8-K

UNITED STATES
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 2, 2007

HEARTLAND PAYMENT SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

Delaware	000-51265	22-3755714
(State or other jurisdiction of	(Commission File No)	(I.R.S. Employer
incorporation or organization)		Identification Number)

90 Nassau Street, Princeton, New Jersey 08542

(Address of principal executive offices) (Zip Code)

(609) 683-3831

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

EX-99.1: PRESS RELEASE

Item 2.02 Results of Operations and Financial Condition

The following information is furnished pursuant to Item 2.02, “Results of Operations and Financial Condition.”

On August 4, 2007, Heartland Payment Systems, Inc., a Delaware corporation (the “Company”), issued a press release announcing its financial results for the second quarter ended June 30, 2007. The information contained in this report, including Exhibit 99.1 attached hereto, 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, except as shall be expressly set forth by specific reference in such filing.

On August 2, 2007, the Company conducted a previously-scheduled conference call to discuss its results of operations for the second quarter ended June 30, 2007 and to answer any questions raised by the call’s audience.

Item 8.01 Other Events

Cash Dividend

On July 30, 2007, the board of directors of the Company declared a quarterly cash dividend of $0.075 per share of Company’s common stock, which will be payable on September 15, 2007 to stockholders of record as of August 24, 2007. The press release announcing the cash dividend is furnished as Exhibit 99.1 to this report.

Item 9.01 Financial Statements and Exhibits

(c) Exhibits

Exhibit
Number	Description
99.1	Press Release of the Company dated August 2, 2007

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.

Dated: August 2, 2007

	Heartland Payment Systems, Inc.
	(Registrant)
By:	/s/ Robert H. B. Baldwin, Jr.
	Robert H. B. Baldwin, Jr.
	Chief Financial Officer

EX-99.1

EXHIBIT 99.1

New Release

Heartland Payment Systems Announces 40% Increase in Second Quarter Net Income

Record Quarterly Earnings of $0.26 per Diluted Share
Operating Margin Reaches Record 21.5%

Quarterly Dividend Increased 50% to 7.5 Cents Per Share

Princeton, N.J., August 2, 2007 — Heartland Payment Systems, Inc. (NYSE: HPY), a leading provider of credit/debit/prepaid card processing, payroll and payment services, today announced that net income for the quarter ended June 30, 2007 increased 40% to a record $10.4 million from $7.4 million in the second quarter of 2006. For the second quarter of 2007, the Company reported record earnings of $0.26 per fully diluted share, an increase of 37% from $0.19 per fully diluted share in the year earlier period. Results were driven by an increase in the operating margin to a record 21.5%, a 210 basis point improvement from the comparable year earlier period. For the quarter, operating income rose 33% to $16.3 million from $12.3 million a year ago.

Robert Carr, Chairman and CEO, said, “Our strong financial performance this quarter was led by record operating margins as we are starting to see the results that are possible by leveraging our increasingly fixed cost processing and servicing platform across our growing transaction volume. For the quarter, 84% of new merchants installed and 73% of total transactions were on HPS Exchange, while our Passport back end processing system continues to provide consistent, reliable and cost effective performance. Refinements throughout our sales organization are yielding similar productivity and efficiency gains as both total and new card merchant installs were at record levels for the second consecutive quarter. Our payroll business also turned in another outstanding quarter with revenues increasing 63% from last year’s second quarter as the number of payroll merchants at June quarter end is up 57% from twelve months ago. We believe that our unique business model, a dedicated direct salesforce supported by advanced technology, can sustain industry-leading growth with outstanding financial performance.”

Total revenues in the second quarter of 2007 were $333.4 million, up 20% compared to $278.2 million in the second quarter of 2006. Processing volume for the three months ended June 30, 2007 increased 21% to $13.3 billion from $11.0 billion during the same period in 2006. The Company’s active total merchant count rose to 152,400 at June 30, 2007, a 19% increase over the past twelve months. Same store sales at our installed base rose 3.3% during the quarter and continue to make a meaningful contribution to the Company’s growing processing volumes.

Mr. Carr continued, “Heartland’s ‘Fair Deal’ philosophy remains the foundation on which the Company is built. As we continue to grow and strengthen that foundation, we are selectively investing in new capabilities that leverage our numerous competitive advantages to enhance our growth. This ability to carefully balance current performance with investments for the future is an important characteristic of Heartland that has enabled us to consistently create long-term shareholder value.”

SIX MONTH RESULTS

For the first six months of 2007, net income was $17.3 million or $0.43 per fully diluted share, increases of 46% and 43%, respectively, compared to net income of $11.8 million, or $0.30 per fully diluted share in the first half of 2006. Revenues for the first half of 2007 were $617.7 million, up 20% compared to $515.1 million for the first half of 2006.

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FULL YEAR 2007 GUIDANCE

The Company is reaffirming 2007 full year guidance. We expect net revenue (total revenues less interchange, dues and assessments) to grow by 21% — 23%; operating income as a percentage of net revenue to be 19% — 21%; a tax rate of approximately 37%; and earnings per share of $0.96 — $1.01.

BOARD DECLARES QUARTERLY DIVIDEND

The Company also declared a quarterly dividend of $0.075 per common share, an increase of 50% over the previous quarterly dividend. The dividend is payable to shareholders of record on August 24, 2007 and will be paid on September 15, 2007.

Conference Call

Heartland Payment Systems, Inc. will host a conference call on August 2, 2007 at 8:30AM Eastern Time to discuss financial results and business highlights. The conference call may be accessed by calling 973-935-8510 at 8:25AM Eastern time on August 2, 2007. Please provide the operator with PIN number 9016195. The conference call will also be webcast where it can be accessed on the investor relations portion of Heartland’s website at http://www.heartlandpaymentsystems.com.

A digital replay of the conference call will be available within two hours of the conclusion of the call and will remain available through Tuesday, October 2, 2007. The number to call for the taped replay is 973-341-3080 and the conference PIN 9016195. The webcast will also be archived within two hours of the live call on the investor relations portion of the Company’s website.

About Heartland Payment Systems

Heartland Payment Systems, Inc., a NYSE company trading under the symbol HPY, delivers credit/debit/prepaid card processing, payroll and payment solutions to more than 150,000 small and mid-sized businesses nationwide.

Heartland is the founding supporter of The Merchant Bill of Rights, a public advocacy initiative that educates merchants about fair credit and debit card processing practices. For more information, visit www.heartlandpaymentsystems.com and www.MerchantBillOfRights.com.

http://www.heartlandpaymentsystems.com

Forward-looking Statements:

This press release may contain statements of a forward-looking nature which represent our management’s beliefs and assumptions concerning future events. Forward-looking statements involve risks, uncertainties and assumptions and are based on information currently available to us. Actual results may differ materially from those expressed in the forward-looking statements due to many factors. Information concerning these factors is contained in the Company’s Securities and Exchange Commission filings, including but not limited to, the Company’s registration statement on Form 10- K, or Form 10-Q as applicable. We undertake no obligation to update any forward-looking statements to reflect events or circumstances that may arise after the date of this release.

CONTACT:
Joe Hassett or Paul Johnson
Gregory FCA
27 West Athens Ave.
Ardmore, PA 19003
Tel: 610-642-8253
Email: Heartland_ir@gregoryfca.com

Tables Follow

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Heartland Payment Systems, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
Total Revenues	$	333,445		$	278,198		$	617,657		$	515,117
Costs of Services:
Interchange		245,225			204,541			450,562			376,770
Dues and assessments		12,398			10,226			22,857			18,812
Processing and servicing		32,764			29,611			64,094			57,762
Customer acquisition costs		11,383			8,323			21,774			16,495
Depreciation and amortization		1,661			1,438			3,385			2,801
Total costs of services		303,431			254,139			562,672			472,640
General and administrative		13,735			11,781			28,034			23,790
Total expenses		317,166			265,920			590,706			496,430
Income from operations		16,279			12,278			26,951			18,687
Other income (expense):
Interest income		517			314			976			568
Interest expense		(233	)		(224	)		(345	)		(344	)
Other, net		5			17			(90	)		831
Total other income (expense)		289			107			541			1,055
Income before income taxes		16,568			12,385			27,492			19,742
Provision for income taxes		6,166			4,940			10,238			7,909
Net income	$	10,402		$	7,445		$	17,254		$	11,833
Net income	$	10,402		$	7,445		$	17,254		$	11,833
Other comprehensive income, net of tax:
Unrealized gains (losses) on investments		(7	)		1			(4	)		(2	)
Comprehensive income	$	10,395		$	7,446		$	17,250		$	11,831
Earnings per common share:
Basic	$	0.28		$	0.21		$	0.46		$	0.33
Diluted	$	0.26		$	0.19		$	0.43		$	0.30
Weighted average number of common shares outstanding:
Basic		37,653			36,201			37,580			35,667
Diluted		39,863			39,932			39,919			39,898

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Heartland Payment Systems, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(unaudited)

	June 30,			December 31,
	2007			2006
Assets
Current assets:
Cash and cash equivalents	$	27,290		$	16,054
Funds held for payroll customers		20,788			16,960
Receivables, net		118,496			107,154
Investments		2,244			1,082
Inventory		2,878			2,252
Prepaid expenses		2,741			2,030
Current tax asset		17,763			19,227
Current deferred tax assets, net		673			757
Total current assets		192,873			165,516
Capitalized customer acquisition costs, net		63,820			56,705
Deferred tax assets, net		4,557			4,562
Property and equipment, net		32,744			23,135
Goodwill and intangible assets		2,014			1,757
Deposits and other assets		102			93
Total assets	$	296,110		$	251,768
Liabilities and stockholders’ equity
Current liabilities:
Due to sponsor bank	$	52,538		$	27,253
Accounts payable		20,101			16,936
Deposits held for payroll customers		20,788			16,960
Current portion of accrued buyout liability		12,243			11,519
Merchant deposits and loss reserves		8,170			8,210
Accrued expenses and other liabilities		11,566			9,649
Current portion of borrowings and financing arrangements		28			174
Total current liabilities		125,434			90,701
Reserve for unrecognized tax benefits		990			—
Long-term portion of accrued buyout liability		23,554			21,774
Total liabilities		149,978			112,475
Commitments and contingencies		—			—
Stockholders’ equity
Common Stock, $.001 par value, 100,000,000 shares authorized, 39,133,454 and 38,488,880 shares issued at June 30, 2007 and December 31, 2006; 37,443,754 and 37,405,680 shares outstanding at June 30, 2007 and December 31, 2006		39			38
Additional paid-in capital		163,163			153,997
Accumulated other comprehensive loss		(25	)		(21	)
Retained earnings		23,787			10,804
Treasury stock, at cost (1,689,700 and 1,083,200 shares at June 30, 2007 and December 31, 2006)		(40,832	)		(25,525	)
Total stockholders’ equity		146,132			139,293
Total liabilities and stockholders’ equity	$	296,110		$	251,768

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Heartland Payment Systems, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flow
(In thousands)
(unaudited)

	Six Months Ended June 30,
	2007			2006
Cash flows from operating activities
Net income	$	17,254		$	11,833
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Amortization of capitalized customer acquisition costs		21,253			16,804
Other depreciation and amortization		4,254			3,563
Addition to loss reserves		1,122			700
Stock-based compensation		801			461
Deferred taxes		90			(101	)
Other		172			—
Changes in operating assets and liabilities:
Increase in receivables		(11,342	)		(6,095	)
Increase in inventory		(625	)		(673	)
Payment of signing bonuses, net		(21,639	)		(15,955	)
Increase in capitalized customer acquisition costs		(6,729	)		(8,392	)
(Increase) decrease in prepaid expenses		(711	)		425
Decrease in current tax asset		5,284			1,502
Decrease in deposits and other assets		(9	)		—
Excess tax benefits on options exercised under SFAS No. 123R		(3,820	)		(25,204	)
Increase in reserve for unrecognized tax benefits		476			—
Increase in due to sponsor bank		25,284			2,853
Increase (decrease) in accounts payable		3,165			(893	)
Increase in accrued expenses and other liabilities		1,917			3,738
Decrease in merchant deposits and loss reserves		(1,161	)		(1,499	)
Payouts of accrued buyout liability		(4,746	)		(6,144	)
Increase in accrued buyout liability		7,250			8,083
Net cash provided by (used in) operating activities		37,540			(14,994	)
Cash flows from investing activities
Purchase of investments		(1,330	)		(976	)
Maturities of investments		265			563
Increase in funds held for payroll customers		(3,930	)		(2,836	)
Increase in deposits held for payroll customers		3,828			2,738
Acquisition of business, net of cash acquired		(300	)		(3,453	)
Purchases of property and equipment		(13,993	)		(6,254	)
Net cash used in investing activities		(15,460	)		(10,218	)
Cash flows from financing activities
Principal payments on borrowings and financing arrangements		(146	)		(112	)
Proceeds from exercise of stock options		4,546			20,604
Excess tax benefits on options exercised under SFAS No. 123R		3,820			25,204
Repurchase of common stock		(15,307	)		(20,176	)
Dividends paid on common stock		(3,757	)		—
Net cash (used in) provided by financing activities		(10,844	)		25,520
Net increase in cash and cash equivalents		11,236			308
Cash and cash equivalents at beginning of year		16,054			8,724
Cash and cash equivalents at end of period	$	27,290		$	9,032

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