Rick’s Cabaret International Reports Fourth Quarter Revenues and Earnings Gain Over Previous Year

Rick’s Cabaret International, Inc. (NASDAQ: RICK), the nation’s leading chain of upscale gentlemen’s clubs, today reported consolidated total revenues of $18.85 million for the fourth quarter ended Sept. 30, 2009 compared with $16.13 million in the quarter ended Sept. 30, 2008, with net income of $1.79 million compared with $1.44 million last year. Earnings per diluted share for the fourth quarter were 19 cents this year, compared with 14 cents in the same quarter last year.

For the fiscal year ended Sept. 30, 2009 the company had consolidated total revenues of $75.15 million, compared to consolidated total revenues of $57.9 million in fiscal 2008, an increase of 29.8 percent. The increase in total revenues was primarily due to revenues generated both at new and existing clubs, especially from the midtown Manhattan club. Same-club revenues from nightclubs operated by the company for more than 12 months decreased by 4.1 percent.

Net income for the full fiscal year was $5.21 million compared to $7.66 million for the previous year. Net earnings were 55 cents per diluted share, compared with 91 cents in the previous year. The decrease was due principally to the impact of the poor U. S. economy in 2009 and abnormally high marketing expenses at the Rick’s Cabaret in Las Vegas club.

‘Our results in the fourth quarter indicate we have begun to emerge from the impact of the worst overall economic period the country has seen in more than a decade,’ said Eric Langan. ‘Our clubs overall are beginning to improve, we have resumed our acquisition program and we are beginning to see a decline in the unusually high marketing costs we experienced earlier this year at our Las Vegas club.’

Mr. Langan predicted that results in the company’s January-March 2010 quarter should be strong because of increased business at Tootsie’s Cabaret in Miami, which hosts both the 2010 Super Bowl and the Pro Bowl, and at the company’s four Dallas/Ft. Worth clubs, because the NBA All-Star Game will be played Feb. 14th at the new Dallas Cowboys Stadium in Arlington.

The company said service revenues were $36.08 million, compared with $28.02 million in 2008, while alcoholic beverage revenues increased to $28.29 million, compared with $21.17 million last year. Sales of food and merchandise increased to $6.17 million from $5.04 million in 2008. The company’s Internet division had revenues of $640,667, compared with $715,759 a year ago while the Media division brought in $1.40 million compared with $801,215 last year.

While most major cost items remained proportionately level with the prior year, the costs for legal and professional services increased to $2.95 million from $1.62 million and advertising and marketing expenses were $8.09 million compared with $2.23 million in 2008. Interest expense was $3.42 million, compared with $2.64 million, primarily due to the increase in debt related to the purchase of new clubs in 2008 and the $7.2 million in new convertible debt issued in August 2009. Long term debt was $37.81 million as of Sept. 30, 2009 compared to $33.56 million as of Sept. 30, 2008, and cash on hand was $12.75 million compared to $5.43 million at the end of the prior year.

Overall operating margins were 17.8 percent for the year ended September 30, 2009 compared to 26.3 percent for the prior year, a decline attributed to the poor U. S. economy in 2009 and operating costs in especially tough markets such as Las Vegas.