Rick's Cabaret International, Inc. reports fiscal 2010 results

HOUSTON – (December 14, 2010) – Rick's Cabaret International, Inc. [NASDAQ:RICK] today reported financial results for its fiscal year ending September 30, 2010. The company had consolidated total revenues of $83 million, an increase of 9.4 percent over the $75.8 million reported in the previous year. The company reported a loss from continuing operations of $7.6 million for the year, primarily because of non-cash balance sheet impairment charges of $20.5 million, compared with 2009 income from continuing operations $5.5 million.

“Our income statement was dramatically affected by the impairment charges incurred chiefly because of losses at the Las Vegas club we acquired in 2008 and we believe that the growth in our adjusted EBITDA to $17.6 million is a more realistic way to look at the year,” said Eric Langan, President and CEO of Rick’s Cabaret International, Inc.

Mr. Langan said the company generated cash flow from operations of $17.3 million compared with $8.9 million in 2009, despite the Las Vegas losses, benefitting from continuing strong performances of Rick’s Cabaret in New York City and Tootsie’s Cabaret in Miami.

“We think 2011 is looking very good,” Mr. Langan said. “We plan to add four more locations in 2011, staying on our goal of making at least one acquisition per quarter. In addition we will benefit from the Super Bowl in February in Dallas, where we will have a terrific cluster of seven clubs ready to welcome fans.”

Other highlights from results for the year ending September 30, 2010 include:

  • The company’s adjusted EBITDA for 2010 $17.6 million, compared with $16.0 million in 2009. Diluted adjusted EBITDA per common share was $1.84 compared with $1.70, based on shares outstanding of 9.7 million and 9.4 million respectively. The adjusted EBITDA calculation (earnings before interest expense, income taxes, depreciation, amortization and impairment charges) is a non-GAAP performance measure that excludes the largest recurring non-cash charges (depreciation, amortization and impairment) and provides a core operational performance measurement that compares results without the need to adjust for Federal, state and local taxes that have considerable variation between domestic jurisdictions. Interest cost is also excluded from the calculation of adjusted EBITDA. The results are, therefore, without consideration of financing alternatives of capital employed. Adjusted EBITDA is one guideline to assess unleveraged performance return on the company’s investments and is also the target benchmark for acquisitions of nightclubs.
  • The 9.4 per cent increase in total revenues was driven by revenues generated at new clubs and an overall 7.0 percent increase from clubs open more than one year, especially the New York location, offset by a decrease in revenues from the Las Vegas club.
  • The Las Vegas club is still not profitable even with the taxi marketing costs under more control than in the prior year, due principally to decreased revenues since the Las Vegas market collapsed after September 2008. The company noted that the club it acquired had revenues of approximately $16.6 million in the year ended July 31, 2008, compared to $8.8 million and $9.7 million for the years ended September 30, 2010 and 2009. The club had adjusted EBITDA of approximately ($37,000) and ($1.4) million for the years ended September 30, 2010 and 2009, respectively, compared to pro forma EBITDA income of $2.6 million for the year ended July 31, 2008.

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.

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.

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

RICK"S CABARET INTERNATIONAL, INC.          
CONSOLIDATED STATEMENTS OF OPERATIONS          
           
  Year Ended September 30,
(in thousands, except per share data) 2010   2009   2008
           
Revenues:          
Sales of alcoholic beverages $33,101   $28,679   $21,764
Sales of food and merchandise 6,850   6,203   5,145
Service revenues 37,725   36,310   28,362
Internet revenues 562   641   716
Media revenues 1,440   1,404   801
Other 3,309   2,592   2,220
Total revenues 82,987   75,829   59,008
           
Operating expenses:          
Cost of goods sold 9,927   8,895   6,796
Salaries and wages 17,767   16,429   13,485
Stock-based compensation 405   96   157
Other general and administrative:          
Taxes and permits 12,367   9,396   7,365
Charge card fees 1,434   1,612   1,060
Rent 4,108   3,716   2,371
Legal and professional 3,071   2,963   1,629
Advertising and marketing 6,740   8,174   2,510
Depreciation and amortization 3,743   3,423   2,439
Insurance 1,125   1,100   845
Utilities 1,721   1,646   1,218
Impairment of assets 20,511   823   -
Other 6,441   5,826   5,147
Total operating expenses 89,360   64,099   45,022
           
Income (loss) from operations -6,373   11,730   13,986
           
Other income (expense):          
Interest income 18   16   60
Interest expense -4,023   -3,358   -2,713
Interest expense – loan origination costs -450   -65   -
Gain (loss) on change in fair value of derivative instruments -31   145   -
Gain (loss) on sale of property and other -3   181   -
           
Income (loss) from continuing operations before income taxes -10,862   8,649   11,333
Income taxes -3,221   2,854   3,532
           
Income (loss) from continuing operations -7,641   5,795   7,801
Loss from discontinued operations, net of income taxes -57   -293   -171
           
Net income (loss) -7,698   5,502   7,630
Less: net income attributable to noncontrolling interests -260   -294   31
  ($7,958)   $5,208   $7,661
Net income (loss) attributable to Rick’s Cabaret International, Inc.
           
Basic earnings (loss) per share attributable to Rick’s shareholders:          
Income (loss) from continuing operations ($0.81)   $0.59   $0.99
Loss from discontinued operations -0.01   -0.03   -0.02
Net income (loss) ($0.82)   $0.56   $0.97
           
     
 
Diluted earnings (loss) per share attributable to Rick’s shareholders:
Income (loss) from continuing operations ($0.81)   $0.58   $0.93
Loss from discontinued operations -0.01   -0.03   -0.02
Net income (loss) ($0.82)   $0.55   $0.91
           
Weighted average number of common shares outstanding:          
Basic 9,697   9,266   7,931
Diluted 9,697   9,428   8,413
           
 See accompanying notes to consolidated financial statements.            
RICK"S CABARET INTERNATIONAL, INC.          
CONSOLIDATED STATEMENTS OF OPERATIONS          
           
  Year Ended September 30,
(in thousands, except per share data) 2010   2009   2008
           
Revenues:          
Sales of alcoholic beverages $33,101   $28,679   $21,764
Sales of food and merchandise 6,850   6,203   5,145
Service revenues 37,725   36,310   28,362
Internet revenues 562   641   716
Media revenues 1,440   1,404   801
Other 3,309   2,592   2,220
Total revenues 82,987   75,829   59,008
           
Operating expenses:          
Cost of goods sold 9,927   8,895   6,796
Salaries and wages 17,767   16,429   13,485
Stock-based compensation 405   96   157
Other general and administrative:          
Taxes and permits 12,367   9,396   7,365
Charge card fees 1,434   1,612   1,060
Rent 4,108   3,716   2,371
Legal and professional 3,071   2,963   1,629
Advertising and marketing 6,740   8,174   2,510
Depreciation and amortization 3,743   3,423   2,439
Insurance 1,125   1,100   845
Utilities 1,721   1,646   1,218
Impairment of assets 20,511   823   -
Other 6,441   5,826   5,147
Total operating expenses 89,360   64,099   45,022
           
Income (loss) from operations -6,373   11,730   13,986
           
Other income (expense):          
Interest income 18   16   60
Interest expense -4,023   -3,358   -2,713
Interest expense – loan origination costs -450   -65   -
Gain (loss) on change in fair value of derivative instruments -31   145   -
Gain (loss) on sale of property and other -3   181   -
           
Income (loss) from continuing operations before income taxes -10,862   8,649   11,333
Income taxes -3,221   2,854   3,532
           
Income (loss) from continuing operations -7,641   5,795   7,801
Loss from discontinued operations, net of income taxes -57   -293   -171
           
Net income (loss) -7,698   5,502   7,630
Less: net income attributable to noncontrolling interests -260   -294   31
  ($7,958)   $5,208   $7,661
Net income (loss) attributable to Rick’s Cabaret International, Inc.
           
Basic earnings (loss) per share attributable to Rick’s shareholders:          
Income (loss) from continuing operations ($0.81)   $0.59   $0.99
Loss from discontinued operations -0.01   -0.03   -0.02
Net income (loss) ($0.82)   $0.56   $0.97
           
     
 
Diluted earnings (loss) per share attributable to Rick’s shareholders:
Income (loss) from continuing operations ($0.81)   $0.58   $0.93
Loss from discontinued operations -0.01   -0.03   -0.02
Net income (loss) ($0.82)   $0.55   $0.91
           
Weighted average number of common shares outstanding:          
Basic 9,697   9,266   7,931
Diluted 9,697   9,428   8,413
           
 See accompanying notes to consolidated financial statements.