Rick's Cabaret International, Inc. Reports Record Net Income For Fiscal 2007 With 74.3 Percent Increase From Previous Year; Net Earnings Are 54 Cents Per Basic Share


HOUSTON-(December 20, 2007)-Rick's Cabaret International, Inc. [NASDAQ-GM:RICK], operator of upscale gentlemen's clubs, today reported net income of $3,054,899 for its fiscal year ending September 30, 2007, a 74.3 percent increase over the $1,752,714 reported in the previous year. The company became a taxpayer during the 2007 fiscal year and thus recorded $236,446 in income tax expense. Income before income taxes for the 2007 fiscal year was $3,291,345, an 87.8% increase over 2006.
For the company's fourth quarter ending September 30, 2007 revenues were $8,968,243, a 41.5 percent increase over the $6,336,781 reported in the previous year; net income was $1,178,208 compared with a loss of $114,668 and earnings per basic share were 20 cents compared with a loss of three cents in the previous year.

Full fiscal year 2007 earnings were 54 cents per basic share, which exceeded the company's guidance of 48 cents. Earnings per fully diluted share were 50 cents, compared with 35 cents in the previous year.

In fiscal 2007 the company had revenues of $32,013,940, a 30.7 percent increase over revenues of $24,487,215 in 2006. The increase was primarily due to revenues generated from newly acquired clubs and increases in revenues from existing clubs, especially from the Rick's Cabaret in New York City. Revenues from nightclub operations for same-location same-period increased by 11.8 percent year over year. Revenue for Internet businesses decreased by 9.1 percent, but generated operating income of $111,919.

"We are very pleased with our 2007 performance overall," said Eric Langan, President and CEO of Rick's Cabaret. "The really exciting time for our company lies ahead of us: our organic growth continues to be strong; we will immediately begin seeing the dramatic impact of earnings from our newest acquisition, Tootsies in Miami; and we have a robust pipeline of additional acquisitions ahead of us."

Net cash provided by operating activities in 2007 was $4,383,121, compared with $2,725,770 in 2006. On September 30th, the company had cash and cash equivalents of $2,998,758, compared with $854,932 at the end of the prior year.

Interest expense for the year ended September 30, 2007 was $1,335,713 compared to $1,057,020 for the prior year, primarily due to the increase in debt related to the purchase of new clubs. The company had long term debt to $14,387,339 as of September 30, 2007 compared to $13,920,733 a year earlier.

Total assets on the consolidated balance sheets of the company as of September 30, 2007 were $47,075,760, compared with $30,602,875 at the end of fiscal 2006.

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

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

   

Year Ended September 30,

 
   

2007

 

2006

 
           

Revenues:

             

Sales of alcoholic beverages

 

$

12,111,348

 

$

8,781,635

 

Sales of food and merchandise

   

3,185,494

   

2,651,868

 

Service revenues

   

14,883,205

   

11,442,371

 

Internet revenues

   

730,629

   

801,395

 

Other

   

1,103,264

   

809,946

 

Total revenues

   

32,013,940

   

24,487,215

 
               

Operating expenses:

             

Cost of goods sold

   

4,035,522

   

2,915,312

 

Salaries and wages

   

8,739,859

   

7,081,660

 

Stock-based compensation

   

196,871

   

-

 

Other general and administrative:

             

Taxes and permits

   

4,071,677

   

3,074,577

 

Charge card fees

   

638,248

   

485,342

 

Rent

   

1,494,005

   

1,150,338

 

Legal and professional

   

1,124,856

   

865,111

 

Advertising and marketing

   

1,325,367

   

1,176,277

 

Depreciation and amortization

   

1,596,650

   

1,049,247

 

Insurance

   

785,519

   

420,450

 

Utilities

   

800,366

   

621,051

 

Other 

   

3,101,314

   

2,576,628

 

Goodwill impairment

   

-

   

79,841

 

Total operating expenses

   

27,910,254

   

21,495,834

 
               

Income from operations

   

4,103,686

   

2,991,381

 
               

Other income (expense):

             

Interest income

   

58,394

   

25,796

 

Interest expense

   

(1,335,713)

   

(1,057,020)

 

Loss on sales of assets

   

-

   

(68,134)

 

Other

   

37,134

   

(170,646)

 
               

Income before minority interest

   

2,863,501

   

1,721,377

 
               

Minority interest

   

427,844

   

31,337

 
               

Income before income taxes

   

3,291,345

   

1,752,714

 
               

Income taxes

   

          236,446

   

                     -

 
               

Net income

 

$

3,054,899

 

$

1,752,714

 

Basic and diluted earnings per share:

             

Net income, basic

 

$

0.54

 

$

0.38

 
               

Net income, diluted

 

$

0.50

 

$

0.35

 

Weighted average number of common shares outstanding:

             

Basic

   

5,700,548

   

4,640,499

 
               

Diluted

   

6,215,285

   

5,065,962