Rick's Cabaret International, Inc. Reports Third Quarter Results and Provides New Guidance for Investors

Rick’s Cabaret International, Inc., the premier operator of upscale gentlemen’s clubs, today reported record revenues for its third quarter ended June 30, 2008 of $16.28 million with net income of $1.83 million, compared with $8.45 million and $1.03 million, respectively, for the same period last year. Earnings per diluted share for the quarter were 21 cents, compared with 16 cents in 2007. "While we had a great same store sales performance with an 8.4 per cent increase over last year, our income would have been much more impressive had we not been impacted by approximately $775,000 in start up and other costs related to three items -- the expense of opening clubs in Dallas and Philadelphia, our inability to recapture about $125,000 for the so-called ‘Pole Tax’ imposed by the state of Texas pending an appeal by the state of a judge’s ruling that the tax is unconstitutional, and by revenue timing issues in our media division that resulted in a loss for this unit,” said Phil Marshall, CFO of Rick’s Cabaret. "During our third quarter we booked revenue from only one edition of Exotic Dancer Magazine, and will not book revenue from the Gentlemen’s Club Expo that takes place in Las Vegas this month until our fourth quarter,” Mr. Marshall noted. He added that the Company’s earnings per share were also affected by the issuance of 672,000 shares in June. Eric Langan, President and CEO, said: "Both our internal growth and expansion by acquisition programs continue on course and we are looking forward to a strong performance at Rick’s Cabaret Minneapolis in our fourth quarter, which should benefit from the Republican National Convention in early September.” He noted that the company’s cash position increased to approximately $13 million at the end of the quarter due to strong cash flow and a recent capital raise. Mr. Langan will comment on the third quarter results and provide new guidance for the balance of the year in a conference call scheduled for today at 4:30 p.m. EDT. The call is being webcast by Vcall (click here) and can be accessed at the Rick’s Cabaret website, ricks.com or www.InvestorCalendar.com. Toll free live participant dial-in number is 877-407-8033, and international callers are invited to dial 201-689-8033. A toll free replay number 877-660-6853 will be available until August 21 (international callers dial 201-612-7415). During the conference call Mr. Langan plans to advise investors that fiscal 2008 revenues will be about $60 million and earnings per share will be about $1.02 based on anticipated earnings of about $2.4 million in the fourth quarter. These figures do not include any revenue from the pending Scores-Las Vegas transaction. He further said the Company's 2009 outlook will be revised to reflect earnings per share of $2.00 to $2.20 based on revenues exceeding $100 million. Among the other highlights of the quarterly report, the company said cash provided by operating activities for the nine months ended June 30, 2008 was over $9.73 million, compared with $2.65 million for the same period in 2007. Revenues for the company for the nine months ended June 30, 2008 were $42.70 million, compared with $23.05 million for the same period in 2007 while net income for the first nine months was $6.22 million compared with $1.88 million last year, and earnings per diluted share for the first nine months total 77 cents compared with 32 cents last year. About Rick’s Cabaret: Rick’s Cabaret International, Inc. (NASDAQ: RICK) operates upscale adult nightclubs serving primarily businessmen and professionals that offer live adult entertainment, restaurant and bar operations. The company owns, operates or licenses adult nightclubs in New York City, Miami, Philadelphia, New Orleans, Charlotte, Dallas, Houston, Minneapolis and other cities 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 Web site, 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. 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 and media division, 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. RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS       FOR THE THREE MONTHS ENDED JUNE 30, FOR THE NINE MONTHS ENDED JUNE 30,     2008 2007 2008 2007 (UNAUDITED) (UNAUDITED)   Revenues: Sales of alcoholic beverages $ 6,085,023 $ 3,254,244 $ 15,983,149 $ 8,661,248 Sales of food and merchandise 1,362,122 869,853 3,748,039 2,302,568 Service revenues 7,836,900 3,864,108 20,608,912 10,753,923 Internet revenues 194,105 191,553 537,606 557,033 Other   800,311     266,593     1,819,354     770,925   Total revenues 16,278,461 8,446,351 42,697,060 23,045,697   Operating expenses: Cost of goods sold 1,901,284 1,077,984 4,876,340 2,931,620 Salaries and wages 3,856,733 2,238,630 9,740,367 6,465,822 Stock compensation 39,270 48,134 117,810 178,846 Other general and administrative: Taxes and permits 2,049,438 1,088,917 5,304,096 2,943,189 Charge card fees 294,844 157,932 748,815 439,440 Rent 613,910 388,702 1,697,042 1,137,974 Legal and professional 463,954 279,339 1,107,190 766,615 Advertising and marketing 665,221 297,494 1,589,662 981,290 Insurance 164,070 192,225 532,400 501,490 Utilities 370,068 189,562 861,299 560,063 Depreciation and amortization 652,923 410,507 1,810,389 1,161,535 Other   1,489,341     765,146     3,658,635     2,352,315   Total operating expenses   12,561,056     7,134,572     32,044,045     20,420,199   Income from operations 3,717,405 1,311,779 10,653,015 2,625,498   Other income (expense): Interest income 22,083 28,940 91,555 41,994 Interest expense (700,788 ) (345,130 ) (1,839,344 ) (999,146 ) Minority interests   (73,500 )   120,997     104,412     293,204   Income before income taxes 2,965,200 1,116,586 9,009,638 1,961,550 Income taxes   1,135,996     84,859     2,791,782     84,859   Net income $ 1,829,204   $ 1,031,727   $ 6,217,856   $ 1,876,691     Basic and diluted earnings per share: Net income, basic $ 0.22 $ 0.17 $ 0.83 $ 0.34 Net income, diluted $ 0.21 $ 0.16 $ 0.77 $ 0.32 Weighted average number of common shares outstanding: Basic 8,240,914 6,112,678 7,536,104 5,539,923 Diluted 8,860,699 6,789,647 8,238,094 6,044,398