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) November 1, 2007

HEARTLAND PAYMENT SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

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

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

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

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

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

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 November 1, 2007, Heartland Payment Systems, Inc., a Delaware corporation (the “Company”), issued a press release announcing its financial results for the third quarter ended September 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 November 1, 2007, the Company conducted a previously-scheduled conference call to discuss its results of operations for the third quarter ended September 30, 2007 and to answer any questions raised by the call’s audience.

Item 8.01 Other Events

Cash Dividend

On October 31, 2007, the board of directors of the Company declared a quarterly cash dividend of $0.075 per share of the Company’s common stock, which will be payable on December 15, 2007 to stockholders of record as of November 23, 2007. The press release announcing the cash dividend is furnished as Exhibit 99.1 to this report.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit Number	Description
99.1	Press Release of the Company dated November 1, 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: November 1, 2007
	Heartland Payment Systems, Inc.
	(Registrant)
	By:	/s/ Robert H.B. Baldwin, Jr.
		Robert H.B. Baldwin, Jr.
		President and Chief Financial Officer

EX-99.1

EXHIBIT 99.1

FOR IMMEDIATE RELEASE

HEARTLAND PAYMENT SYSTEMS ANNOUNCES RECORD EARNINGS FOR THE THIRD QUARTER

Earnings per Share Rise 20%

Operating Income up 35% as Operating Margin Widens to Record 24%

Princeton, N.J. — November 1, 2007 — Heartland Payment Systems, Inc. (NYSE: HPY), a leading provider of credit/debit/prepaid card processing, payroll and payment services, today announced record earnings, with fully diluted earnings per share for the quarter ended September 30, 2007 rising 20% to $0.30 from $0.25 in the year earlier period. Operating income in the quarter rose 35% as the operating margin expanded to 24.0% from 21.4% in the third quarter of 2006. Net income for the quarter, on a GAAP basis, increased 16% to $11.8 million and includes a $0.8 million pre-tax charge related to indemnification of an insurer. Excluding that legal charge, net income would have been $12.3 million and diluted earnings per share would have been $0.31, increases of 21% and 24%, respectively, compared to the third quarter of 2006. The effective tax rate for the third quarter of 2007 was 37.3%, while the effective tax rate for the third quarter of 2006 was 29.6%, reflecting an adjustment to the company’s state tax rates.

Robert Carr, Chairman and CEO, said, “Record earnings this quarter were driven by widening operating margins, which improved to a record 24.0%. In the third quarter, we continued to leverage our efficient end-to-end processing and servicing infrastructure as 86% of new merchants installed and 76% of total transactions were on HPS Exchange, and we continue to benefit from our integrated back end processing platform. During the quarter, our growth initiatives helped us achieve a new quarterly record for the value of new annual margin installed, and kept us on pace for a record number of 2007 new merchant installations. By building and strengthening the products we can offer our Main Street merchants, we expect to gain market share and sustain our track record of better than industry growth.”

Total revenues in the third quarter were $354.6 million, up 20.6% compared to $293.9 million in the third quarter of 2006, and our net revenue increased 19.8%, from $67.4 million to $80.7 million. Processing volume for the three months ended September 30, 2007 increased 20% to $14.1 billion from $11.7 billion during the same period in 2006. The Company’s total active merchant count rose to 158,000 at September 30, 2007, a 19% increase over the past twelve months. Same store sales at our installed base rose 3.6% during the quarter and continue to contribute to the Company’s growing processing volumes.

Mr. Carr continued, “Our strong cash flows are supporting a wide range of investments to strengthen the Heartland franchise within the small and mid-sized merchant community and to enhance shareholder value. To address growth opportunities, we are introducing innovative new solutions, expanding the range of merchants we can serve, and accelerating our penetration of attractive new verticals both organically as well as through selective acquisitions. These investments are being balanced with share repurchases and dividends to optimize value for our shareholders.”

NINE MONTH RESULTS

For the first nine months of 2007, revenues were $972.3 million, up 20% compared to $809.0 million for the first nine

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months of fiscal 2006, and net revenue grew by 20.3%, from $186.9 million to $224.9 million. Net income for the first nine months of 2007 was $29.0 million or $0.73 per fully diluted share, increases of 32% and 33%, respectively, compared to net income of $22.0 million, or $0.55 per fully diluted share, for the first nine months of 2006.

FULL YEAR 2007 GUIDANCE

The Company is raising the bottom end and narrowing the range of expected 2007 full year earnings per share and transitioning its guidance to a GAAP basis to conform with prevailing analyst preferences. On a GAAP basis, the Company now expects 2007 full year earnings to be between $0.99 -$1.01, per fully diluted share, which is equivalent to $1.03 - $1.05 on the previous basis. The Company is also now expecting net revenue (total revenues less interchange, dues and assessments) to grow by approximately 21% and operating income as a percentage of net revenue to be approximately 21%, both for the full year 2007. The expected tax rate remains approximately 37% for the full year.

BOARD DECLARES QUARTERLY DIVIDEND

The Company also declared a quarterly dividend of $0.075 per common share. The dividend is payable to shareholders of record on November 23, 2007 and will be paid on December 15, 2007.

Conference Call

Heartland Payment Systems, Inc. will host a conference call on Thursday, November 1, 2007 at 8:30 a.m. Eastern Time to discuss financial results and business highlights. The conference call may be accessed by calling 973-582-2857 at 8:25 AM Eastern time on November 1, 2007. Please provide the operator with PIN number 9358160. The conference call will also be Web cast where it can be accessed on the investor relations portion of Heartland’s website at 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, January 1, 2008. The number to call for the taped replay is 973-341-3080 and the conference PIN 9358160. 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 158,000 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.

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.

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CONTACT:

Joe Hassett

Gregory FCA Communications

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 September 30,						Nine Months Ended September 30,
	2007			2006			2007			2006
Total Revenues	$	354,615		$	293,930		$	972,272		$	809,047
Costs of Services:
Interchange		260,876			215,656			711,438			592,426
Dues and assessments		13,061			10,920			35,918			29,732
Processing and servicing		35,638			30,894			99,732			88,656
Customer acquisition costs		11,557			8,774			33,331			25,269
Depreciation and amortization		1,642			1,602			5,027			4,403
Total costs of services		322,774			267,846			885,446			740,486
General and administrative		12,493			11,699			40,527			35,489
Total expenses		335,267			279,545			925,973			775,975
Income from operations		19,348			14,385			46,299			33,072
Other income (expense):
Interest income		474			291			1,450			859
Interest expense		(242	)		(264	)		(587	)		(608	)
Other, net		(781	)		—			(871	)		831
Total other income (expense)		(549	)		27			(8	)		1,082
Income before income taxes		18,799			14,412			46,291			34,154
Provision for income taxes		7,014			4,273			17,252			12,182
Net income	$	11,785		$	10,139		$	29,039		$	21,972
Net income	$	11,785		$	10,139		$	29,039		$	21,972
Other comprehensive income, net of tax:
Unrealized (losses) gains on investments		(14	)		9			(18	)		7
Comprehensive income	$	11,771		$	10,148		$	29,021		$	21,979
Earnings per common share:
Basic	$	0.31		$	0.27		$	0.77		$	0.61
Diluted	$	0.30		$	0.25		$	0.73		$	0.55
Weighted average number of common shares outstanding:
Basic		37,615			36,939			37,592			36,096
Diluted		39,714			39,955			39,837			39,921

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Heartland Payment Systems, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except share data)

(unaudited)

	September 30, 2007			December 31, 2006
Assets
Current assets:
Cash and cash equivalents	$	37,739		$	16,054
Funds held for payroll customers		18,803			16,960
Receivables, net		113,609			107,154
Investments		2,756			1,082
Inventory		2,932			2,252
Prepaid expenses		2,815			2,030
Current tax asset		7,805			19,227
Current deferred tax assets, net		685			757
Total current assets		187,144			165,516
Capitalized customer acquisition costs, net		67,202			56,705
Deferred tax assets, net		4,935			4,562
Property and equipment, net		42,330			23,135
Goodwill and intangible assets		2,004			1,757
Deposits and other assets		98			93
Total assets	$	303,713		$	251,768
Liabilities and stockholders’ equity
Current liabilities:
Due to sponsor bank	$	39,848		$	27,253
Accounts payable		20,138			16,936
Deposits held for payroll customers		18,803			16,960
Current portion of accrued buyout liability		12,749			11,519
Merchant deposits and loss reserves		11,709			8,210
Accrued expenses and other liabilities		13,643			9,649
Current portion of borrowings and financing arrangements		—			174
Total current liabilities		116,890			90,701
Reserve for unrecognized tax benefits		1,142			—
Long-term portion of accrued buyout liability		25,196			21,774
Total liabilities		143,228			112,475
Commitments and contingencies		—			—
Stockholders’ equity
Common Stock, $.001 par value, 100,000,000 shares authorized, 39,615,672 and 38,488,880 shares issued at September 30, 2007 and December 31, 2006; 37,875,972 and 37,405,680 shares outstanding at September 30, 2007 and December 31, 2006		40			38
Additional paid-in capital		170,056			153,997
Accumulated other comprehensive loss		(39	)		(21	)
Retained earnings		32,747			10,804
Treasury stock, at cost, 1,739,700 and 1,083,200 shares at September 30, 2007 and December 31, 2006		(42,319	)		(25,525	)
Total stockholders’ equity		160,485			139,293
Total liabilities and stockholders’ equity	$	303,713		$	251,768

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Heartland Payment Systems, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flow

(In thousands)

(unaudited)

	Nine Months Ended September 30,
	2007			2006
Cash flows from operating activities
Net income	$	29,039		$	21,972
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Amortization of capitalized customer acquisition costs		33,128			25,758
Other depreciation and amortization		6,322			5,537
Addition to loss reserves		1,833			1,068
Stock-based compensation		1,282			764
Deferred taxes		(300	)		104
Other		172			—
Changes in operating assets and liabilities:
Increase in receivables		(6,455	)		(3,500	)
Increase in inventory		(680	)		(546	)
Payment of signing bonuses, net		(32,943	)		(23,934	)
Increase in capitalized customer acquisition costs		(10,682	)		(12,235	)
(Increase) decrease in prepaid expenses		(784	)		544
Decrease in current tax asset		18,151			5,477
Increase in deposits and other assets		(4	)		(3	)
Excess tax benefits on options exercised under SFAS No. 123R		(6,729	)		(27,661	)
Increase in reserve for unrecognized tax benefits		628			—
Increase (decrease) in due to sponsor bank		12,595			(6,081	)
Increase (decrease) in accounts payable		3,201			(585	)
Increase in accrued expenses and other liabilities		3,993			2,178
Increase (decrease) in merchant deposits and loss reserves		1,666			(4,004	)
Payouts of accrued buyout liability		(6,234	)		(7,983	)
Increase in accrued buyout liability		10,886			11,746
Net cash provided by (used in) operating activities		58,085			(11,384	)
Cash flows from investing activities
Purchase of investments		(1,871	)		(1,061	)
Maturities of investments		290			687
Increase in funds held for payroll customers		(1,954	)		(2,632	)
Increase in deposits held for payroll customers		1,843			2,498
Acquisition of business, net of cash acquired		(300	)		(3,453	)
Purchases of property and equipment		(25,637	)		(9,603	)
Net cash used in investing activities		(27,629	)		(13,564	)
Cash flows from financing activities
Principal payments on borrowings and financing arrangements		(174	)		(192	)
Proceeds from exercise of stock options		8,025			25,723
Excess tax benefits on options exercised under SFAS No. 123R		6,729			27,661
Repurchase of common stock		(16,794	)		(24,444	)
Net proceeds from sale of common stock		25			—
Dividends paid on common stock		(6,582	)		(928	)
Net cash (used in) provided by financing activities		(8,771	)		27,820
Net increase in cash and cash equivalents		21,685			2,872
Cash and cash equivalents at beginning of year		16,054			8,724
Cash and cash equivalents at end of period	$	37,739		$	11,596

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