ECHO Press Releases

FOR IMMEDIATE RELEASE

ELECTRONIC CLEARING HOUSE, Inc. (ECHO) Announces First Quarter FY 2003 Results

Agoura Hills, Calif., February 10, 2003 - Electronic Clearing House, Inc. (NASDAQ:ECHO) reported revenue of $9,301,000 in the first quarter of fiscal 2003, an increase of 17.4% as compared to $7,921,000 in the prior year quarter. 

Operating income rose to $527,000, as compared to an operating loss of $76,000 in the first quarter of 2002. This increase was mainly attributable to a decrease in legal and professional fees, which resulted from the litigation last year, and elimination of $125,000 amortization expense due to the adoption of FASB No. 142, "Goodwill and Other Intangible Assets." 

The Company reported a net income before effect of an accounting change of $234,000, or $0.04 per share, in the quarter, as compared to a net loss of $93,000, or $0.02 per share in the first quarter of fiscal 2002. During the quarter ended December 31, 2002, ECHO recorded a one-time, non-cash goodwill impairment charge of $4,707,000 resulting from the implementation of FASB Statement No. 142. Net loss for the quarter including the cumulative effect of the accounting change was $4,473,000, or $0.77 per diluted share. 

"We are extremely pleased to report solid revenue growth and a return to operating profitability in our first fiscal quarter," said Joel M. Barry, Chairman and CEO of Electronic Clearing House, Inc. "In spite of the unstable economic environment, ECHO continued to experience strong demand for its products and services. Following a period of extensive development and beta testing, the Visa POS Check Program is now moving into active roll out. Today, ECHO is providing critical infrastructure to major financial institutions for the Visa program. 

"In January 2003, we partnered with TouchNet Information Systems, Inc. to introduce the Visa POS Check Service program to its customers in the higher education market. ECHO will continue to aggressively pursue new partnership opportunities and customers who can benefit from our programs by enhancing their competitive advantage and increasing the efficiency, convenience and security of accepting checks as a form of payment." 

Total processing and transaction revenue for this fiscal quarter increased 16.8%, from $7,846,000 in fiscal 2002 to $9,162,000 in fiscal 2003. 

Bankcard processing and transaction revenue increased 14.0% to $7,519,000 for this fiscal quarter, from $6,595,000 in the first fiscal quarter 2002. This increase was mainly attributable to merchant growth generated from the Company's various marketing initiatives. 

Check-related revenues increased 34.4% to $1,782,000, from $1,326,000 for the three months ended December 31, 2001. This increase was primarily due to the growing acceptance of the Company's check services. 

"The Company generated $1,114,000 of cash from operating activities in the first fiscal quarter, an increase of 126.9% as compared to $491,000 in the prior year quarter," continued Mr. Barry. "ECHO's balance sheet continues to be strong, with $2,849,000 in cash and cash equivalents, $3,225,000 in working capital and $9,065,000 in stockholders' equity as of December 31, 2002. 

"Based on current trends and the progress we have made in introducing new services, we expect solid growth over the course of fiscal 2003," concluded Mr. Barry. 

Electronic Clearing House, Inc. (www.echo-inc.com) 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. 

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.

                    ELECTRONIC CLEARING HOUSE, INC.
                      CONSOLIDATED BALANCE SHEETS
                              (Unaudited)

                                ASSETS

                                          December 31,  September 30,
                                             2002           2002

Current assets:
   Cash and cash equivalents              $2,849,000     $ 2,409,000
   Restricted cash                           958,000         906,000
   Accounts receivable less allowance
    of $520,000 and $431,000               1,859,000       1,744,000
   Inventory                                 232,000         234,000
   Prepaid expenses and other assets         208,000         169,000
   Deferred tax asset                         84,000         266,000
      Total current assets                 6,190,000       5,728,000

Noncurrent assets:
   Property and equipment, net             5,234,000       5,101,000
   Deferred tax asset                      1,951,000       2,018,000
   Other assets less accumulated
    amortization of $270,000 and $259,000    674,000         637,000
   Goodwill, net                                 -0-       4,707,000
      Total assets                       $14,049,000     $18,191,000

                 LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Short-term borrowings and current
    portion of long-term debt            $   518,000     $   515,000
   Accounts payable                           93,000         201,000
   Settlement payable to merchants         1,142,000         729,000
   Accrued expenses                        1,212,000         987,000
   Deferred income                               -0-          62,000
      Total current liabilities            2,965,000       2,494,000
Long-term debt                             2,019,000       2,159,000
      Total liabilities                    4,984,000       4,653,000

Commitments and contingencies

Stockholders' equity:
   Common stock, $.01 par value,
    36,000,000 authorized; 5,835,331
    shares issued; 5,796,062 shares
    outstanding                               58,000          58,000
   Additional paid-in capital             21,435,000      21,435,000
   Accumulated deficit                   (11,959,000)     (7,486,000)
   Less treasury stock at cost,
    39,269 common shares                    (469,000)       (469,000)
      Total stockholders' equity           9,065,000      13,538,000

      Total liabilities and stockholders'
       equity                            $14,049,000     $18,191,000


                    ELECTRONIC CLEARING HOUSE, INC.
                 CONSOLIDATED STATEMENTS OF OPERATIONS
                              (Unaudited)

                                                     Three Months
                                                   Ended December 31,
                                                   2002         2001
Revenues:
  Processing revenue                           $4,747,000  $3,807,000
  Transaction revenue                           4,415,000   4,039,000
  Terminal sales                                   32,000      75,000
  Other revenue                                   107,000         -0-
                                                9,301,000   7,921,000
Costs and expenses:
  Processing and transaction expense            6,189,000   5,049,000
  Cost of terminals sold                           21,000      32,000
  Other operating costs                           721,000     672,000
  Research and development expense                371,000     377,000
  Selling, general and administrative expenses  1,472,000   1,742,000
  Amortization expense - goodwill                     -0-     125,000
                                                8,774,000   7,997,000

Income (loss) from operations                     527,000     (76,000)
Interest income                                     8,000      22,000
Interest expense                                  (52,000)    (14,000)

Income (loss) before provision for income tax
 and cumulative effect of an accounting change    483,000     (68,000)

Provision for income taxes                       (249,000)    (25,000)
Income (loss) before cumulative effect of an
 accounting change                                234,000     (93,000)

Cumulative effect of an accounting change to
 adopt SFAS 142                                (4,707,000)         -0-
Net loss                                       (4,473,000)    (93,000)

Basic net earnings (loss) per share
  Before cumulative effect of accounting change  $  0.04      $ (0.02)
  Cumulative effect of accounting change           (0.81)         -0-
  Basic net loss per share                       $ (0.77)     $ (0.02)

Diluted net earnings (loss) per share
  Before cumulative effect of accounting change  $ (0.04)     $ (0.02)
  Cumulative effect of accounting change           (0.81)         -0-
  Diluted net loss per share                     $ (0.77)     $ (0.02)

Weighted average shares outstanding
  Basic                                        5,796,062    5,769,933
  Diluted                                      5,809,309    5,769,933


                    ELECTRONIC CLEARING HOUSE, INC.
                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (Unaudited)

                                                Three Months Ended
                                                    December 31,
                                                2002           2001

Cash flows from operating activities:
  Net loss                                $(4,473,000)      $(93,000)
  Adjustments to reconcile net loss to
   net cash provided by operating
   activities:
  Depreciation                                164,000        149,000
  Amortization of software                    203,000        107,000
  Amortization of goodwill                        -0-        128,000
  Provisions for losses on accounts and
   notes receivable                            94,000        153,000
  Deferred income taxes                       249,000         20,000
  Cumulative effect of an accounting
   change                                   4,707,000            -0-
Changes in assets and liabilities:
  Restricted cash                             (52,000)       106,000
  Accounts receivable                        (209,000)       (63,000)
  Inventory                                     2,000         13,000
  Accounts payable                           (108,000)        34,000
  Settlement payable to merchants             413,000         77,000
  Deferred income                             (62,000)           -0-
  Accrued expenses                            225,000       (100,000)
  Prepaid expenses                            (39,000)       (40,000)

   Net cash provided by operating
    activities                              1,114,000        491,000

Cash flows from investing activities:
  Other assets                                (48,000)        (9,000)
  Purchase of equipment and software         (458,000)      (391,000)
  Net cash used in investing activities      (506,000)      (400,000)
Cash flows from financing activities:
  Repayment of notes payable                  (43,000)       (34,000)
  Repayment of capitalized leases            (125,000)       (50,000)
  Proceeds from exercise of stock options         -0-         11,000
  Net cash used in financing activities      (168,000)       (73,000)

   Net increase in cash                       440,000         18,000

  Cash and cash equivalents at beginning
   of period                                2,409,000      4,147,000

   Cash and cash equivalents at end of
    period                                 $2,849,000     $4,165,000

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

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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