RICK RCI Hospitality Holdings Inc

Rick�s Cabaret International, Inc. today reported net income for the year ended September 30, 2008 of $7.66 million, a 151 percent increase over the $3.05 million reported the previous year. Consolidated total revenues for the premier publicly traded operator of upscale gentlemen�s clubs were $59.93 million, compared to $32.01 million for the previous year, an increase of 87.2%. The company had earnings per fully diluted share of 91 cents for the year, compared with 50 cents per share in 2007. The company said the revenue increase was primarily due to the performance of five new clubs acquired during the fiscal year and continued strong growth from existing clubs, especially Rick�s Cabaret-New York City. Sales from nightclub operations for same-location, same-period increased by 14.6 percent. Eric Langan, President and CEO of the company, will discuss the results in a conference call with investors at 4:30 pm EST today. The call will be webcast by Vcall and can be accessed at the Rick�s Cabaret website, ricks.com or www.InvestorCalendar.com. The toll free live participant dial-in number is 877-407-8033, and international callers are invited to dial 201-689-8033. The toll free domestic replay number is 877-660-6853 (enter account number 286, conference ID number307825) and international callers may dial 201-612-7415. In its Form 10KSB filed with the SEC the company said operating margins increased to 22.9 percent in fiscal 2008, compared to 12.8 percent for the prior year, due principally to the overall increase in sales and the contribution from Tootsie�s Cabaret, a nightclub in Miami Gardens, Florida acquired in November 2007. The company said the cost of goods sold for the year ended September 30, 2008 was 11.6% of total revenues compared to 12.6% in the previous year, as the company took advantage of volume discounts, improved inventory management and better margins from liquor and food sales. Interest expense for fiscal 2008 was $2.71 million compared to $1.33 million for the year ended September 30, 2007, an increase primarily due to higher debt related to the purchase of new clubs. Long-term debt was $33.56 million at the end of the fiscal year, compared to $14.39 million a year earlier. Depreciation was $2.28 million compared to $1.44 million for the previous year and amortization was $263,076 compared to $158,492. At the end of the 2008 fiscal year the company had cash and cash equivalents of $5.60 million compared to $2.99 million at September 30, 2007. The company said it believes its nightclub operations can continue to grow organically and through careful entry into markets and demographic segments with high growth potential. The company noted that during fiscal 2008, it acquired five nightclub operations and the remaining 49% of the Austin location, for a total cost of $70.47 million including real property of $14.76 million. These acquisitions were funded primarily through debt of $20.99 million, including real property debt of $7.99 million, issuance of restricted common stock valued at $12.96 million, $701,711 in debt forgiveness, and $35.19 million in cash. The company also acquired a media division for approximately $1 million, which will enable the company to create new marketing synergies with major industry product suppliers and new national advertising opportunities. It also provides additional diversification of revenue and income streams while remaining within the Rick�s Cabaret core competency. 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, Las Vegas, 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 owns the adult Internet membership Web site, couplestouch.com; a network of online adult auction sites under the flagship URL naughtybids.com; ED Publications, the national trade magazine and convention for the adult nightclub industry; and Storerotica, the national trade magazine and convention for the adult product and intimate apparel industries." Rick�s Cabaret common stock is traded on the NASDAQ Global Market 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, 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. CONSOLIDATED BALANCE SHEETS � September 30, 2008 � 2007 Assets Current assets: Cash and cash equivalents $ 5,602,645 $ 2,998,758 Accounts receivable: Trade, net 637,035 557,295 Other, net 230,298 218,746 Marketable securities - 33,368 Inventories 1,717,237 368,557 Prepaid expenses and other current assets � 568,599 � � 286,883 Total current assets 8,755,814 4,463,607 � Property and equipment, net 50,038,264 21,365,415 � Other assets: Goodwill and indefinite lived intangibles 76,457,694 20,179,610 Definite lived intangibles, net 1,335,509 698,584 Other � 481,525 � � 368,544 Total other assets � 78,274,728 � � 21,246,738 � Total assets $ 137,068,806 � $ 47,075,760 � Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 1,203,555 $ 493,499 Accrued liabilities 4,579,918 1,709,426 Current portion of long-term debt � 2,644,541 � � 3,291,154 Total current liabilities 8,428,014 5,494,079 � Deferred tax liability 16,894,256 4,391,499 Other long-term liabilities 537,967 420,415 Long-term debt-related parties 600,000 2,085,000 Long-term debt � 30,312,865 � � 9,011,185 � Total liabilities 56,773,102 21,402,178 � Commitments and contingencies � Minority interest 3,358,096 180,728 � Temporary equity - Common stock, subject to put rights (611,740 and 215,000 shares, respectively) 13,935,020 1,450,000 � Permanent stockholders' equity: Preferred stock, $.10 par, 1,000,000 shares authorized, none outstanding - - Common stock, $.01 par, 20,000,000 shares authorized, 9,689,315 and 6,903,354 shares issued, respectively 96,893 69,034 Additional paid-in capital 53,948,172 22,643,596 Accumulated other comprehensive income (loss) (13,347 ) 20,021 Retained earnings � 10,264,650 � � 2,603,983 64,296,368 25,336,634 Less 908,530 shares of common stock held in treasury, at cost � 1,293,780 � � 1,293,780 Total stockholders' equity � 63,002,588 � � 24,042,854 � Total liabilities and stockholders' equity $ 137,068,806 � $ 47,075,760 RICK'S CABARET INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS � Year Ended September 30, 2008 � 2007 � Revenues: Sales of alcoholic beverages $ 22,278,479 $ 12,111,348 Sales of food and merchandise 5,200,452 3,185,494 Service revenues 28,669,299 14,883,205 Internet revenues 715,759 730,629 Media revenues 801,215 - Other � 2,264,274 � � 1,103,264 � Total revenues 59,929,478 32,013,940 � Operating expenses: Cost of goods sold 6,959,889 4,035,522 Salaries and wages 13,845,362 8,739,859 Stock-based compensation 157,080 196,871 Other general and administrative: Taxes and permits 7,561,260 4,071,677 Charge card fees 1,064,841 638,248 Rent 2,431,053 1,494,005 Legal and professional 1,659,034 1,124,856 Advertising and marketing 2,557,770 1,325,367 Depreciation and amortization 2,541,683 1,596,650 Insurance 867,946 785,519 Utilities 1,284,920 800,366 Other 5,278,620 � 3,101,314 � Total operating expenses � 46,209,458 � � 27,910,254 � � Income from operations 13,720,020 4,103,686 � Other income (expense): Interest income 136,597 58,394 Interest expense (2,712,987 ) (1,335,713 ) Other � (73,896 ) � 37,134 � � Income before minority interest 11,069,734 2,863,501 � Minority interest � 30,911 � � 427,844 � � Income before income taxes 11,100,645 3,291,345 � Income taxes � 3,439,978 � � 236,446 � � Net income $ 7,660,667 � $ 3,054,899 � Basic and diluted earnings per share: Net income, basic $ 0.97 � $ 0.54 � � Net income, diluted $ 0.91 � $ 0.50 � Weighted average number of common shares outstanding: Basic 7,931,121 � 5,700,548 � � Diluted 8,413,183 � 6,215,285 �