Rick's Cabaret International, Inc. Reports Third Quarter Revenue Increase To $20.8 Million and Adjusted EBITDA of $6.0 Million

HOUSTON – (August 9, 2011) – Rick’s Cabaret International, Inc. (NASDAQ: RICK), the leading group of upscale gentlemen’s clubs, had revenues of $20.8 million in its third quarter ended June 30, a 15.4 percent increase over the $18.0 million in the same period last year. The company reported adjusted EBITDA* of $6.0 million a 52.7 percent increase over $3.9 million in the same period last year.

The company reported net income from continuing operations for the quarter of $2.5 million, compared with $1.1 million in 2010, with earnings per diluted share from continuing operations of 25 cents versus 11 cents last year. After accounting for a loss from discontinued operations including the now closed club in Las Vegas, net income was $888,000 versus $857,000. Net income per diluted share for both periods was nine cents.

“With this quarter we have now put the pain of the Las Vegas situation behind us and we are well positioned to move forward on an apples-to-apples basis,” said Eric Langan, President and CEO of Rick’s Cabaret. “Apart from the Las Vegas loss, we had a strong third quarter, with increases in cash flows, EBITDA and income from continuing operations. Our larger clubs across the country are doing well and we will have a positive outlook on the remainder of the year as long as the general economy maintains its present levels.”

Mr. Langan will discuss the third quarter results in detail at a conference call and webcast today at 4:30 pm EDT that can be accessed at http://www.investorcalendar.com/IC/CEPage.asp?ID=165509  or though the Rick’s Cabaret investor website, www.ricksinvestor.com . The toll free participant dial-in number is 877-407-8033 (International 201-689-8033). The toll free replay number is 877-660-6853 (international 201-612-7415). Replay pass codes required for playback are: Account number 286 and Conference ID 376967.

The increase in total revenues was primarily attributable to clubs acquired during the past year, additional traffic generated during the NBA Championship series in Dallas and Miami, and gains at the Rick’s locations in San Antonio, North Austin and Minneapolis.

Total revenues for same-location-same-period of club operations open more than one year increased by 9.0 percent to $19.2 million in the quarter from $17.6 million for the same period last year. Comparable club operating income was $5.7 million compared with $4.7 million last year.

Net cash generated from continuing operations was $13.7 million, compared with $12.0 million last year. Interest expense dropped to $1.0 million from $1.2 million.

*Adjusted EBITDA is a financial statement measure that was not derived in accordance with GAAP. We use adjusted EBITDA (earnings from continuing operations before interest expense, income taxes, depreciation, amortization and impairment charges) as a non-GAAP performance measure. In calculating adjusted EBITDA, we exclude our largest recurring non-cash charge, depreciation, amortization and impairment charges. Adjusted EBITDA provides a core operational performance measurement that compares results without the need to adjust for Federal, state and local taxes which have considerable variation between domestic jurisdictions. Also, we exclude interest cost in our calculation of adjusted EBITDA. The results are, therefore, without consideration of financing alternatives of capital employed. We use adjusted EBITDA as one guideline to assess our unleveraged performance return on our investments. Adjusted EBITDA is also the target benchmark for our acquisitions of nightclubs.

RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

ASSETS

 

(in thousands, except per share data)

June 30, 2011
(UNAUDITED)
 
September 30, 2010

Assets
Current assets:
Cash and cash equivalents
Accounts receivable:
Trade, net
Other, net
Marketable securities
Inventories
Deferred tax asset
Prepaid expenses and other current assets
Assets of discontinued operations
Total current assets

Property and equipment, net

Other assets:
Goodwill and indefinite lived intangibles, net
Definite lived intangibles, net
Other
Total other assets

Total assets
 

 



$  12,356

840
3,133
500
1,169
2,285
1,292
         129
21,704

62,507


63,706
904
       2,987
     67,597

 $ 151,808
 



$  18,614

662
207
-
1,093
2,037
333
         4,629
27,575

56,900


61,835
1,139
           922
      63,896

 $ 148,371
 

LIABILITIES AND STOCKHOLDERS’ EQUITY

(in thousands, except per share data)

June 30,2011
(UNAUDITED)
 
September 30, 2010

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
Accrued liabilities
Texas patron tax liability
Current portion of derivative liabilities
Current portion of long-term debt
Liabilities of discontinued operations
Total current liabilities

Deferred tax liability
Other long-term liabilities
Long-term debt
Derivative liabilities at fair value, less current portion
Total liabilities

Commitments and contingencies

Temporary equity - Common stock, subject to put rights 84 and 198 shares, respectively

PERMANENT STOCKHOLDERS' EQUITY:
Preferred stock, $.10 par, 1,000 shares authorized; none issued and outstanding
Common stock, $.01 par, 20,000 shares authorized; 9,723 and 9,766 shares issued and outstanding, respectively
Additional paid-in capital
Accumulated other comprehensive loss
Retained earnings
Total Rick’s permanent stockholders’ equity
Noncontrolling interests
Total permanent stockholders’ equity

Total liabilities and stockholders’ equity
 



$782
3,187
6,136
1,143
6,238
        127
17,613

21,275
769
30,699
        238

70,594




1,932




-


97
62,446
(5)
      13,401
75,939
       3,343
79,282

  $ 151,808



$699
4,313
3,955
1,276
5,461
      2,995
18,699

15,288
719
34,803
      1,243
 
70,752




4,366




-


98
62,326
-
       7,515
69,939
       3,314
73,253

  $ 148,371

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

(in thousands, except per share data)

FOR THE THREE MONTHS
ENDED JUNE 30,
 
FOR THE NINE MONTHS
ENDED JUNE 30,
 


Revenues:
Sales of alcoholic beverages
Sales of food and merchandise
Service revenues
Internet revenues
Media revenues
Other
Total revenues

Operating expenses:
Cost of goods sold
Salaries and wages
Stock compensation
Other general and administrative:
Taxes and permits
Charge card fees
Rent
Legal and professional
Advertising and marketing
Insurance
Utilities
Depreciation and amortization
Other
Total operating expenses
Operating income

Other income (expense):
Interest income and other
Interest expense
Gain on settlement of debt
Gain (loss) on change in fair value of derivative instruments
Income from continuing operations before income taxes
Income taxes
Income from continuing operations
Loss from discontinued operations, net of income taxes
Net income
Less: net income attributable to noncontrolling interests
Net income attributable to Rick’s Cabaret International, Inc.





Basic earnings (loss) per share attributable to Rick’s shareholders:
Income from continuing operations
Loss from discontinued operations
Net income
Diluted earnings (loss) per share attributable to Rick’s shareholders:
Income from continuing operations
Loss from discontinued operations
Net income

Weighted average number of common shares outstanding:
Basic
Diluted
 

2011

2010

(UNAUDITED)

$   8,149
1,891
9,553
113
176
      911
20,793
 

2,710
4,683
-

3,101
405
756
635
838
300
394
980
   1,626
 16,428
4,365


2
(1,033)
903
   (216)
4,021
    1,500
2,521
 (1,580)
941
      (53)

   $ 888





$ 0.25
 $  (0.16)
 $     0.09

$  0.25
$ (0.16)

$  0.09

9,924
9,941
 

$   7,029
1,578
8,331
144
203
      737
18,022
 

2,254
4,109
44

2,750
315
668
854
665
244
349
837
    1,419
  14,508
3,514


5
(1,231)
-
   (407)
1,881
     762
1,119
   (202)
917
     (60)

  $ 857





$ 0.11
$ (0.02)
$ 0.09

$0.11
$ (0.02)

$ 0.09

9,905
9,958
 

2011

2010

(UNAUDITED)

$ 24,312
5,469
28,637
359
585
    2,678
62,040
 

7,793
13,503
-

9,333
1,047
2,305
1,547
2,651
851
1,143
2,855
     4,646
   47,674
14,366


57
(3,170)
903
      266
12,422
   4,231
8,191
 (2,146)
6,045
    (159)

  $ 5,886





$ 0.81
$(0.22)
$ 0.59

$ 0.80
$ (0.21)

$ 0.59

9,968
9,983
 

$ 21,371
4,648
25,507
433
771
    2,202
54,932
 

6,887
12,074
132

8,426
907
1,957
2,207
2,465
687
1,077
2,363
    4,341
  43,523
11,409


11
(3,227)
-
       22
8,215
   2,869
5,346
   (555)
4,791
   (207)

 $ 4,584





$ 0.54
$ (0.06)
$ 0.48

$ 0.53
$ (0.06)

$  0.48

9,546
9,876
 


About Rick’s Cabaret: Rick’s Cabaret International, Inc. (NASDAQ: RICK) is home to 22 upscale adult nightclubs serving primarily businessmen and professionals that offer live entertainment, dining and bar operations. Nightclubs in New York City, Miami, Philadelphia, 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 couplestouch.com as well as 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  or visit www.ricksinvestor.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. Additional factors that could cause the Company’s results to differ materially from those described in the forward-looking statements are described in forms filed with the SEC from time to time and available at www.ricksinvestor.com  or on the SEC's internet website at www.sec.gov . 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.ricksinvestor.com.

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