Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Dec. 31, 2016 | Jan. 31, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | RCI HOSPITALITY HOLDINGS, INC. | |
Entity Central Index Key | 935,419 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 9,718,711 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,017 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2016 | Sep. 30, 2016 |
Current assets | ||
Cash and cash equivalents | $ 12,064 | $ 11,327 |
Accounts receivables, net | 3,721 | 4,365 |
Inventories | 2,106 | 2,019 |
Prepaid expenses and other current assets | 3,430 | 4,005 |
Assets held for sale | 7,671 | 7,671 |
Total current assets | 28,992 | 29,387 |
Property and equipment, net | 143,439 | 142,003 |
Notes receivable | 4,780 | 4,800 |
Goodwill | 45,921 | 45,921 |
Intangibles, net | 52,143 | 52,189 |
Other assets | 2,175 | 2,188 |
Total assets | 277,450 | 276,488 |
Current liabilities | ||
Accounts payable | 2,042 | 1,701 |
Accrued liabilities | 12,193 | 12,806 |
Current portion of long-term debt | 9,957 | 9,950 |
Total current liabilities | 24,192 | 24,457 |
Deferred tax liability | 25,470 | 25,470 |
Long-term debt | 95,663 | 95,936 |
Other long-term liabilities | 523 | 483 |
Total liabilities | 145,848 | 146,346 |
Commitments and contingencies (Note 9) | ||
Stockholders' equity | ||
Preferred stock, $0.10 par value per share; 1,000 shares authorized; none issued and outstanding | ||
Common stock, $0.01 par value per share; 20,000 shares authorized; 9,719 and 9,808 shares issued and outstanding as of December 31, 2016 and September 30, 2016, respectively | 97 | 97 |
Additional paid-in capital | 63,451 | 64,552 |
Retained earnings | 65,517 | 62,909 |
Total RCIHH stockholders' equity | 129,065 | 127,558 |
Noncontrolling interests | 2,537 | 2,584 |
Total stockholders' equity | 131,602 | 130,142 |
Total liabilities and stockholders' equity | $ 277,450 | $ 276,488 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2016 | Sep. 30, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.10 | $ 0.10 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 9,719,000 | 9,808,000 |
Common stock, shares outstanding | 9,719,000 | 9,808,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | ||
Revenues | |||
Sales of alcoholic beverages | $ 14,375 | $ 14,597 | |
Sales of food and merchandise | 4,207 | 4,334 | |
Service revenues | 13,475 | 12,641 | |
Other | 1,682 | 1,903 | |
Total revenues | 33,739 | 33,475 | |
Operating expenses | |||
Cost of goods sold | 4,881 | 5,184 | |
Salaries and wages | 9,652 | 9,357 | |
Selling, general and administrative | 11,193 | 10,860 | |
Depreciation and amortization | 1,618 | 1,817 | |
Other charges | 62 | 540 | |
Total operating expenses | 27,406 | 27,758 | |
Income from operations | 6,333 | 5,717 | |
Other income (expenses) | |||
Interest expense | (2,015) | (1,915) | |
Interest income | 37 | 4 | |
Income before income taxes | 4,355 | 3,806 | |
Income taxes | 1,450 | 1,367 | |
Net income | 2,905 | 2,439 | |
Less: Net income (loss) attributable to noncontrolling interests | 7 | (113) | |
Net income attributable to RCIHH common shareholders | $ 2,898 | $ 2,552 | |
Earnings per share attributable to RCIHH common shareholders | |||
Basic | $ 0.30 | $ 0.25 | |
Diluted | $ 0.30 | $ 0.25 | |
Weighted average number of common shares outstanding | |||
Basic | [1],[2] | 9,768,000 | 10,296,000 |
Diluted | [1],[2] | 9,814,000 | 10,635,000 |
Dividend per share | $ 0.03 | ||
[1] | All outstanding restricted stock, warrants and options were considered for the EPS computation. Potentially dilutive options and warrants of 172,400 for the three months ended December 31, 2015 have been excluded from earnings per share due to their being anti-dilutive. No restricted stock or options were outstanding during the three months ended December 31, 2016. | ||
[2] | As of January 4, 2017, in relation to paying off certain convertible notes (see Note 11), the Company has no more outstanding restricted stock, stock options, warrants or convertible debt. |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Condensed Consolidated Statements Of Comprehensive Income | ||
Net income | $ 2,905 | $ 2,439 |
Other comprehensive income: | ||
Unrealized holding gain on securities available for sale | 7 | |
Comprehensive income | 2,905 | 2,446 |
Less: Comprehensive income (loss) attributable to noncontrolling interests | 7 | (113) |
Comprehensive income attributable to RCI Hospitality Holdings, Inc. | $ 2,898 | $ 2,559 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 2,905 | $ 2,439 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 1,618 | 1,817 |
Deferred taxes | 676 | |
Amortization of debt issuance costs, note discount and beneficial conversion | 85 | 8 |
Deferred rent | 40 | (24) |
Stock-based compensation expense | 120 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 644 | (594) |
Inventories | (87) | (321) |
Prepaid expenses and other assets | 588 | 278 |
Accounts payable and accrued liabilities | (272) | (197) |
Net cash provided by operating activities | 5,521 | 4,202 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Proceeds from notes receivable | 20 | |
Additions to property and equipment | (3,008) | (889) |
Net cash used in investing activities | (2,988) | (889) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from long-term debt | 1,900 | 4,556 |
Payments on long-term debt | (2,152) | (4,656) |
Purchase of treasury stock | (1,101) | (2,795) |
Payment of dividends | (290) | |
Payment of loan origination costs | (99) | |
Distribution to noncontrolling interests | (54) | (54) |
Net cash used in financing activities | (1,796) | (2,949) |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 737 | 364 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 11,327 | 8,020 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 12,064 | 8,384 |
CASH PAID DURING PERIOD FOR: | ||
Interest | 1,920 | 1,919 |
Income taxes | 385 | $ 97 |
Non-cash and other transactions: | ||
Refinancing of long term debt by borrowing | 8,000 | |
Proceeds from borrowing | 9,900 | |
Net cash proceeds from borrowing for refinance | $ 1,900 | |
Number of common shares purchased and retired | 89,685 | 282,762 |
Cost of common shares purchased and retired | $ 1,100 | $ 2,800 |
Unrealized gain on marketable securities | $ 7 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q of Regulation S-X. They do not include all information and footnotes required by GAAP for complete financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to the consolidated financial statements for the year ended September 30, 2016 included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on December 13, 2016. The interim unaudited condensed consolidated financial statements should be read in conjunction with those consolidated financial statements included in the Form 10-K. In the opinion of management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three months ended December 31, 2016 are not necessarily indicative of the results that may be expected for the year ending September 30, 2017. The September 30, 2016 consolidated balance sheet data were derived from audited financial statements, but does not include all disclosures required by GAAP. |
Recent Accounting Standards and
Recent Accounting Standards and Pronouncements | 3 Months Ended |
Dec. 31, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Standards and Pronouncements | 2. Recent Accounting Standards and Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers In February 2015, the FASB issued ASU No. 2015-02, which amends FASB ASU Topic 810, Consolidations In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) In March 2016, the FASB issued amended guidance ASU No. 2016-09, Compensation–Stock Compensation (Topic 718): Improvement to Employee Share-Based Payment Accounting In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force) In January 2017, the FASB issued ASU No. 2017-01, Business Combination (Topic 805): Clarifying the Definition of a Business Revenue from Contracts with Customers |
Reclassifications
Reclassifications | 3 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Reclassifications | 3. Reclassifications Certain prior year amounts have been reclassified to conform to the current year financial statement presentation. |
Selected Account Information
Selected Account Information | 3 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Data [Abstract] | |
Selected Account Information | 4. Selected Account Information The components of accrued liabilities are as follows (in thousands): December 31, 2016 September 30, 2016 Lawsuit settlement $ 1,941 $ 2,704 Insurance 1,678 2,303 Property taxes 1,570 1,017 Payroll and related costs 1,533 1,506 Patron tax 1,522 1,559 Sales and liquor taxes 887 889 Unearned revenues 516 256 Other 2,546 2,572 $ 12,193 $ 12,806 The components of selling, general and administrative expenses are as follows (in thousands): For the Three Months Ended December 31, 2016 2015 Taxes and permits $ 2,289 $ 2,125 Advertising and marketing 1,657 1,305 Supplies and services 1,146 1,262 Insurance 935 874 Legal 703 835 Rent 690 948 Utilities 670 710 Charge card fees 570 613 Security 541 539 Accounting and professional fees 497 270 Repairs and maintenance 466 497 Other 1,029 882 $ 11,193 $ 10,860 |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | 5. Long-Term Debt On October 5, 2016, the Company refinanced $8.0 million of long-term debt by borrowing $9.9 million. The new unsecured debt is payable $118,817 per month, including interest at 12%, and matures in five years with a balloon payment for the remaining balance at maturity. The refinanced debt was comprised of interest-only notes that were scheduled to mature with full principal payments in October 2017. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | 6. Stockholders’ Equity During the quarter ended December 31, 2016, the Company purchased and retired 89,685 common shares at a cost of $1.1 million. The Company also paid a $0.03 per share cash dividend totaling approximately $290,000. During the quarter ended December 31, 2015, the Company purchased and retired 282,762 common shares at a cost of $2.8 million. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Dec. 31, 2016 | |
Earnings per share attributable to RCIHH common shareholders | |
Earnings Per Share | 7. Earnings Per Share Basic earnings per share (“EPS”) includes no dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of the Company. Potential common stock shares consist of shares that may arise from outstanding dilutive common restricted stock, stock options and warrants (the number of which is computed using the “treasury stock method”) and from outstanding convertible debentures (the number of which is computed using the “if converted method”). Diluted EPS considers the potential dilution that could occur if the Company’s outstanding common restricted stock, stock options, warrants and convertible debentures were converted into common stock that then shared in the Company’s earnings (as adjusted for interest expense that would no longer occur if the debentures were converted). The table below presents the reconciliation of the numerator and the denominator in the calculation of basic and diluted EPS (in thousands, except per share amounts): For the Three Months Ended December 31, 2016 2015 Numerator - Net income attributable to RCIHH common shareholders – basic $ 2,898 $ 2,552 Adjustment to net income from assumed conversion of debentures(2) 5 85 Adjusted net income attributable to RCIHH common shareholders – diluted $ 2,903 $ 2,637 Denominator(1)(3) Weighted average number of common shares outstanding – basic 9,768 10,296 Effect of potentially dilutive convertible debentures(2) 46 339 Adjusted weighted average number of common shares outstanding – diluted 9,814 10,635 Basic earnings per share $ 0.30 $ 0.25 Diluted earnings per share $ 0.30 $ 0.25 (1) All outstanding restricted stock, warrants and options were considered for the EPS computation. Potentially dilutive options and warrants of 172,400 for the three months ended December 31, 2015 have been excluded from earnings per share due to their being anti-dilutive. No restricted stock or options were outstanding during the three months ended December 31, 2016. (2) Convertible debentures (principal and accrued interest) outstanding at the beginning of the quarters ended December 31, 2016 and 2015 totaling $859,000 and $3.9 million, respectively, were convertible into common stock at a price of $10.25 and $12.50 per share in fiscal 2017 and $10.00, $10.25 and $12.50 per share in fiscal 2016. (3) As of January 4, 2017, in relation to paying off certain convertible notes (see Note 11), the Company has no more outstanding restricted stock, stock options, warrants or convertible debt. |
Income Taxes
Income Taxes | 3 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8. Income Taxes Income tax expense was $1.5 million for the first quarter of 2017 compared with a $1.4 million for the same quarter of 2016. The effective income tax rate for the first quarter of 2017 was 33.3% compared with 35.9% for the comparable period of 2016. Our effective tax rate is affected by state taxes, permanent differences, and tax credits, including the FICA tip credit. The Company or one of its subsidiaries files income tax returns for U.S. federal, and various state and local jurisdictions. The Company is no longer subject to federal, state and local income tax examinations by tax authorities for years before 2013. The Company’s federal income tax returns for the fiscal years ended September 30, 2015, 2014 and 2013 are currently under examination by the Internal Revenue Service. The Company accounts for uncertain tax positions pursuant to ASC Topic 740, Income Taxes |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 9. Commitments and Contingencies Legal Matters New York Settlement Filed in 2009, the case claimed Rick’s Cabaret New York misclassified entertainers as independent contractors. Plaintiffs sought minimum wage for the hours they danced and return of certain fees. RCI Entertainment (New York), Inc. and Peregrine Enterprises, Inc. maintained the dancers were properly classified, and alternatively, amounts earned were well in excess of the minimum wage and should satisfy any obligations. On April 1, 2015, we and our subsidiaries, RCI Entertainment (New York), Inc. and Peregrine Enterprises, Inc., entered into an agreement to settle in full a New York based federal wage and hour class and collective action filed in the United States District Court for the Southern District of New York. On September 22, 2015, the Court granted final approval of the settlement. Under the terms of the agreement, Peregrine Enterprises, Inc. was to make up to $15.0 million available to class members and their attorneys. The actual amount paid was determined based on the number of class members responding by the end of a two-month notice period which ended on December 4, 2015. Unclaimed checks or payments reverted back to Peregrine at that time. Based on the current schedule, an initial payment for attorneys’ fees of $1,833,333 was made in October 2015, with two subsequent payments of $1,833,333 each being made in equal annual installments. As part of the settlement, RCIHH was required to guarantee the obligations of RCI Entertainment (New York), Inc. and Peregrine Enterprises, Inc. under the settlement. The Company expensed $11.1 million during the year ended September 30, 2015 as the final liability for its obligations under the settlement, which was included as settlement of lawsuits and other one-time costs in the consolidated statement of income. Of this amount, $5.6 million was paid to entertainers and $5.5 million has been or will be paid to the lawyers. As of December 31, 2016 and September 30, 2016, the Company has a total amount of $1.9 million and $2.7 million, respectively, recorded in accrued liabilities on the Company’s consolidated balance sheets for future payments to the lawyers. Indemnity Insurance Corporation As previously reported, the Company and its subsidiaries were insured under a liability policy issued by Indemnity Insurance Corporation, RRG (“IIC”) through October 25, 2013. The Company and its subsidiaries changed insurance companies on that date. On November 7, 2013, the Court of Chancery of the State of Delaware entered a Rehabilitation and Injunction Order (“Rehabilitation Order”), which declared IIC impaired, insolvent and in an unsafe condition and placed IIC under the supervision of the Insurance Commissioner of the State of Delaware (“Commissioner”) in her capacity as receiver (“Receiver”). The Rehabilitation Order empowered the Commissioner to rehabilitate IIC through a variety of means, including gathering assets and marshaling those assets as necessary. Further, the order stayed or abated pending lawsuits involving IIC as the insurer until May 6, 2014. On April 10, 2014, the Court of Chancery of the State of Delaware entered a Liquidation and Injunction Order With Bar Date (“Liquidation Order”), which ordered the liquidation of IIC and terminated all insurance policies or contracts of insurance issued by IIC. The Liquidation Order further ordered that all claims against IIC must be filed with the Receiver before the close of business on January 16, 2015 and that all pending lawsuits involving IIC as the insurer are further stayed or abated until October 7, 2014. As a result, the Company and its subsidiaries no longer have insurance coverage under the liability policy with IIC. Currently, there are several civil lawsuits pending against the Company and its subsidiaries. The Company has retained counsel to defend against and evaluate these claims and lawsuits. We are funding 100% of the costs of litigation and will seek reimbursement from the bankruptcy receiver. The Company filed the appropriate claims against IIC with the Receiver before the January 16, 2015 deadline; however, there are no assurances of any recovery from these claims. It is unknown at this time what effect this uncertainty will have on the Company. As previously stated, since October 25, 2013, the Company has obtained general liability coverage from other insurers, which have covered and/or will cover any claims arising from actions after that date. General The Company is involved in various suits and claims arising in the normal course of business. The ultimate outcome of these items will not have a material adverse effect on the Company’s consolidated statements of income or financial position. The Company has been sued by a landlord in the 33rd Judicial District Court of Harris County, Texas for a Houston Bombshells which was under renovation in 2015. The plaintiff alleges RCI Hospitality Holdings, Inc.’s subsidiary, BMB Dining Services (Willowbrook), Inc., breached a lease agreement by constructing an outdoor patio, which allegedly interfered with the common areas of the shopping center, and by failing to provide Plaintiff with proposed plans before beginning construction. Plaintiff also asserts RCI Hospitality Holdings, Inc. is liable as guarantor of the lease. The lease was for a Bombshells restaurant to be opened in the Willowbrook Shopping Center in Houston, Texas. Both RCI Hospitality Holdings, Inc. and BMB Dining Services (Willowbrook), Inc. have denied liability and assert that Plaintiff has failed to mitigate its claimed damages. Further, BMB Dining Services (Willowbrook), Inc. asserts that Plaintiff affirmatively represented that the patio could be constructed under the lease and has filed counter claims and third-party claims against Plaintiff, Plaintiff’s manager, and Plaintiff’s broker asserting that they committed fraud and that the landlord breached the applicable agreements. It is unknown at this time whether the resolution of this uncertainty will have a material effect on the Company’s financial condition. Settlements of lawsuits for the quarters ended December 31, 2016 and 2015 totaled $73,000 and $540,000, respectively. As of December 31, 2016 and September 30, 2016, the Company has accrued $1.9 million and $2.7 million in accrued liabilities, respectively, related to settlement of lawsuits. |
Segment Information
Segment Information | 3 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Segment Information | 10. Segment Information The Company owns and operates adult nightclubs and Bombshells Restaurants and Bars. The Company has identified such reportable segments based on management responsibility and the nature of the Company’s products, services and costs. There are no major distinctions in geographical areas served as all operations are in the United States. The Company measures segment profit (loss) as income (loss) from operations. Segment assets are those assets controlled by each reportable segment. The other category below includes our media divisions and rental income that are not significant to the consolidated financial statements. Below is the financial information related to the Company’s segments (in thousands): For the Three Months Ended December 31, 2016 2015 Revenues Nightclubs $ 29,282 $ 28,170 Bombshells 4,295 4,379 Other 162 926 $ 33,739 $ 33,475 Income (loss) from operations Nightclubs $ 9,216 $ 8,508 Bombshells 638 487 Other (341 ) (648 ) General corporate (3,180 ) (2,630 ) $ 6,333 $ 5,717 Depreciation and amortization Nightclubs $ 1,242 $ 1,142 Bombshells 218 231 Other 5 171 General corporate 153 273 $ 1,618 $ 1,817 Capital expenditures Nightclubs $ 795 $ 391 Bombshells 1,104 40 Other 1 2 General corporate 1,108 456 $ 3,008 $ 889 December 31, 2016 September 30, 2016 Total assets Nightclubs $ 245,174 $ 244,464 Bombshells 9,350 8,673 Other 1,056 896 General corporate 21,870 22,455 $ 277,450 $ 276,488 General corporate expenses include corporate salaries, health insurance and social security taxes for officers, legal, accounting and information technology employees, corporate taxes and insurance, legal and accounting fees, depreciation and other corporate costs such as automobile and travel costs. Management considers these to be non-allocable costs for segment purposes. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | 11. Subsequent Events On January 4, 2017, the Company paid off $392,000 of convertible 6% notes, which would have matured on March 4, 2023. On January 13, 2017, we closed the sale on one of our non-income producing properties for $2.2 million in cash, recognizing approximately $116,000 loss on the sale. Proceeds were used to pay off the remaining $1.5 million of a related 11% balloon note, which was due in 2018. The Company paid a $75,000 prepayment penalty to pay off the debt. |
Selected Account Information (T
Selected Account Information (Tables) | 3 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Data [Abstract] | |
Schedule of Accrued Liabilities | The components of accrued liabilities are as follows (in thousands): December 31, 2016 September 30, 2016 Lawsuit settlement $ 1,941 $ 2,704 Insurance 1,678 2,303 Property taxes 1,570 1,017 Payroll and related costs 1,533 1,506 Patron tax 1,522 1,559 Sales and liquor taxes 887 889 Unearned revenues 516 256 Other 2,546 2,572 $ 12,193 $ 12,806 |
Schedule of Selling, General and Administrative Expenses | The components of selling, general and administrative expenses are as follows (in thousands): For the Three Months Ended December 31, 2016 2015 Taxes and permits $ 2,289 $ 2,125 Advertising and marketing 1,657 1,305 Supplies and services 1,146 1,262 Insurance 935 874 Legal 703 835 Rent 690 948 Utilities 670 710 Charge card fees 570 613 Security 541 539 Accounting and professional fees 497 270 Repairs and maintenance 466 497 Other 1,029 882 $ 11,193 $ 10,860 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Dec. 31, 2016 | |
Earnings per share attributable to RCIHH common shareholders | |
Schedule of Earnings Per Share Basic and Diluted | The table below presents the reconciliation of the numerator and the denominator in the calculation of basic and diluted EPS (in thousands, except per share amounts): For the Three Months Ended December 31, 2016 2015 Numerator - Net income attributable to RCIHH common shareholders – basic $ 2,898 $ 2,552 Adjustment to net income from assumed conversion of debentures(2) 5 85 Adjusted net income attributable to RCIHH common shareholders – diluted $ 2,903 $ 2,637 Denominator(1)(3) Weighted average number of common shares outstanding – basic 9,768 10,296 Effect of potentially dilutive convertible debentures(2) 46 339 Adjusted weighted average number of common shares outstanding – diluted 9,814 10,635 Basic earnings per share $ 0.30 $ 0.25 Diluted earnings per share $ 0.30 $ 0.25 (1) All outstanding restricted stock, warrants and options were considered for the EPS computation. Potentially dilutive options and warrants of 172,400 for the three months ended December 31, 2015 have been excluded from earnings per share due to their being anti-dilutive. No restricted stock or options were outstanding during the three months ended December 31, 2016. (2) Convertible debentures (principal and accrued interest) outstanding at the beginning of the quarters ended December 31, 2016 and 2015 totaling $859,000 and $3.9 million, respectively, were convertible into common stock at a price of $10.25 and $12.50 per share in fiscal 2017 and $10.00, $10.25 and $12.50 per share in fiscal 2016. (3) As of January 4, 2017, in relation to paying off certain convertible notes (see Note 11), the Company has no more outstanding restricted stock, stock options, warrants or convertible debt. |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information | Below is the financial information related to the Company’s segments (in thousands): For the Three Months Ended December 31, 2016 2015 Revenues Nightclubs $ 29,282 $ 28,170 Bombshells 4,295 4,379 Other 162 926 $ 33,739 $ 33,475 Income (loss) from operations Nightclubs $ 9,216 $ 8,508 Bombshells 638 487 Other (341 ) (648 ) General corporate (3,180 ) (2,630 ) $ 6,333 $ 5,717 Depreciation and amortization Nightclubs $ 1,242 $ 1,142 Bombshells 218 231 Other 5 171 General corporate 153 273 $ 1,618 $ 1,817 Capital expenditures Nightclubs $ 795 $ 391 Bombshells 1,104 40 Other 1 2 General corporate 1,108 456 $ 3,008 $ 889 December 31, 2016 September 30, 2016 Total assets Nightclubs $ 245,174 $ 244,464 Bombshells 9,350 8,673 Other 1,056 896 General corporate 21,870 22,455 $ 277,450 $ 276,488 |
Selected Account Information -
Selected Account Information - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Sep. 30, 2016 |
Quarterly Financial Data [Abstract] | ||
Lawsuit settlement | $ 1,941 | $ 2,704 |
Insurance | 1,678 | 2,303 |
Property taxes | 1,570 | 1,017 |
Payroll and related costs | 1,533 | 1,506 |
Patron tax | 1,522 | 1,559 |
Sales and liquor taxes | 887 | 889 |
Unearned revenues | 516 | 256 |
Other | 2,546 | 2,572 |
Accrued liabilities | $ 12,193 | $ 12,806 |
Selected Account Information 22
Selected Account Information - Schedule of Selling, General and Administrative Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Quarterly Financial Data [Abstract] | ||
Taxes and permits | $ 2,289 | $ 2,125 |
Advertising and marketing | 1,657 | 1,305 |
Supplies and services | 1,146 | 1,262 |
Insurance | 935 | 874 |
Legal | 703 | 835 |
Rent | 690 | 948 |
Utilities | 670 | 710 |
Charge card fees | 570 | 613 |
Security | 541 | 539 |
Accounting and professional fees | 497 | 270 |
Repairs and maintenance | 466 | 497 |
Other | 1,029 | 882 |
Selling, general and administrative | $ 11,193 | $ 10,860 |
Long-Term Debt (Details Narrati
Long-Term Debt (Details Narrative) | Oct. 05, 2016USD ($) |
Debt Disclosure [Abstract] | |
Long-term debt refinancing amount | $ 8,000,000 |
Long-term debt | 9,900,000 |
Unsecured debt payable | $ 118,817 |
Debt interest rate percentage | 12.00% |
Debt maturity term | 5 years |
Debt maturity description | The refinanced debt was comprised of interest-only notes that were scheduled to mature with full principal payments in October 2017. |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Stockholders' Equity Note [Abstract] | ||
Common stock purchase and retired, shares | 89,685 | 282,762 |
Common stock purchase and retired, value | $ 1,100 | $ 2,800 |
Cash dividend paid per share | $ 0.03 | |
Total dividend | $ 290 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Earnings Per Share Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | ||
Earnings per share attributable to RCIHH common shareholders | |||
Net income attributable to RCIHH common shareholders - basic | $ 2,898 | $ 2,552 | |
Adjustment to net income from assumed conversion of debentures(2) | [1] | 5 | 85 |
Adjusted net income attributable to RCIHH common shareholders - diluted | $ 2,903 | $ 2,637 | |
Weighted average number of common shares outstanding - basic | [2],[3] | 9,768,000 | 10,296,000 |
Effect of potentially dilutive convertible debentures(2) | [1],[2],[3] | 46,000 | 339,000 |
Adjusted weighted average number of common shares outstanding - diluted | [2],[3] | 9,814,000 | 10,635,000 |
Basic earnings per share | $ 0.30 | $ 0.25 | |
Diluted earnings per share | $ 0.30 | $ 0.25 | |
[1] | Convertible debentures (principal and accrued interest) outstanding at the beginning of the quarters ended December 31, 2016 and 2015 totaling $859,000 and $3.9 million, respectively, were convertible into common stock at a price of $10.25 and $12.50 per share in fiscal 2017 and $10.00, $10.25 and $12.50 per share in fiscal 2016. | ||
[2] | All outstanding restricted stock, warrants and options were considered for the EPS computation. Potentially dilutive options and warrants of 172,400 for the three months ended December 31, 2015 have been excluded from earnings per share due to their being anti-dilutive. No restricted stock or options were outstanding during the three months ended December 31, 2016. | ||
[3] | As of January 4, 2017, in relation to paying off certain convertible notes (see Note 11), the Company has no more outstanding restricted stock, stock options, warrants or convertible debt. |
Earnings Per Share - Schedule26
Earnings Per Share - Schedule of Earnings Per Share Basic and Diluted (Details) (Parenthetical) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2016 | |
Antidilutive securities excluded from computation of earnings per share | 172,400 | |
Convertible debenture outstanding | $ 3,900 | $ 859 |
Fiscal 2017 [Member] | Minimum [Member] | ||
Common stock conversion price | $ 10.25 | |
Fiscal 2017 [Member] | Maximum [Member] | ||
Common stock conversion price | 12.50 | |
Fiscal 2016 [Member] | ||
Common stock conversion price | 10.25 | |
Fiscal 2016 [Member] | Minimum [Member] | ||
Common stock conversion price | 10 | |
Fiscal 2016 [Member] | Maximum [Member] | ||
Common stock conversion price | $ 12.50 | |
Restricted Stock [Member] | ||
Number of options outstanding during period |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2016 | |
Income tax expense | $ 1,450 | $ 1,367 | |
Effective income tax rate percentage | 35.90% | ||
Liability for uncertain tax positions | $ 400 | $ 1,000 | |
Interest and penalties for unrecognized tax benefits | 600 | ||
Fiscal 2017 [Member] | |||
Income tax expense | $ 1,500 | ||
First Quarter of 2017 [Member] | |||
Effective income tax rate percentage | 33.30% |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | Apr. 02, 2015 | Dec. 31, 2016 | Dec. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2016 | Oct. 31, 2015 |
Commitments And Contingencies [Line Items] | |||||||
Litigation settlement, expense | $ 11,100,000 | ||||||
Accrued liabilities | $ 12,193,000 | $ 12,806,000 | |||||
Payments for legal settlements | $ 73,000 | $ 540,000 | |||||
New York Settlement [Member] | |||||||
Commitments And Contingencies [Line Items] | |||||||
Loss contingency, estimate of possible loss | $ 15,000,000 | ||||||
Accrued professional fees | 5,500,000 | $ 1,833,333 | |||||
Loss contingency accrual, payments | $ 1,833,333 | ||||||
Accrued entertainers fees | $ 5,600,000 | ||||||
Indemnity Insurance Corporation [Member] | |||||||
Commitments And Contingencies [Line Items] | |||||||
Costs of litigation percentage | 100.00% |
Segment Information - Schedule
Segment Information - Schedule of Segment Reporting Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2016 | |
Revenues | $ 33,739 | $ 33,475 | |
Income (loss) from operations | 6,333 | 5,717 | |
Depreciation and Amortization | 1,618 | 1,817 | |
Capital Expenditures | 3,008 | 889 | |
Total assets | 277,450 | $ 276,488 | |
Nightclubs [Member] | |||
Revenues | 29,282 | 28,170 | |
Income (loss) from operations | 9,216 | 8,508 | |
Depreciation and Amortization | 1,242 | 1,142 | |
Capital Expenditures | 795 | 391 | |
Total assets | 245,174 | 244,464 | |
Bombshells [Member] | |||
Revenues | 4,295 | 4,379 | |
Income (loss) from operations | 638 | 487 | |
Depreciation and Amortization | 218 | 231 | |
Capital Expenditures | 1,104 | 40 | |
Total assets | 9,350 | 8,673 | |
Other [Member] | |||
Revenues | 162 | 926 | |
Income (loss) from operations | (341) | (648) | |
Depreciation and Amortization | 5 | 171 | |
Capital Expenditures | 1 | 2 | |
Total assets | 1,056 | 896 | |
General Corporate [Member] | |||
Income (loss) from operations | (3,180) | (2,630) | |
Depreciation and Amortization | 153 | 273 | |
Capital Expenditures | 1,108 | $ 456 | |
Total assets | $ 21,870 | $ 22,455 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] - USD ($) $ in Thousands | Jan. 13, 2017 | Jan. 04, 2017 |
Repayments of convertible notes | $ 392 | |
Convertible notes interest rate, percent | 6.00% | |
Convertible notes maturity date | Mar. 4, 2023 | |
Proceeds from sale of properties | $ 2,200 | |
Loss on sale of properties | 116 | |
Balloon Note [Member] | ||
Repayments of convertible notes | $ 1,500 | |
Convertible notes interest rate, percent | 11.00% | |
Prepayment penalty to pay off debt | $ 75 |