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--(BUSINESS WIRE)--Rick’s Cabaret International, Inc. (NASDAQ: 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.

“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”

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, ricks.com or www.InvestorCalendar.com. The live toll free participant dial In number is [phone], while international callers should use [phone]. The domestic toll free replay number is [phone] while international callers should use [phone]. 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 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

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 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 [e-mail].

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 ricks.com.