Rick's Cabaret Reports Record Fiscal 2006 Revenue Of Nearly $24.5 Million And Net Income Over $1.7 Million


Conference Call to Discuss Results Scheduled for Dec. 28th at 4:30 p.m. ET

HOUSTON -
(December 28, 2006)- Rick's Cabaret International, Inc. [NASDAQ:RICK],
the publicly traded chain of gentlemen's clubs, reported revenues of $24,487,215 for the year ending September 30, 2006, a 65 percent increase over the previous year’s total of $14,824,407. The company had net income from operations of $1,752,714 for its fiscal year ending September 30, 2006, compared with a loss of $215,148 in the prior year.

The company said it earned 38 cents per basic share for the year, compared with a loss of five cents per basic share in fiscal 2005. The net income for the year was impacted by one-time events totaling $320,000 for settlement of a lawsuit, loss on a real estate transaction and goodwill impairment, plus a loss of $330,000 in connection with newly acquired clubs.

"The excellent performance of Rick's Cabaret-New York City gave us a strong revenue boost for the fiscal year and this club continues to grow steadily each month," said Eric Langan, President and CEO of Rick's Cabaret. "Our growth program is on track and we are looking forward to another strong year in 2007 from our existing clubs and the four acquisitions we have made recently. We will also continue to look at additional acquisitions that fit our business model and can be quickly accretive."

Mr. Langan will host a conference call to discuss the results at 4:30 p.m. ET December 28th. Callers in the United States can participate by calling toll free, 877-407-8031. International callers should dial 201-689-8031. The conference call will be available at www.ricks.com and through Vcall at http://www.vcall.com/IC/CEPage.asp?ID=112421. Teleconference replay is available until 11:59 p.m. on January 3, 2007 in the U.S. toll free at 877-660-6853 and from international points at 201-612-7415. The replay passcodes (both required for playback) are account number 286 and Conference ID number 225251.

Highlights from the company's Form 10KSB filed with the Securities and Exchange Commission include:
  • The 65.18 percent increase in revenues in 2006 over the previous year came from stronger revenues at both new and existing nightclubs, including the New York location, which contributed for a full twelve months compared to one month in 2005.
  • Revenues from nightclub operations for same-location-same-period increased by 25.12 percent year over year.
  • Income from continuing operations for nightclub operations for the same-location-same-period increased by 51.26 percent year over year.
  • Internet revenue totaled $801,395 for the year, compared with $787,617 in the previous year. We expect to continue to grow our Internet profit centers by focusing on high margin activities.
  • Net income from operations for Internet businesses was $138,351 for the year compared with $114,501 for the previous year.
  • Net income for Internet operations for the same-website-same-period increased by 20.83 percent over the previous year.
  • At September 30, 2006, the company had cash and cash equivalents of $854,932 compared to $480,330 at September 30, 2005. Net cash provided by operating activities in the year was $2,725,770 compared to $2,090,030 for the previous year.
  • Cost of goods sold was 11.91 percent of total revenues compared to 12.59 percent of related revenues for the previous year.
    General and administrative expenses for the year were $11,498,862 compared to $7,458,721 for the previous year, primarily because of the increase in taxes and permit, rent, legal and professional, utilities, insurance, plus advertising and marketing expenses from opening new locations and the New York City location, which was open for the full year.
  • Interest expense for the year was $1,057,020 compared with $699,678 in the previous year, due primarily to increase in debt for the purchase and renovation of the New York club. Long term debt is now $13,920,733, compared with $13,246,836 in the previous year.

Rick's Cabaret reported a weighted average number of common shares outstanding of 4,640,499 as of September 30, 2006, and a diluted total average of 5,065,962 shares. As of December 15, 2006 there were 5,334,515 shares outstanding.

The company's 10KSB filing is available at the Rick's Cabaret website (www.ricks.com) along with other details about operations.

About Rick's Cabaret
Rick's Cabaret International, Inc. (NASDAQ: RICK, www.ricks.com) 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, www.couplestouch.com, and 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 or visit www.ricks.com.

Forward-Looking Statements:
This press release may contain 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, 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.

RICK'S CABARET INTERNATIONAL, INC.

             

CONSOLIDATED STATEMENTS OF OPERATIONS

             
       

Year Ended September 30,

       

2006

 

2005

             

Continuing operations:

     

Revenues:

       
 

Sales of alcoholic beverages

$ 8,781,635

 

$ 5,431,049

 

Sales of food and merchandise

2,651,868

 

1,688,043

 

Service revenues

11,442,371

 

6,632,201

 

Internet revenues

801,395

 

787,617

 

Other

 

809,946

 

285,497

   

Total revenues

24,487,215

 

14,824,407

             

Operating expenses:

     
 

Cost of goods sold

2,915,312

 

1,865,630

 

Salaries and wages

7,081,660

 

5,200,976

 

Other general and administrative:

     
   

Taxes and permits

3,074,577

 

1,985,989

   

Charge card fees

485,342

 

229,397

   

Rent

 

1,150,338

 

558,435

   

Legal and professional

865,111

 

685,291

   

Advertising and marketing

1,176,277

 

752,866

   

Depreciation and amortization

1,049,247

 

590,466

   

Insurance

420,450

 

218,343

   

Utilities

 

621,051

 

392,589

   

Other

 

2,576,628

 

2,045,345

   

Goodwill impairment

79,841

 

-

   

Total operating expenses

21,495,834

 

14,525,327

             

Income from continuing operations

2,991,381

 

299,080

             

Other income (expense):

     
 

Interest income

25,796

 

33,434

 

Interest expense

(1,057,020)

 

(699,678)

 

Loss on sales of assets

(68,134)

 

-

 

Other

 

(170,646)

 

(1,149)

             

Income (loss) from continuing operations before minority interest

1,721,377

 

(368,313)

             

Minority interest

 

31,337

 

9,472

             

Income (loss) from continuing operations

1,752,714

 

(358,841)

             

Discontinued operations:

     
 

Loss from discontinued operations

-

 

(148,294)

 

Gain on sale of a subsidiary

-

 

291,987

 

Income from discontinued operations

-

 

143,693

             

Net income (loss)

$ 1,752,714

 

$ (215,148)

             

Basic and diluted earnings (loss) per share:

     
 

Income (loss) from continuing operations

$ 0.38

 

$ (0.09)

 

Income from discontinued operations

$ -

 

$ 0.04

 

Net income (loss), basic

$ 0.38

 

$ (0.05)

             
 

Net income (loss), diluted

$ 0.35

 

$ (0.05)

             

Weighted average number of common shares outstanding:

     
 

Basic

 

4,640,499

 

3,937,565

             
 

Diluted

 

5,065,962

 

3,937,565

Contact for further information: Allan Priaulx, 212-338-0050, ir@ricks.com