Agoura Hills Calif., May 7, 2002 –

Electronic Clearing House, Inc. (NASDAQ:ECHO), reported revenue of $8.4 million in the second quarter of fiscal 2002, an increase of 13.6% as compared to $7.4 million in the second quarter of the prior year. 

The Company reported a net loss for the quarter of $1.9 million, or $(0.33) per basic and diluted share, as compared to net earnings of $0.17 million, or $0.03 per basic and diluted share, for the same period last year.  The loss reflected ongoing enhancements and product development related to the Company’s Visa POS Check Pilot Program and a one-time charge of $2.5 million in full and final settlement of the Premier Lifestyle International Corporation lawsuit. 

Total processing and transaction revenue for the fiscal quarter increased 17.9 %, from $7.02 million for the comparable quarter in 2001 to $8.3 million in fiscal 2002. 

Bankcard processing and transaction revenue increased 12.5% to $6.82 million for the quarter as opposed to $6.07 million in the second quarter 2001.  This increase was the result of the Company’s successful marketing programs such as the MerchantAmerica web offerings and other sales programs. 

Check-related revenues increased from $1.06 million for the three months ended March 31, 2001 to $1.51 million for the three months ended March 31, 2002, an increase of over 42.4% as compared to the comparable quarter last year. 

Gross margins from processing and transaction revenue decreased from 35.9% in the second fiscal quarter of 2001 to 30.6% for the quarter ended March 31, 2002 due to a rate reduction offered to a major client, U-Haul, as a result of contract renewal negotiations, and an increase in direct processing expenses. 

Excluding cash used in a legal settlement of $1.3 million, the Company generated $704,000 net cash from operating activities for the six-month period ended March 31, 2002 as compared to $1,055,000 for the same period in the prior year.

“I am pleased to announce another quarter of solid revenue growth for the Company, especially in our higher-margin check processing business,” said Joel M. Barry, Chairman and CEO of Electronic Clearing House, Inc.  

“We continue to make excellent progress with regard to our ongoing pilot programs for our VISA POS Check Services.  At the present time, the Company is working with four VISA member banks that have chosen to participate in this pilot program.  We believe that the program offers us strong opportunities to develop strategic relationships with some major banks that could result in a significant increase in check revenues in the coming years.” 

“We continue to exercise tight control over expenses, despite the significant ongoing investment in growing our check services business. This bottom-up approach allows us the flexibility to continue to develop the infrastructure and services necessary to provide a wide range of value-added payment processing and chargeback services to our merchant customers while maintaining a positive cash flow from operations.  Currently over 60,000 merchants are using our services and enjoying the benefits of ease of connectivity and superior data access.” 

“Looking to the third quarter 2002, we anticipate ECHO ‘s top-line growth to be in the range of 15%,” said Barry. 

“Results for this quarter include a one-time charge of $2.5 million in full and final settlement of our lawsuit with Premiere Lifestyles International Corporation,” noted Barry.  “We were extremely reluctant to move toward settlement, but in view of the judge’s recommendation that both parties examine the potential for incurring substantial legal costs should the case proceed to the appeals stage, the Company felt it would be prudent to bring closure to the matter.  We believe that this decision is in the best interests of the organization, our customers and our shareholders as we seek to focus on our long-term strategies and business goals.” 

The Company’s balance sheet for the quarter ended March 31, 2002 showed $2.4 million in cash, a decrease of $1.76 million from the prior quarter.  This was primarily attributable to legal settlement expenses incurred during the period. 

About ECHO:

Electronic Clearing House, Inc. provides a complete solution to the payment processing needs of merchants, banks and collection agencies. ECHO’s services include debit and credit card processing, check guarantee, check verification, check conversion, check re-presentment, check collection, and inventory tracking. Customers include over 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 re 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 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, the adequacy of the Company’s liquidity and financial strength to support its growth, and other information detailed from time to time in the Company’s filings with the United States Securities and Exchange Commission.

View Financial Tables (PDF Acrobat Document)

<---Download this free Version 5 of Acrobat Reader.

Investor Contacts:

Donna Rehman, Corporate Secretary 
Electronic Clearing House, Inc.
818-706-8999, ext. 3033 
Agoura Hills, Calif. 
E-MAIL: corp@ECHO-inc.com
URL: http://www.ECHO-inc.com

Crocker Coulson, Partner
Coffin Communications Group
818-789-0100
E-MAIL: crocker.coulson@coffincg.com

Press Releases are also available by calling (800) 233-0406 ext. 3033, or by email to corp@echo-inc.com

2001
2000

Electronic Clearing House, Inc. (ECHO)
28001 Dorothy Drive
Agoura Hills, CA 91301

Phone: (800) 233-0406
Fax: (818) 991-5973
E-Mail: echo@echo-inc.com
URL: http://www.echo-inc.com