Rick's Cabaret International, Inc., Income Up Sharply For Year On Higher Revenues

HOUSTON--(January 4, 2005)--Rick's Cabaret International [RICK:NASDAQ], operator of a chain of gentlemen's clubs, reported income from operations of $1,065,569 for its 2004 fiscal year ending September 30, 2004, nearly three times the $357,947 reported in the previous year. The company reported revenue of $15,959,684 for 2004 compared with $15,059,569 reported in 2003.

Net income was $775,253 compared with $438,294 in 2003 and earnings were 21 cents per share compared to 12 cents per share in 2003.  

We are highly pleased with our results for the year, said Eric Langan, CEO of Rick's Cabaret. Our core nightclub business showed significant progress from the previous two years. When the club we are purchasing in New York City begins operations in 2005 we expect to accelerate our growth.The company has secured financing to purchase the former Paradise Club in midtown Manhattan in a transaction expected to close on or before January 15, 2005. After remodeling, the club will be reopened as the flagship nightclub in the Rick's Cabaret chain.  

This was an exciting year for us operationally and strategically, Mr. Langan noted. We converted the original Rick's Cabaret in the Galleria area of Houstoninto Club Onyx, and the new club has already become one of the top night spots in the Southwest for urban gentlemen, particularly pro athletes and professionals. He said the company also successfully opened its fifth XTC Cabaret all-nude dance club, after purchasing and remodeling an existing 7,000 square foot gentlemen's club in North Houston.  

Other highlights for the 2004 fiscal year:  

  - Operating income for nightclub businesses was $2,542,482 for 2004 compared with $1,934,150 for previous the year. Same-location-same-period operating income increased by 35.48 percent on an increase in revenues from nightclub operations for same-location same-period of 5.88 percent.

  - The cost of goods sold for nightclub operations was 12.55 percent of total club revenues compared to 14.40 percent for the previous year, the result of the addition of an XTC club with a lower cost of goods sold and of continued efforts to improve inventory management.Margins from liquor and food sales and food service efficiency also improved. 

  - Operating income for Internet businesses was $88,958 for the year ended September 30, 2004 compared with $36,421 for the year ended September 30, 2003, although revenues of Internet businesses for same-sites same-period decreased by 24.38 percent as the company continues to de-emphasize subscription-based websites and focus on auction sites and Web-based meeting sites. Net income for Internet operations for the same-web-site-same-period increased by 144.25 percent and efforts continue to reduce costs for Internet activities.

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Page 2 - Rick's Cabaret International - 2004 Earnings  

  - Total payroll and related costs for 2004 were $5,491,401 compared to $5,393,708 for the previous year, an increase that was primarily due to opening the new XTC club. As of September 30, 2004Rick's had approximately 529 employees. 

  - At September 30, 2004, Rick's had cash and cash equivalents of $278,185 compared to $604,865 at September 30, 2003, a decrease due to funds placed in an escrow account in connection with the purchase of the New York City nightclub.

Rick's Cabaret International Inc. Results Year Ending Sept.30


                                                                2004                           2003

Revenues:

Sales of alcoholic beverages                 $ 6,839,948                $ 6,671,498

Sales of food and merchandise                1,712,225                   1,661,358

Service revenues                                      6,290,698                   5,333,889

Internet Revenues                                       796,353                   1,053,188

Other                                                           320,460                      339,636

                                                               15,959,684                 15,059,569

 

Operating expenses

Cost of goods sold                                    1,983,207                   2,194,940

Salaries and wages                                   5,491,401                   5,393,708

Other general and administrative               7,419,507                   7,112,974

                                                               14,894,115                  14,701,622

 

 

Income from operations                             1,065,569                      357,947

 

Other Income (expense)

Interest income                                               28,898                       16,875

Interest expense                                          (344,438)                   (384,221)

Gain on sale or disposition of assets             345,820

Other                                                               30,000                       67,515

 

Income before minority interests:                   780,029                      403,936

 

Minority interests                                              (4,776)                        34,358

 

Net income                                                  $775,253                     $438,294

 

Basic and diluted earnings per share:

Net income                                                       $0 .21                           $0.12

 

Weighted average number                          3,700,148                    3,729,167
of common shares outstanding

About Rick's Cabaret
Rick's Cabaret International, Inc. (www.ricks.com) currently owns and operates seven upscale adult nightclubs serving primarily businessmen and professionals that offer live adult entertainment, restaurant and bar operations. The company owns and operates adult nightclubs under the name "Rick's Cabaret" and "XTC" in Houston, Austin and San Antonio, Texas, and Minneapolis, Minnesota, and licenses Rick's Cabaret in New Orleans, and owns a Houston sports bar called "Hummers." 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.otherstouch.com and a network of nine online auction sites under the flagship site www.naughtybids.com where sellers are charged a fee for each successful auction. Rick's Cabaret common stock is traded on the NASDAQ Small Cap market under the symbol RICK. For further information contact [email protected].

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, conditions relevant to real estate transactions, 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 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.

Contact for further information: Allan Priaulx, 212-338-0050, [email protected]