Rick's Cabaret International, Inc., Reports Sharply Improved Second Quarter Earnings and Revenues



Houston -- (BUSINESS WIRE)
-- May 18,2004 -- Rick's Cabaret International, Inc. [NASDAQ: RICK], today reported sharply improved earnings and revenues for the second quarter of 2004, benefiting from acquisitions, operating efficiencies and increased nightclub business during the 2004 Super Bowl in Houston.

Net income for the quarter ended March 31, 2004 was $368,254 (10 cents per share), compared to a loss for the same period last year of $28,971 (minus one cent per share). The improvement in net income was driven by a strong upswing in Rick's core adult nightclub business and also reflects cost control measures implemented throughout the corporation.

For the three months ended March 31, 2004, total revenues were $4,151,322, an increase of 17.13% from $3,543,916 for the same period a year earlier. The gain was primarily attributable to the increase in revenues of the company's club operations, which benefited from increased patronage during the Super Bowl held in Houston on February 1st and from the results of two new clubs acquired recently.

"We are very pleased with our progress in the first two quarters of fiscal 2004," said Eric Langan, CEO of Rick's Cabaret. "Rick's Cabaret club operations are strong. The acquisitions we made last year are making significant contributions and we believe we are well positioned to continue our strong performance in upcoming quarters. We are on track for a good year." Mr. Langan noted that "improved inventory management and food service efficiencies, plus across the board cost control measures, also contributed to the improvement in earnings."

On a segment basis, Rick's Cabaret club operations continue to be the driving force for corporate performance, with revenues for the quarter of $3,948,644, a gain of more than 20% from a year earlier revenues of $3,278,752. Net income for the Company's club operations for the quarter was $749,509, compared to $398,379 last year.

While revenues from the company's Internet operations were $202,678, compared with $265,164 a year earlier, net income in the segment was $22,027, compared with $10,674 in the year before. The planned exit from active marketing of subscription Internet services has reached its conclusion and the focus has now been placed on adult auction sites and the couplestouch.com match-making sites, which generate less revenue but higher margins than the previous business model.

For the six months ended March 31, 2004, total revenues were $8,003,357, compared with $7,273,302 for the same period a year earlier. Net income for the first six months was $607,512, compared to $65,704 for the same period last year, while earnings per share were 16 cents in compared with two cents a year earlier. Net income for the Company's club operations in the first six months was $1,336,261, compared to $927,016 last year, an increase of 44.14%. Net income for the Company's Internet operations was $25,908, compared to $36,430 last year.

RICK'S CABARET INTERNATIONAL, INC.
CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
Period Ending March 31, 2004

FOR THE THREE MONTHS
FOR THE SIX MONTHS
 
2004
2003
2004
2003
 
------------
------------
------------
------------
Revenues
$ 4,151,322
$ 3,543,916
$ 8,003,357
$ 7,273,302
Cost of goods sold
519,657
518,765
1,028,526
1,084,120
Salaries and wages
1,353,453
1,293,060
2,641,440
2,636,478
Other general and administrative
1,849,333
1,677,376
3,597,018
3,311,372
------------
------------
------------
------------
Total operating expenses
3,722,443
3,489,201
7,266,984
7,031,970
------------
------------
------------
------------
Income from operations
428,879
54,715
736,373
241,332
Interest income
9,071
6,017
14,826
9,461
Interest expense
(82,423)
(99,036)
(168,588)
(196,856)
Gain from sale of marketable securities
16,878
---
16,878
---
Minority interests
1,020
11,207
10,546
13,641
Other
(5,171)
(1,874)
(2,523)
(1,874)
------------
------------
------------
------------
Net income (loss)
$ 368,254
$ (28,971)
$ 607,512
$ 65,704
=========
=========
=========
=========
Basic and diluted earnings (loss) per share:
Net income (loss)
$ 0.10
$ (0.01)
$ 0.16
$ 0.02
=========
=========
=========
=========
Weighted average number of common shares outstanding
3,700,148
3,720,048
3,700,148
3,728,931
=========
=========
=========
=========


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

ASSETS
3/31/04
(UNAUDITED)
9/30/03
(AUDITED)
 
------------
------------
Total current assets
1,832,059
1,335,853
Property and equipment, net
8,927,404
8,777,057
Total other assets
2,155,311
2,142,602
------------
------------
Total assets
$12,914,774
$12,255,512
=========
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities
1,362,068
1,260,863
Long term debt, less current portion
3,500,530
3,576,896
------------
------------
Total liabilities
4,862,598
4,837,759
------------
------------
Minority interests
25,485
36,032
Total stockholders' equity
8,026,691
7,381,721
------------
------------
Total liabilities and stockholders' equity
$12,914,774
$12,255,512
=========
=========
Net book value per share
$ 2.17
$ 2.00
=========
=========


RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED MARCH 31, 2004 AND 2003
 
2004
2003
------------
------------
Net cash provided by operating activities
502,140
329,245
Net cash used in investing activities
(409,834)
(317,159)
Net cash used in financing activities
(31,454)
(411,947)
------------
------------
Net increase/(decrease) in cash
60,852
(399,861)
Cash at beginning of period
604,865
733,366
------------
------------
Cash at end of period
$ 665,717
$ 333,505
=========
=========


FINANCIAL INFORMATION RELATED TO THE COMPANY'S SEGMENTS

FOR THE THREE MONTHS
ENDED MARCH 31,
FOR THE SIX MONTHS
ENDED MARCH 31,
 
2004
2003
2004
2003
 
------------
------------
------------
------------
REVENUES
Club operations
$ 3,948,644
$ 3,278,752
$ 7,599,934
$ 6,676,650
Internet websites
202,678
265,164
403,423
596,652
------------
------------
------------
------------
$ 4,151,322
$ 3,543,916
$ 8,003,357
$ 7,273,302
=========
=========
=========
=========
NET INCOME/(LOSS)
Club operations
$ 749,509
$ 398,379
$ 1,336,261
$ 927,016
Internet websites
22,027
10,674
25,908
36,430
Corporate expenses
(403,282)
(438,023)
(754,657)
(897,742)
------------
------------
------------
------------
$ 368,254
$ (28,971)
$ 607,512
$ 65,704
=========
=========
=========
=========


About Rick's Cabaret
Rick's Cabaret International, Inc. (www.ricks.com) owns and operates upscale adult nightclubs serving primarily businessmen and professionals that offer live adult entertainment, restaurant and bar operations. The company owns and operates seven adult nightclubs under the name "Rick's Cabaret" and "XTC Cabaret" in Houston, Austin and San Antonio, Texas, and Minneapolis, Minnesota, licenses Rick's Cabaret in New Orleans, and owns an adult-themed club called "Encounters" that serves the couples or "swingers'" market and a sports bar called the "Hummers," both in Houston. No sexual contact is permitted at any of these locations. Rick's Cabaret also owns two adult Internet membership Web sites at www.couplestouch.com and www.xxxpassword.com that contain content acquired from wholesalers, and a network of nine online auction sites a under the flagship site www.naughtybids.com. These highly automated sites provide a sales platform for adult products and services in an auction format and generate revenues through transactional service fees. Rick's Cabaret common stock is traded on the NASDAQ Small Cap market under the symbol RICK. For further information contact ir@ricks.com.


Forward-Looking Statements:

This press release may contain forward-looking information within the meaning of Section 21E of the Securities Exchange Act of 1934 that involves significant risks and uncertainties, and is subject to the safe harbors created by this section. Important factors that could cause actual results for Rick's Cabaret to differ materially from those indicated in this press release include the risks and uncertainties as to the future operational and financial results of our Web sites, the future operational performance of our partners, the laws governing the operation of adult entertainment businesses, competitive and economic factors, dependence on key personnel and the ability to manage operations. Rick's Cabaret has no obligation to update or revise the forward-looking statements to reflect the occurrence of future events or circumstances. Please refer you to the documents Rick's Cabaret files from time to time with the Securities and Exchange Commission, in particular the most recent quarterly reports on Form 10-QSB and annual report on Form 10-KSB.


Media/Investor Contact:
Allan Priaulx
212-338-0050
ir@ricks.com