Rick's Cabaret International, Inc. Reports Record Revenues And Income For Second Quarter, With EPS Of 32 Cents

HOUSTON - (May 8, 2008) - Rick's Cabaret International, Inc. [NASDAQ-GM:RICK] , the premier operator of upscale gentlemen's clubs, today reported record revenues of $15.46 million for its second quarter ended March 31, 2008 with net earnings of $2.60 million compared with $7.57 million and $492,344, respectively, for the same period last year. Earnings per diluted share for the quarter were 32 cents, compared with 9 cents the year before.

"This significant increase in our revenues and earnings demonstrates that our strategy of acquiring outstanding nightclubs in key markets is yielding the expected results in improving margins and cash flow," said Eric Langan, President and CEO of Rick's Cabaret. Mr. Langan will comment on the results in a conference call scheduled for today at 4:30 p.m. The call is being webcast by VCall (click here) and can be accessed at the Rick’s Cabaret website, www.ricks.com or www.InvestorCalendar.com. The toll free live participant dial-in number is 877-407-8031, and international callers are invited to dial 201-689-8031. The toll free replay number is 877-660-6853 (international callers dial 201-689-8031).

The revenue increase for the three months ended March 31, 2008 was driven primarily by new clubs in Miami and Ft. Worth, which together added nearly $7.29 million, while organic growth from existing clubs added $609,109, an 8.24 percent increase.

The increase in net income was primarily due to higher same-locations-same-period club sales and by revenues from the newly acquired clubs in Miami and Ft. Worth. Income before income taxes for same-location-same-period of club operations for the quarter increased to $1.72 million, a 30.5 percent increase over the same period in 2007.

Cash provided by operating activities for the six months ended March 31, 2008 was $6.4 million, compared with $1.3 million for the same period in 2007.

For the six months ended March 31, 2008, revenues for the company were $26.42 million, compared with $14.6 million for the first half of 2007. Net income was $4.39 million compared with $844,964, and earnings per diluted share for the first six months were 56 cents compared with 15 cents last year.

At the end of the second quarter the company showed $94.48 million in total assets on its balance sheet, compared with $ 47.07 million at the same point last year.

Mr. Langan noted that new clubs in Philadelphia and Dallas opening in the third quarter will add more new revenues but he cautioned that start up expenses to launch the new clubs would also be a factor in results for the period. He said the company would update guidance for 2008 during the conference call.

Rick's CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

 

FOR THE THREE MONTHS

ENDED MARCH 31,

 

FOR THE SIX MONTHS

ENDED MARCH 31,

               
 

2008

 

2007

 

2008

 

2007

 

(UNAUDITED)

 

(UNAUDITED)

               

Revenues:

             

Sales of alcoholic beverages

$ 5,702,934

 

$ 2,812,406

 

$ 9,898,126

 

$ 5,407,004

Sales of food and merchandise

1,325,585

 

768,628

 

2,385,917

 

1,432,715

Service revenues

7,748,514

 

3,538,017

 

12,772,011

 

6,889,815

Internet revenues

172,712

 

177,502

 

343,501

 

365,481

Other

514,515

 

273,036

 

1,019,043

 

504,332

Total revenues

15,464,260

 

7,569,589

 

26,418,598

 

14,599,347

               

Operating expenses:

             

Cost of goods sold

1,633,224

 

962,469

 

2,975,055

 

1,853,636

Salaries and wages

3,297,158

 

2,156,054

 

5,883,634

 

4,227,192

Stock compensation

39,270

 

65,356

 

78,540

 

130,712

Other general and administrative:

             

Taxes and permits

2,018,865

 

981,327

 

3,254,658

 

1,854,272

Charge card fees

254,261

 

137,505

 

452,971

 

281,507

Rent

618,677

 

396,040

 

1,083,132

 

749,272

Legal and professional

349,862

 

248,418

 

643,235

 

487,276

Advertising and marketing

563,609

 

325,027

 

924,441

 

683,797

Insurance

166,933

 

180,812

 

368,329

 

309,265

Utilities

281,496

 

204,083

 

491,231

 

370,501

Depreciation and amortization

646,127

 

386,427

 

1,157,466

 

751,027

Other

1,231,064

 

798,908

 

2,170,295

 

1,587,170

Total operating expenses

11,100,546

 

6,842,426

 

19,482,987

 

13,285,627

Income from operations

4,363,714

 

727,163

 

6,935,611

 

1,313,720

               

Other income (expense):

             

Interest income

26,403

 

2,420

 

69,472

 

13,054

Interest expense

(676,673)

 

(328,454)

 

(1,138,556)

 

(654,017)

Minority interests

--

 

91,215

 

177,911

 

172,207

Income before income taxes

3,713,444

 

492,344

 

6,044,438

 

844,964

Income taxes

1,108,064

 

--

 

1,655,786

 

--

Net income

$ 2,605,380

 

$ 492,344

 

$ 4,388,652

 

$ 844,964

Basic and diluted earnings per share:

             

Net income, basic

$ 0.34

 

$ 0.09

 

$ 0.61

 

$ 0.16

Net income, diluted

$ 0.32

 

$ 0.09

 

$ 0.56

 

$ 0.15

Weighted average number of common shares outstanding:

             

Basic

7,561,163

 

5,365,602

 

7,183,699

 

5,253,546

Diluted

8,473,497

 

5,647,442

 

8,012,745

 

5,540,233

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