HOUSTON, Aug. 29, 2011 /PRNewswire/ -- Rick's Cabaret
International, Inc. (NASDAQ:RICK), the nation's leading group of
upscale gentlemen's clubs, said today it is considering an appeal
of a Texas Supreme Court decision upholding a state law requiring
strip clubs to pay a $5 fee for every
club visitor. On Friday August
26th the Texas Supreme Court reversed the judgment of a
Texas Court of Appeals, ruling
that the SOB Fee does not violate the First Amendment to the U.S.
Constitution, and remanded the case to the District Court to
determine whether the fee violates the Texas Constitution.
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In a Form 8-K filing with the Securities and Exchange Commission
signed by Rick's Cabaret President and CEO Eric Langan, the company said: "We disagree
with the decision of the Texas Supreme Court. Both we and the
TEA [Texas Entertainment Association, a trade group] are currently
considering whether to appeal the Texas Supreme Court's decision to
the U.S. Supreme Court (regarding the constitutionality of the fee
under the First Amendment of the U.S. Constitution).
Additionally, our claims regarding the Texas Constitution have not
yet been addressed by the courts. We do not plan to make any
payments of these taxes while the case is pending in the courts.
However, we will continue to accrue and expense the potential tax
liability on our financial statements, so any ultimate negative
ruling will not have any effect on our income statement and will
only affect our balance sheet. If the decision is ultimately found
in our favor, as we believe it will be, then we will have a
one-time gain of the entire amount previously expensed. Further, we
have filed a separate lawsuit in which we raise additional
challenges to the statute imposing the fee or tax. The courts
have not yet addressed these additional claims."
The company further stated in the Form 8-K: "We have paid the
tax for the first five calendar quarters under protest and expensed
the tax in our consolidated financial statements (as filed with the
SEC), except for two locations in Dallas where the taxes have not been paid, but
we are accruing and expensing the liability. For the
subsequent quarters, as a result of the Third Court's decision, we
accrued the fee, but did not pay the State. As of
June 30, 2011, the Company had
approximately $6.1 million in accrued
liabilities for this tax. We have paid more than $2 million to the State
of Texas since the inception of the tax."
A copy of the company's Form 8-K is available at its investor
relations website, www.ricksinvestor.com.
About Rick's Cabaret: Rick's Cabaret International, Inc.
(NASDAQ: RICK) is home to 22 upscale adult nightclubs serving
primarily businessmen and professionals that offer live
entertainment, dining and bar operations. Nightclubs in
New York City, Miami, Philadelphia, 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 ir@ricks.com
or visit www.ricksinvestor.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 websites, 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. Additional
factors that could cause the Company's results to differ materially
from those described in the forward-looking statements are
described in forms filed with the SEC from time to time and
available at www.ricksinvestor.com or on the SEC's internet website
at www.sec.gov. 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
www.ricksinvestor.com.
SOURCE Rick's Cabaret International, Inc.