ECHO Press Releases

FOR IMMEDIATE RELEASE

Electronic Clearing House (ECHO) Announces 
Fourth Quarter and FY 2001 Results 

·        Processing and transaction revenues up 13% in FY 2001

·        Check-related revenue up 126% in FY 2001

Agoura Hills, Calif., December 6, 2001 -- Electronic Clearing House, Inc. (NASDAQ: ECHO) today announced net income for its fiscal 2001 year ended September 30, 2001 of $434,000, an increase of 49.1% compared to net income of $291,000 for the same period last year. Income before provision for income tax increased 94.5% to $1.0 million for fiscal year 2001, as compared to $524,000 in FY 2000.  Both basic and diluted earnings per share were $0.07 for fiscal year 2001, as compared to $0.06 per basic share and $0.05 per diluted share for fiscal year 2000. 

Revenue for fiscal year 2001 was $29.9 million, an increase of 5.7% over revenue of $28.3 million for the same period last year.  Total processing and transaction revenues increased 13.3% from $25.7 million in fiscal year 2000 to $29.1 million in fiscal year 2001.  This included a 126.3% increase in check-related revenue and a 4.7% increase in bank card and transaction revenue.  Terminal sales decreased 81.8% to $447,000 for fiscal year 2001, down from $2.5 million for the same period last year, reflecting a large order of U-Haul terminal sales in FY 2000. 

As a result of its changing revenue mix, ECHO’s gross margin improved by 4.6% to 34.3% in fiscal year 2001, as compared to 29.7% in fiscal year 2000. 

For the fourth quarter of fiscal 2001, the Company reported a loss of $37,000, or $0.01 per basic and diluted share, as compared to net income of $208,000, or $0.04 for both basic and diluted share in the fourth quarter of FY 2000. Revenue for the fourth quarter was $7.8 million, an increase of 3.8% as compared to revenue of $7.5 million in the comparable period last year. The net loss includes approximately $300,000 of legal and consulting fees in the fourth quarter related to ongoing litigation which is continuing into the first fiscal quarter of 2002.

“We are pleased to report our fifth consecutive year of profitability and sequential revenue growth, confirming that ECHO remained on track in growing our core business in fiscal year 2001,” said Joel M. Barry, Chairman and CEO of Electronic Clearing House, Inc.  “The fourth fiscal quarter posed several challenges, including a sharp drop in processing and transaction revenues immediately following September 11^th, combined with an unusual level of litigation-related expense and significant investment in technology and personnel to support the pilot program of Visa’s POS check service. However, credit and debit card transaction volumes have since recovered strongly.

“The rapid growth in our check services and improvement in gross margin provide investors with visibility on ECHO’s progress in executing our business strategy. ECHO now provides the most comprehensive, flexible and cost-effective payment processing platform available today. Our electronic check conversion, verification and guarantee services enable the merchant to maximize revenue, reduce check handling costs and effectively manage their risk. 

“As one of the primary third party acquiring processors currently participating in Visa’s POS check service, ECHO has the opportunity to participate strongly in the rapid projected growth of the electronic check market. Given the immense size of this market and the unique marketing power of Visa U.S.A. and its financial institution members, we are very excited about making this tremendous opportunity a success. Combined with the continued growth of our core business, we believe that ECHO is positioned for sustainable improvement in our bottom-line performance over the coming fiscal year.”

As of September 30, 2001, the company’s balance sheet remains strong with $4.1 million in cash and equivalents, $5.7 million in working capital and stockholders’ equity of $15.7 million.

(financial tables below)

About ECHO:

Electronic Clearing House Inc. provides debit and credit card processing, check guarantee, check verification, check conversion, check re-presentment, check collection and inventory tracking to more than 60,000 retail merchants and U-Haul dealers across the nation.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Any statements set forth above that are not historical facts are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Potential risks and uncertainties include, but are not limited to, such factors as successful completion of the Visa POS check service pilot program, acceptance of the service by Visa member banks, fluctuations in demand for the company's products and services, the introduction of new products and services, the company's ability to maintain customer and strategic business relationships, technological advancements, impact of competitive products and services and pricing, growth in targeted markets and other information detailed from time to time in the company's filings with the United States Securities and Exchange Commission.

ELECTRONIC CLEARING HOUSE, INC.
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