texas and an increase of $599,399 from other locations. Total revenues for same-location-same-period of club operations increased just over 10 percent. The company reported a 2.77 percent decrease in internet revenues to $191,553.

"We are very pleased with the results for our third quarter," said Eric Langan, President and CEO of the company. "Revenues from the newly acquired locations are beginning to make the contributions we had anticipated and our existing nightclubs are also growing steadily."

Interest expense for the period was $345,130 compared to $267,059 for the three months ended June 30, 2006, due primarily to new debt to finance the purchase and renovation of the new clubs. As of June 30, 2007, the balance of long-term debt including current maturities was $14,895,002 compared to $12,316,144 a year earlier.

Cash flows from operating activities during the first three quarters were $2,652,237, a 52 percent increase compared with the $1,747,107 generated during the period in 2006.

Mr. Langan and chief financial officer Phillip Marshall will discuss the third quarter results in a conference call today at 4:30 p.m. EDT. The call is being webcast and can be accessed through the Rick’s Cabaret website (www.ricks.com). The toll free live participant dial-in number for callers from the U.S. and Canada is 800-361-0912, while international callers can use 913-981-5559. The conference call will be available for replay for 14 days after the event at 888-203-1112 (U.S. and Canada) and 719-457-0820 (international). Replay passcode: 9453772.

RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

 

FOR THE THREE MONTHS

ENDED JUNE 30,

 

FOR THE NINE MONTHS

ENDED JUNE 30,

               
 

2007

 

2006

 

2007

 

2006

 

(UNAUDITED)

 

(UNAUDITED)

               

Revenues:

             

Sales of alcoholic beverages

$ 3,254,244

 

$ 2,214,651

 

$ 8,661,248

 

$ 6 ,600,135

Sales of food and merchandise

869,853

 

679,049

 

2,302,568

 

1,995,048

Service revenues

3,864,108

 

2,931,801

 

10,753,923

 

8,367,721

Internet revenues

191,553

 

196,948

 

557,033

 

609,857

Other

266,593

 

228,732

 

770,925

 

577,673

Total revenues

8,446,351

 

6,251,181

 

23,045,697

 

18,150,434

               

Operating expenses:

             

Cost of goods sold

1,077,984

 

715,949

 

2,931,620

 

2,170,481

Salaries and wages

2,238,630

 

1,776,181

 

6,465,822

 

5,124,704

Stock compensation

48,134

 

--

 

178,846

 

--

Other general and administrative:

             

Taxes and permits

1,088,917

 

763,337

 

2,943,189

 

2,238,103

Charge card fees

157,932

 

140,115

 

439,440

 

346,425

Rent

388,702

 

261,863

 

1,137,974

 

855,440

Legal and professional

279,339

 

256,938

 

766,615

 

592,885

Advertising and marketing

297,494

 

285,171

 

981,290

 

891,721

Insurance

192,225

 

104,726

 

501,490

 

273,100

Utilities

189,562

 

157,574

 

560,063

 

437,281

Depreciation and amortization

410,507

 

258,409

 

1,161,535

 

726,679

Other

765,146

 

635,868

 

2,352,315

 

1,850,914

Total operating expenses

7,134,572

 

5,356,131

 

20,420,199

 

15,507,733

Income from operations

1,311,779

 

895,050

 

2,625,498

 

2,642,701

               

Other income (expense):

             

Interest income

28,940

 

5,316

 

41,994

 

20,702

Interest expense

(345,130)

 

(267,059)

 

(999,146)

 

(801,581)

Minority interests

120,997

 

2,550

 

293,204

 

1,206

Other

--

 

--

 

--

 

4,354

Income before income taxes

1,116,586

 

635,857

 

1,961,550

 

1,867,382

Deferred income taxes

84,859

 

--

 

84,859

 

--

Net income

$ 1,031,727

 

$ 635,857

 

$ 1,876,691

 

$ 1,867,382

Basic and diluted earnings per share:

             

Net income, basic

$ 0.17

 

$ 0.13

 

$ 0.34

 

$ 0.41

Net income, diluted

$ 0.16

 

$ 0.12

 

$ 0.32

 

$ 0.38

Weighted average number of common shares outstanding:

             

Basic

6,112,678

 

4,835,502

 

5,539,923

 

4,521,600

Diluted

6,789,647

 

5,752,084

 

6,044,398

 

5,211,700

Comprehensive income for the three months ended June 30, 2007 and 2006 were $1,031,727 and $613,612, and for the nine months were $1,874,466 and $1,867,382, respectively. This includes the changes in available-for-sale securities and net income.

About Rick's Cabaret
Rick’s Cabaret International, Inc. (NASDAQ: RICK) operates upscale adult nightclubs serving primarily businessmen and professionals that offer live adult entertainment, restaurant and bar operations. The company owns and operates or licenses adult nightclubs in New York City, New Orleans, Charlotte, Houston, Minneapolis and other cities under the names "Rick's Cabaret," "XTC" and "Club Onyx." No sexual contact is permitted at any of these locations. Rick's Cabaret also owns the adult Internet membership Web site, couplestouch.com, and a network of online adult auction sites under the flagship URL naughtybids.com. Rick's Cabaret common stock is traded on NASDAQ under the symbol RICK. For further information contact ir@ricks.com.


Forward-Looking Statements:
This document contains forward-looking statements that involve a number of risks and uncertainties that could cause the company's actual results to differ materially from those indicated in this document, including:  the risks and uncertainties associated with operating and managing an adult business; the business climates in New York City and elsewhere; the success or lack thereof in launching and building the company's businesses in New York City and elsewhere; the Company's ability to identify and secure suitable locations for new nightclubs on acceptable terms, open the anticipated number of new nightclubs on time and within budget; achieve anticipated rates of same-store sales; hire and train additional nightclub personnel and integrate new nightclubs into its operations; unexpected increases in costs of sales or employee, pre-opening or other expenses; the economic conditions in the new markets into which the Company expands and possible uncertainties in the customer base in these areas; fluctuations in quarterly operating results; the impact of any negative publicity or public attitudes; competitive pressure from other national and regional nightclub chains; risks and uncertainties related to the operational and financial results of our Web sites, conditions relevant to real estate transactions, and numerous other factors such as laws governing the operation of adult entertainment businesses, competition and dependence on key personnel. Rick's has no obligation to update or revise the forward-looking statements to reflect the occurrence of future events or circumstances. For further information go to www.ricks.com.

Contact for further information: Allan Priaulx, 212-338-0050, ir@ricks.com