Rick's Cabaret International, Inc. Reports Net Income Of $2.94 Million, 30 Cents Per Share, For Second Quarter Ending March 31st


Total Revenues Rise 21.9% to $22.4 Million

HOUSTON - (May 11, 2010) - Rick's Cabaret International, Inc. [NASDAQ-GM:RICK] the nation's leading chain of upscale gentlemen's clubs, today reported net income for its second quarter ending March 31, 2010 of $2.94 million or 30 cents per share, compared with $839,471 or nine cents per share in the same quarter in 2009.

The company incurred one-time costs of $246,300 related to now-terminated negotiations for the acquisition of VCG Holdings. Without these costs, net income attributable to Rick's Cabaret would have been two cents higher per share for the second quarter.

"Our improved performance in the second quarter is the result of higher sales as well the increased focus on our bottom line that we announced during our last conference call," said Eric Langan, President and CEO of Rick's Cabaret. "Decreased marketing costs in Las Vegas and in Dallas/Fort Worth also contributed to improved results," he said.

Mr. Langan will discuss the results in detail during a conference call and webcast today at 4:30 p.m. EDT. The call is being webcast by Vcall and can be accessed at the Rick's Cabaret website, www.ricks.com or www.InvestorCalendar.com. The live toll free participant dial In number is (877) 407-8033, while international callers should use (201) 689-8033. The domestic toll free replay number is (877) 660-6853 while international callers should use (201) 612-7415. Replay passcodes required for playback are: Account #: 286 and Conference ID #: 350402. Details are also available in the company’s Form 10-Q filed with the SEC and available on the company's investor webpage at www.ricksinvestor.com.

The company attributed the revenue increase of 21.9 percent primarily to increases in same club sales. Revenues for same-location-same-period of club continuing operations increased 14.9% to $20 million in the second quarter compared with 2009, partly as a result of increased business during the Super Bowl in Miami and the NBA All Star Game in Dallas in February 2010. The company's two new locations also contributed to the overall revenue increase.

Legal and professional expenses were lower, following the settlement in the first quarter of a labor lawsuit in Minnesota, which had been accrued in the quarter ended September 30, 2009.

The company also reduced before tax losses at certain clubs losing money during the second quarter to approximately $391,000, compared to $1.3 million for the quarter ended December 31, 2009 and $900,000 for the March 31, 2009 quarter. The significant losing club in the prior quarter was Rick's Cabaret Las Vegas, which lost $500,000 in the first quarter ended December 31, 2009 and $633,000 for the quarter ended March 31, 2009. The Las Vegas club made a profit of approximately $150,000 before income taxes for the quarter ended March 31, 2010.

RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

ASSETS

 

 

MARCH 31, 2010

 

SEPTEMBER 30, 2009

 

(UNAUDITED)

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$ 12,218,919

 

$ 12,850,250

Accounts receivable

 

 

 

Trade, net

836,274

 

776,721

Other, net

394,797

 

136,761

Marketable securities

1,121,993

 

-

Inventories

1,304,838

 

1,231,353

Prepaid expenses and other current assets

1,387,346

 

846,430

Assets of discontinued operations

189,380

 

210,032

Total current assets

17,453,547

 

16,051,547

 

 

 

 

PROPERTY AND EQUIPMENT:

 

 

 

Buildings, land and leasehold improvements

48,226,361

 

46,577,101

Furniture and equipment

15,807,386

 

12,289,630

 

64,033,747

 

58,866,731

 

 

 

 

Accumulated depreciation

(12,080,645)

 

(10,566,656)

 

Total property and equipment, net

51,953,102

 

48,300,075

 

 

 

 

 

OTHER ASSETS:

 

 

 

Goodwill and indefinite lived intangibles

80,345,628

 

78,330,914

Definite lived intangibles, net

1,170,062

 

1,161,433

Other

1,414,289

 

1,232,330

Total other assets

82,929,979

 

80,724,677

Total assets

$ 152,336,628

 

$ 145,076,299

 


RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

MARCH 31,

2009

 

SEPTEMBER 30,

2009

 

 

(UNAUDITED)

 

 

CURRENT LIABILITIES:

 

 

 

 

Accounts payable – trade

 

$ 960,373

 

$ 787,982

Accrued liabilities

 

2,813,531

 

2,413,988

Patron tax liability

 

2,571,925

 

1,162,960

Current portion of derivative liabilities, at fair value

 

915,000

 

885,600

Current portion of long-term debt

 

7,080,749

 

5,855,727

Liabilities of discontinued operations

 

39,951

 

51,799

Total current liabilities

 

14,381,529

 

11,158,056

 

 

 

 

 

Deferred tax liability

 

20,011,360

 

18,581,344

Other long-term liabilities

 

680,617

 

641,800

Long-term debt, less current portion

 

32,022,296

 

31,956,856

Derivative liabilities at fair value, long-term portion

 

1,760,960

 

2,455,992

Total liabilities

 

68,856,762

 

64,794,048

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

TEMPORARY EQUITY – Common stock, subject to put rights (271,500 and 317,000 shares)

 

5,915,000

 

6,871,000

 

 

 

 

 

PERMANENT STOCKHOLDERS' EQUITY:

 

 

 

 

Preferred stock, $.10 par, 1,000,000 shares authorized; none issued and outstanding

 

-

 

-

Common stock, $.01 par, 20,000,000 shares authorized; 8,921,395 and 8,879,566 shares issued

 

89,214

 

88,796

Additional paid-in capital

 

54,846,125

 

54,530,319

Accumulated other comprehensive income

 

113,038

 

-

Retained earnings

 

19,200,100

 

15,472,747

Total Rick’s permanent stockholders’ equity

 

74,248,477

 

70,091,862

Noncontrolling interests

 

3,316,389

 

3,319,389

Total permanent stockholders’ equity

 

77,564,866

 

73,411,251

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$ 152,336,628

 

$ 145,076,299

 

 

RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

 

 

 

FOR THE THREE MONTHS

ENDED MARCH 31,

 

FOR THE SIX MONTHS

ENDED MARCH 31,

 

 

 

 

 

 

 

 

 

2010

 

2009

 

2010

 

2009

(UNAUDITED)

 

(UNAUDITED)

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

Sales of alcoholic beverages

$ 9,028,930

 

$ 6,965,973

 

$ 17,078,395

 

$ 13,599,544

Sales of food and merchandise

1,782,326

 

1,565,931

 

3,372,338

 

2,985,996

Service revenues

10,225,314

 

8,795,369

 

19,517,562

 

16,935,258

Internet revenues

143,730

 

164,631

 

289,167

 

341,394

Media revenues

310,727

 

285,331

 

567,483

 

468,967

Other

948,358

 

627,863

 

1,619,456

 

1,207,632

Total revenues

22,439,385

 

18,405,098

 

42,444,401

 

35,538,791

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Cost of goods sold

2,639,473

 

2,212,112

 

5,096,011

 

4,441,585

Salaries and wages

4,411,424

 

3,995,568

 

8,721,729

 

8,216,454

Stock compensation

44,037

 

20,044

 

88,074

 

40,088

Other general and administrative:

 

 

 

 

 

 

 

Taxes and permits

3,334,371

 

2,395,423

 

6,169,934

 

4,714,723

Charge card fees

369,685

 

447,948

 

715,873

 

786,488

Rent

1,027,577

 

920,823

 

2,051,111

 

1,869,185

Legal and professional

759,463

 

810,513

 

1,409,072

 

1,314,562

Advertising and marketing

1,506,831

 

1,696,161

 

4,445,004

 

2,868,533

Insurance

259,279

 

267,128

 

521,131

 

506,365

Utilities

410,878

 

374,393

 

816,747

 

803,311

Impairment of nightclub assets

-

 

823,090

 

-

 

823,090

Depreciation and amortization

892,440

 

858,611

 

1,724,418

 

1,702,964

Other

1,630,487

 

1,301,984

 

3,176,510

 

2,712,028

Total operating expenses

17,285,945

 

16,123,798

 

34,935,614

 

30,799,376

Operating income

5,153,440

 

2,281,300

 

7,508,787

 

4,739,415

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

Interest income

5,582

 

1,659

 

9,255

 

7,393

Interest expense

(1,079,498)

 

(808,831)

 

(2,108,080)

 

(1,642,302)

Other

(2,676)

 

169

 

(2,675)

 

(8,565)

Gain on change in fair value of derivative instruments

 

385,207

 

 

-

 

 

429,482

 

 

-

Income from continuing operations before income taxes

 

4,462,055

 

 

1,474,297

 

 

5,836,769

 

 

3,095,941

Income taxes

1,430,270

 

520,070

 

1,932,626

 

1,087,423

Income from continuing operations

3,031,785

 

954,227

 

3,904,143

 

2,008,518

Loss from discontinued operations, net of income taxes

 

(13,620)

 

 

(41,256)

 

 

(29,790)

 

 

(231,215)

Net income

3,018,165

 

912,971

 

3,874,353

 

1,777,303

Less: net income attributable to noncontrolling interests

 

(73,500)

 

 

(73,500)

 

 

(147,000)

 

 

(147,000)

Net income attributable to Rick’s Cabaret International, Inc.

 

$ 2,944,665

 

 

$ 839,471

 

 

$ 3,727,353

 

 

$ 1,630,303

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share attributable to Rick’s shareholders:

 

 

 

 

 

 

 

Income from continuing operations

$ 0.32

 

$ 0.09

 

$ 0.40

 

$ 0.20

Loss from discontinued operations

$ (0.00)

 

$ (0.00)

 

$ (0.00)

 

$ (0.02)

Net income

$ 0.31

 

$ 0.09

 

$ 0.40

$ 0.17

Diluted earnings (loss) per share attributable to Rick’s shareholders:

 

 

 

 

 

 

 

Income from continuing operations

$ 0.31

 

$ 0.09

 

$ 0.40

 

$ 0.20

Loss from discontinued operations

$ (0.00)

 

$ (0.00)

 

$ (0.00)

 

$ (0.02)

Net income

$ 0.30

 

$ 0.09

 

$ 0.40

 

$ 0.17

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

Basic

9,361,328

 

9,313,819

 

9,365,751

 

9,339,926

Diluted

10,283,512

 

9,487,528

 

9,394,131

 

9,543,741

 

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 cities where it operates, the success or lack thereof in launching and building the company's businesses, 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 visit www.ricks.com.

About Rick's Cabaret:
Rick's Cabaret International, Inc. (NASDAQ: RICK) is home to upscale adult nightclubs serving primarily businessmen and professionals that offer live entertainment, dining and bar operations. Nightclubs in New York City, Miami, Philadelphia, New Orleans, Charlotte, Dallas, Houston, Minneapolis and other cities operate under the names "Rick's Cabaret," "XTC," "Club Onyx" and "Tootsie's Cabaret". Sexual contact is not permitted at these locations. Rick's Cabaret also operates a media division, ED Publications, and owns the adult internet membership website www.couplestouch.com as well as a network of online adult auction sites under the flagship URL www.naughtybids.com. Rick's Cabaret common stock is traded on NASDAQ under the symbol RICK. For further information contact ir@ricks.com.

Contact: Allan Priaulx, 212-338-0050, allan@ricks.com