-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BtK7OiqWJBvdc15wuOOYP79qJxe6psrD+ZiJkJya7i3hAuqfSgtN7t6xvU/yfpRg vARndw+RQ+55AM+NSeKySQ== 0001015402-04-003285.txt : 20040811 0001015402-04-003285.hdr.sgml : 20040811 20040811161614 ACCESSION NUMBER: 0001015402-04-003285 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040811 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ELECTRONIC CLEARING HOUSE INC CENTRAL INDEX KEY: 0000721773 STANDARD INDUSTRIAL CLASSIFICATION: FUNCTIONS RELATED TO DEPOSITORY BANKING, NEC [6099] IRS NUMBER: 930946274 STATE OF INCORPORATION: NV FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-15245 FILM NUMBER: 04967341 BUSINESS ADDRESS: STREET 1: 28001 DOROTHY DR CITY: AGOURA HILLS STATE: CA ZIP: 91301-2697 BUSINESS PHONE: 8187068999 MAIL ADDRESS: STREET 1: 28001 DOROTHY DRIVE CITY: AGOURA HILLS STATE: CA ZIP: 91301 FORMER COMPANY: FORMER CONFORMED NAME: BIO RECOVERY TECHNOLOGY INC DATE OF NAME CHANGE: 19860122 8-K 1 doc1.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): August 11, 2004 ELECTRONIC CLEARING HOUSE, INC. ------------------------------- (Exact name of registrant as specified in its charter) Nevada 0-15245 93-0946274 (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 730 Paseo Camarillo, Camarillo, California 93010 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (800) 233-0406 - -------------------------------------------------------------------------------- (Former name or former address, if changes since last report) ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits 99.1 Press Release dated August 11, 2004, announcing financial results for the quarter ended June 30, 2004. ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. On August 11, 2004, Electronic Clearing House, Inc. issued a press release announcing its financial results for the quarter ended June 30, 2004. A copy of the press release is being furnished as Exhibit 99.1 to this report and is incorporated herein by reference. The information in this report shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in such a filing. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ELECTRONIC CLEARING HOUSE, INC. (Registrant) By: \s\Alice Cheung ------------------------------ Alice L. Cheung, Treasurer & Chief Financial Officer Dated: August 11, 2004 EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION OF DOCUMENT - ------ ----------------------- 99.1 Press Release dated August 11, 2004, announcing financial results for the quarter ended June 30, 2004 EX-99.1 2 doc2.txt EXHIBIT 99.1 ECHO ELECTRONIC CLEARING HOUSE, INC. FOR IMMEDIATE RELEASE - --------------------- ELECTRONIC CLEARING HOUSE, INC. (ECHO) ANNOUNCES THIRD QUARTER FY 2004 RESULTS - TOTAL REVENUE INCREASES 14.9% TO $12.2 MILLION - OPERATING INCOME RISES 91.8% TO $1.1 MILLION CAMARILLO, CALIF., AUGUST 11, 2004 - Electronic Clearing House, Inc. (NASDAQ: ECHO), a leading provider of electronic payment and transaction processing services, today reported financial and operating results for the third fiscal quarter ended June 30, 2004. THIRD QUARTER HIGHLIGHTS: Financial highlights for the third quarter of 2004, as compared to the same period last year, were as follows: - Total revenue increased 14.9% to $12.2 million - Check-related revenue increased 44.3% to $2.8 million, or 23.3% of total revenue - Bankcard and transaction processing revenue increased 8.2% to $9.3 million - ACH transactions processed jumped 98.7% to 6 million transactions - Gross margin from processing and transaction revenue improved to 37.1% from 32.2% in Q3 FY 2003 - Operating income rose to $1.1 million, up from $0.6 million in Q3 FY 2003 - Diluted earnings per share increased to $0.09 from $0.05 in Q3 FY 2003 "We are pleased to report another quarter of solid revenue growth and improving profitability, driven by organic growth in our bankcard processing business and the increasing contribution of our higher margin check services to our overall results," said Joel M. Barry, Chairman and CEO of Electronic Clearing House, Inc. "During the third quarter, we continued to focus on growing our check services by training Visa member banks' sales teams and associates on the Visa POS Check program's numerous merchant benefits. We have now successfully rolled out the program at Cole National Corporation's Pearle Vision and Things Remembered chains, with a total of 1,200 locations running on the system. Discussions and bidding activity with prospective customers, including a number of national retail chains, picked up significantly during the third quarter. We continue to build strategic relationships with other service providers in related industries to quicken our check services time to market via our current distribution channels. We also continue to make progress in rolling out our MerchantAmerica Agent Bank program, with more than 20 banks enrolled in this program in the past year," said Mr. Barry. Total revenue for the third quarter of fiscal 2004 was a record $12,152,000, an increase of 14.9%, as compared to $10,578,000 in the prior year quarter. Bankcard processing and transaction revenue increased 8.2% to $9,315,000 in the third quarter of fiscal 2004 from $8,612,000 in the prior year quarter. This increase was primarily attributable to the Company's continuous organic growth in bankcard processing volume from existing merchants and new merchants generated as a result of other marketing programs. Check-related revenues increased 44.3% to $2,837,000 for the three months ended June 30, 2004, compared with $1,966,000 in the prior year quarter. This was primarily due to an increase in ACH processing revenue, which increased as a result of a 98.7% increase in total ACH transactions processed, 6 million transactions in the quarter ended June 30, 2004, as compared to 3 million in the prior year quarter, an increase of check conversion revenue as a result of growing acceptance of ECHO's Visa POS Check Service program, and increased verification revenue. The Company reported net income of $651,000, or $0.09 per fully diluted share, in the third quarter of fiscal 2004, as compared to $308,000, or $0.05 per fully diluted share, in the same period last year. Third quarter results were favorably affected by revenue growth in all business segments and a decrease in interest expense due to the repayment of loans associated with the sale of the building formerly housing ECHO's executive offices in March 2004. Gross margin from processing and transaction revenue rose to $4,484,000 from $3,391,000 in the prior year quarter. This translated to a gross margin of 37.1% in the third quarter of fiscal 2004, up from 32.2% in the year-ago quarter and up from 36.2% in the prior quarter (Q2 2004). The gross margins improved from the prior quarter as a result of an interchange fee increase implemented by the card associations in February 2004 that ECHO began passing to its merchants in April 2004. Other operating costs as a percentage of total revenue increased to 10.2%, from 9.9% in the third quarter of fiscal 2003. ECHO continued to invest in personnel costs to support the implementation and training of the various financial institutions that have chosen the Company as their Third-Party Processor under the Visa POS Check program. Additionally, the cost of customer support increased substantially over the prior year period due to significantly higher volumes of checks processed. Selling, general and administrative expenses were 15.5% of total revenue in the third quarter of fiscal 2004, compared with 13.8% in the third quarter of fiscal 2003. This was primarily attributable to an increase in personnel costs and employee benefits, increases in sales and marketing expenses, and an increase in rent expense due to ECHO's new corporate relocation in October 2003. Operating income rose to $1,082,000, or 8.9% of revenues in the third quarter of 2004, from $564,000, or 5.3% of revenues in the year-ago quarter. The improvement can be primarily attributed to strong revenue growth and expansion in the gross profit margin over the prior year quarter. The Company generated $9,045,000 of cash from operating activities in the nine months ended June 30, 2004, as compared to $5,366,000 cash provided by operating activities in the same period last year. A significant portion of this cash increase was attributable to a $5,110,000 net increase in settlement receivable/payable to merchants. Mr. Barry observed that, "ECHO's balance sheet is very solid, with $15,316,000 in cash and cash equivalents, $7,772,000 in working capital, only $888,000 in long-term debt, and $15,664,000 in stockholders' equity as of June 30, 2004. This strong financial condition provides us with the flexibility to support strategic growth initiatives in our check services business." BUSINESS OUTLOOK For the fiscal year 2004, the Company tightened its guidance on revenue growth to 16-20% and confirming gross margin guidance of 36-38%, and income from operations of 7-9%. CONFERENCE CALL The Company will host a conference call at 1:30 p.m. PDT (4:30 p.m. EDT) today to discuss third quarter 2004 results. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: (800) 399-7496. International callers should dial (706) 634-6508. There is no pass code required for this call. This conference call will be broadcast live over the Internet and can be accessed by all interested parties on the Investor Relations section of ECHO's website at www.echo-inc.com. ---------------- ABOUT ELECTRONIC CLEARING HOUSE, INC. (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, and check collection. For more information about ECHO, please visit www.echo-inc.com. ---------------- 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. Examples of forward-looking statements in this press release include, but are not limited to, our belief that our check services program and continued results in bankcard and transaction processing will drive continued double digit revenue growth and improving gross margins, as well as our specific financial guidance for the full fiscal year 2004. 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. - FINANCIAL TABLES FOLLOW -
ELECTRONIC CLEARING HOUSE, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) ASSETS JUNE 30, SEPTEMBER 30, 2004 2003 ------------- --------------- Current assets: Cash and cash equivalents $ 15,316,000 $ 5,641,000 Restricted cash 1,042,000 977,000 Settlement receivable 498,000 717,000 Accounts receivable less allowance of $157,000 and $91,000 1,916,000 1,918,000 Prepaid expenses and other assets 289,000 307,000 Deferred tax asset -0- 86,000 ------------- --------------- Total current assets 19,061,000 9,646,000 Noncurrent assets: Property and equipment, net 2,135,000 2,928,000 Software, net 6,261,000 4,445,000 Deferred tax asset -0- 1,256,000 Other assets, net 384,000 500,000 ------------- --------------- Total assets $ 27,841,000 $ 18,775,000 ============= =============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term borrowings and current portion of long-term debt $ 919,000 $ 901,000 Accounts payable 324,000 779,000 Settlement payable 8,320,000 3,429,000 Accrued expenses 1,487,000 1,336,000 Deferred income 20,000 -0- Deferred tax liability 219,000 -0- ------------- --------------- Total current liabilities 11,289,000 6,445,000 Long-term debt 888,000 1,961,000 ------------- --------------- Total liabilities 12,177,000 8,406,000 ------------- --------------- Commitments and contingencies Stockholders' equity: Common stock, $0.01 par value, 36,000,000 authorized: 6,408,081 and 5,920,174 shares issued; 6,369,812 and 5,881,905 shares outstanding 64,000 59,000 Additional paid-in capital 24,485,000 21,641,000 Accumulated deficit (8,419,000) (10,865,000) Less treasury stock at cost, 39,269 common shares (466,000) (466,000) ------------- --------------- Total stockholders' equity 15,664,000 10,369,000 ------------- --------------- Total liabilities and stockholders' equity $ 27,841,000 $ 18,775,000 ============= ===============
ELECTRONIC CLEARING HOUSE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) THREE MONTHS NINE MONTHS ENDED JUNE 30, ENDED JUNE 30, -------------------------- -------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Revenues: Processing revenue $ 6,217,000 $ 5,673,000 $18,152,000 $15,559,000 Transaction revenue 5,854,000 4,853,000 16,914,000 13,837,000 Other revenue 81,000 52,000 207,000 250,000 ------------ ------------ ------------ ------------ 12,152,000 10,578,000 35,273,000 29,646,000 ------------ ------------ ------------ ------------ Costs and expenses: Processing and transaction expense 7,587,000 7,135,000 21,945,000 19,809,000 Other operating costs 1,240,000 1,047,000 3,903,000 3,049,000 Research and development expense 363,000 375,000 1,090,000 1,101,000 Selling, general and administrative expenses 1,880,000 1,457,000 5,534,000 4,131,000 ------------ ------------ ------------ ------------ 11,070,000 10,014,000 32,472,000 28,090,000 ------------ ------------ ------------ ------------ Income from operations 1,082,000 564,000 2,801,000 1,556,000 Interest income 19,000 6,000 49,000 21,000 Interest expense (31,000) (51,000) (146,000) (150,000) Gain on sale of building -0- -0- 1,319,000 -0- ------------ ------------ ------------ ------------ Income before provision for income tax and cumulative effect of an accounting change 1,070,000 519,000 4,023,000 1,427,000 Provision for income taxes (419,000) (211,000) (1,577,000) (617,000) ------------ ------------ ------------ ------------ Income before cumulative effect of an accounting change 651,000 308,000 2,446,000 810,000 Cumulative effect of an accounting change to adopt SFAS 142 -0- -0- -0- (4,707,000) ------------ ------------ ------------ ------------ Net earnings (loss) $ 651,000 $ 308,000 $ 2,446,000 $(3,897,000) ============ ============ ============ ============ Basic net earnings (loss) per share Before cumulative effect of accounting change $ 0.10 $ 0.05 $ 0.39 $ 0.14 Cumulative effect of accounting change -0- -0- -0- (0.81) ------------ ------------ ------------ ------------ Basic net earnings (loss) per share $ 0.10 $ 0.05 $ 0.39 $ (0.67) ============ ============ ============ ============ Diluted net earnings (loss) per share Before cumulative effect of accounting change $ 0.09 $ 0.05 $ 0.35 $ 0.14 Cumulative effect of accounting change -0- -0- -0- (0.80) ------------ ------------ ------------ ------------ Diluted net earnings (loss) per share $ 0.09 $ 0.05 $ 0.35 $ (0.66) ============ ============ ============ ============ Weighted average shares outstanding Basic 6,347,919 5,810,787 6,289,843 5,802,802 ============ ============ ============ ============ Diluted 6,977,897 6,039,990 6,890,389 5,917,532 ============ ============ ============ ============
ELECTRONIC CLEARING HOUSE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) NINE MONTHS ENDED JUNE 30, -------------------------- 2004 2003 ------------ ------------ Cash flows from operating activities: Net income (loss) $ 2,446,000 $(3,897,000) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Gain on sale of building (1,319,000) -0- Depreciation 446,000 498,000 Amortization of software 1,061,000 649,000 Provision for losses on accounts and notes receivable 84,000 45,000 Fair value of stock issued in connection with directors' compensation -0- 21,000 Deferred income taxes 1,561,000 571,000 Stock option compensation 25,000 20,000 Cumulative effect of an accounting change -0- 4,707,000 Changes in assets and liabilities: Restricted cash (65,000) (206,000) Accounts receivable (82,000) (340,000) Settlement receivable 219,000 (559,000) Accounts payable (455,000) (90,000) Settlement payable 4,891,000 3,761,000 Deferred income 20,000 -0- Accrued expenses 145,000 304,000 Prepaid expenses 68,000 (118,000) ------------ ------------ Net cash provided by operating activities 9,045,000 5,366,000 ------------ ------------ Cash flows from investing activities: Other assets 17,000 74,000 Purchase of equipment (398,000) (139,000) Proceed from sale of building 2,233,000 -0- Purchased and capitalized software (2,554,000) (1,990,000) ------------ ------------ Net cash used in investing activities (702,000) (2,055,000) ------------ ------------ Cash flows from financing activities: Proceeds from issuance of notes payable 811,000 292,000 Repayment of notes payable (1,827,000) (133,000) Repayment of capitalized leases (476,000) (339,000) Proceeds from private placement 2,693,000 -0- Proceeds from exercise of stock options 131,000 23,000 ------------ ------------ Net cash provided by (used in) financing activities 1,332,000 (157,000) ------------ ------------ Net increase in cash 9,675,000 3,154,000 Cash and cash equivalents at beginning of period 5,641,000 2,409,000 ------------ ------------ Cash and cash equivalents at end of period $15,316,000 $ 5,563,000 ============ ============
CONTACT: - ------- Donna Rehman, Corporate Secretary Crocker Coulson, Partner (800) 262-3246, ext. 8533 CCG Investor Relations Electronic Clearing House, Inc. 818-789-0100 Camarillo, CA E-MAIL: crocker.coulson@ccgir.com ------------------------- URL:http://www.echo-inc.com - --------------------------- E-MAIL:corp@echo-inc.com ----------------- # # # -----END PRIVACY-ENHANCED MESSAGE-----