Heartland Payment Systems Reports Record Second Quarter Earnings Per Share of $0.30

Network Services Acquisition Helps Increase Total Revenue by
18.3%, and Net Revenues by 29.3%
PRINCETON, N.J.--(Business Wire)--
Heartland Payment Systems, Inc. (NYSE:HPY), a leading provider of
credit/debit/prepaid card processing, payroll, check management and
payments services, today announced record second quarter net income of
$11.5 million and fully diluted earnings per share of $0.30.

Highlights for the second quarter, which included the results of
the acquisition of the Network Services (NWS) business of Alliance
Data for one month, include:

-- Total transaction processing volume of $17.1 billion, up 29%,
$15.2 billion organic volume, up 14%

-- Net Revenue up 29.3%, and excluding NWS increased by 17.7%

-- Earnings per share up 15% and net income up 10.3% from the
second quarter of 2007

-- New margin installed increased by 12.2%

-- Operating margin on net revenue of 19.4%

Robert Carr, Chairman and CEO, said, "Our record second quarter is
a reflection of our ability to achieve solid current results while
investing for the future, even in a challenging environment. In the
near term we are clearly facing a difficult economy, which resulted in
same store sales in the quarter declining 0.1%, the first such decline
in our history. Nevertheless, this quarter we continued our string of
double-digit growth in new margin installed while increasing our
processing volume 14%, excluding NWS, as we continue to increase our
market share. Although we are only two months into the process today,
the integration of NWS is proceeding nicely, and we are enthusiastic
about the long-term benefits the transaction will offer to Heartland's
growth and profitability. Through our organic growth, acquisitions,
and investments in new verticals, products, and markets, Heartland's
"Fair Deal" is rapidly becoming the premier brand in the payment
processing industry."

Total revenues in the second quarter were $395 million, an
increase of 18.3% compared to $333 million in the second quarter of
2007. Card processing volume for the three months ended June 30, 2008
increased 29.0% to $17.1 billion, including $2.0 billion of volume
from acquisitions. Transaction processing volume and net revenue
growth continue to benefit from the installation of larger and more
profitable merchants onto our platform.

Mr. Carr continued, "In the quarter we accomplished many strategic
objectives, achieving greater penetration of the broad payments space
and setting the stage for our next growth phase. Our card business is
very strong, growing faster than the industry, and is preparing to add
incremental volume, processing Discover and American Express
transactions along with the NWS volume already added. In addition, we
are also making solid progress in the payroll, remote deposit, and
campus card markets. The second half of the year should be an exciting
time as we begin to realize the benefits of both the NWS integration
and our various investments."

SIX MONTH RESULTS:

For the first six months of 2008, net income was $20.4 million or
$0.53 per fully diluted share, increases of 19% and 23%, respectively,
from the first six months of 2007. Revenues for the first half of 2008
were $734 million, up 19% compared to the first half of 2007.

FULL YEAR 2008 GUIDANCE:

The Company is affirming guidance for fiscal 2008. For the year,
we expect net revenue (total revenues less interchange, dues and
assessments) to grow by 16% - 18% organically, and in excess of 35%
including NWS; and earnings per share to be $1.13 - $1.17.

DIVIDEND:

The Company also announced that the Board of Directors has
declared a third quarter dividend of $0.09 per common share. The
dividend is payable to shareholders of record on August 22, 2008 and
will be paid on September 15, 2008.

Conference Call:

Heartland Payment Systems, Inc. will host a conference call on
August 5, 2008 at 8:30 a.m. Eastern Time to discuss financial results
and business highlights. Heartland Payment Systems invites all
interested parties to listen to its conference call, broadcast through
a webcast on the Company's website. To access the call, please visit
the Investor Relations portion of the Company's website at:
www.heartlandpaymentsystems.com. You may also participate by calling
610-228-2110 to request the dial-in information for the conference
call.

The webcast will be archived on the Company's website within two
hours of the live call and will remain available through Friday,
August 29, 2008.

About Heartland Payment Systems

Heartland Payment Systems, Inc., a NYSE company trading under the
symbol HPY, delivers credit/debit/prepaid card processing, payroll,
check management and payment solutions to more than 250,000 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 annual report on Form 10- K for the year ended
December 31, 2007. We undertake no obligation to update any
forward-looking statements to reflect events or circumstances that may
arise after the date of this release.

TABLES FOLLOW

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

Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2008 2007 2008 2007
--------- --------- --------- ---------

Total Revenues $394,554 $333,445 $734,173 $617,657
--------- --------- --------- ---------
Costs of Services:
Interchange 282,377 245,225 527,654 450,562
Dues and assessments 14,152 12,398 26,494 22,857
Processing and servicing 45,953 32,764 82,882 64,094
Customer acquisition costs 12,274 11,383 23,724 21,774
Depreciation and
amortization 2,465 1,661 4,375 3,385
--------- --------- --------- ---------
Total costs of services 357,221 303,431 665,129 562,672
General and administrative 18,289 13,735 35,463 28,034
--------- --------- --------- ---------
Total expenses 375,510 317,166 700,592 590,706
--------- --------- --------- ---------
Income from operations 19,044 16,279 33,581 26,951
--------- --------- --------- ---------
Other income (expense):
Interest income 169 517 469 976
Interest expense (751) (233) (1,097) (345)
Loss on investment -- -- (103) --
Other, net 1 5 24 (90)
--------- --------- --------- ---------
Total other income
(expense) (581) 289 (707) 541
--------- --------- --------- ---------
Income before income taxes 18,463 16,568 32,874 27,492
Provision for income taxes 6,994 6,166 12,428 10,238
--------- --------- --------- ---------
Net income $ 11,469 $ 10,402 $ 20,446 $ 17,254
========= ========= ========= =========

Net income $ 11,469 $ 10,402 $ 20,446 $ 17,254
Other comprehensive income:
Unrealized gains on
investments, net of
income tax of $(3), $(4),
$9 and $(2) (6) (7) 15 (4)
Foreign currency
translation adjustment,
net of income tax of $37
and $(124) 54 -- (205) --
--------- --------- --------- ---------
Comprehensive income $ 11,517 $ 10,395 $ 20,256 $ 17,250
========= ========= ========= =========

Earnings per common share:
Basic $ 0.31 $ 0.28 $ 0.55 $ 0.46
Diluted $ 0.30 $ 0.26 $ 0.53 $ 0.43

Weighted average number of
common shares outstanding:
Basic 37,387 37,653 37,464 37,580
Diluted 38,688 39,863 38,755 39,919

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

June 30, December 31,
2008 2007
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 40,142 $ 35,508
Funds held for payroll customers 22,651 24,201
Receivables, net 156,276 122,613
Investments held to maturity 1,141 1,119
Inventory 7,721 5,383
Prepaid expenses 4,653 3,478
Current tax asset 4,739 5,449
Current deferred tax assets, net 835 690
------------ ------------
Total current assets 238,158 198,441
Capitalized customer acquisition costs, net 76,376 70,498
Deferred tax assets, net 1,517 3,878
Property and equipment, net 59,403 50,248
Goodwill 58,774 5,489
Intangible assets, net 34,352 481
Deposits and other assets, net 202 154
------------ ------------
Total assets $ 468,782 $ 329,189
============ ============

Liabilities and stockholders' equity
Current liabilities:
Due to sponsor banks $ 98,182 $ 49,798
Accounts payable 26,138 20,495
Deposits held for payroll customers 22,651 24,201
Current portion of borrowings 56,250 --
Current portion of accrued buyout
liability 11,006 11,521
Merchant deposits and loss reserves 19,028 14,757
Accrued expenses and other liabilities 22,045 15,266
------------ ------------
Total current liabilities 255,300 136,038
Reserve for unrecognized tax benefits 1,391 1,230
Long-term portion of borrowings 18,750 --
Long-term portion of accrued buyout
liability 29,015 26,252
------------ ------------
Total liabilities 304,456 163,520
------------ ------------

Commitments and contingencies -- --

Stockholders' equity
Common Stock, $0.001 par value, 100,000,000
shares authorized, 37,448,752 and
39,804,322 shares issued at June 30, 2008
and December 31, 2007; 37,448,752 and
37,989,622 shares outstanding at June 30,
2008 and December 31, 2007 38 40
Additional paid-in capital 165,155 173,346
Accumulated other comprehensive loss (252) (62)
(Accumulated deficit) Retained earnings (615) 36,729
Treasury stock, at cost (1,814,700 shares at
December 31, 2007) -- (44,384)
------------ ------------
Total stockholders' equity 164,326 165,669
------------ ------------
Total liabilities and stockholders' equity $ 468,782 $ 329,189
============ ============

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

Six Months Ended
June 30,
--------------------
2008 2007
---------- ---------
Cash flows from operating activities
Net income $ 20,446 $ 17,254
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of capitalized customer
acquisition costs 25,822 21,253
Other depreciation and amortization 5,882 4,254
Addition to loss reserves 3,262 1,122
Provision for doubtful receivables 1,395 216
Stock-based compensation 775 801
Deferred taxes 2,292 90
Loss on investment 103 --
Other 4 172
Changes in operating assets and liabilities:
Increase in receivables (15,686) (11,558)
Decrease (increase) in inventory 899 (625)
Payment of signing bonuses, net (24,053) (21,639)
Increase in capitalized customer acquisition
costs (7,647) (6,729)
Increase in prepaid expenses (600) (711)
Decrease in current tax asset 1,286 5,284
Increase in deposits and other assets (43) (9)
Excess tax benefits on options exercised
under SFAS No. 123R (811) (3,820)
Increase in reserve for unrecognized tax
benefits 160 476
Increase in due to sponsor bank 48,383 25,284
Increase in accounts payable 4,697 3,165
(Decrease) increase in accrued expenses and
other liabilities (824) 1,917
Decrease in merchant deposits and loss
reserves (1,201) (1,161)
Payouts of accrued buyout liability (3,250) (4,746)
Increase in accrued buyout liability 5,498 7,250
---------- ---------
Net cash provided by operating activities 66,789 37,540
---------- ---------
Cash flows from investing activities
Purchase of investments held to maturity (46) (1,330)
Maturities of investments held to maturity 250 265
Decrease (increase) in funds held for payroll
customers 1,245 (3,930)
(Decrease) increase in deposits held for payroll
customers (1,549) 3,828
Acquisition of business, net of cash acquired (102,544) (300)
Purchases of property and equipment (12,375) (13,993)
---------- ---------
Net cash used in investing activities (115,019) (15,460)
---------- ---------
Cash flows from financing activities
Proceeds from borrowings 95,000 --
Principal payments on borrowings and financing
arrangements (20,000) (146)
Proceeds from exercise of stock options 1,783 4,546
Excess tax benefits on options exercised under
SFAS No. 123R 811 3,820
Repurchase of common stock (17,995) (15,307)
Dividends paid on common stock (6,724) (3,757)
---------- ---------
Net cash provided by (used in) financing
activities 52,875 (10,844)
---------- ---------

Net increase in cash and cash equivalents 4,645 11,236
Effect of exchange rates on cash (11) --
Cash and cash equivalents at beginning of year 35,508 16,054
---------- ---------
Cash and cash equivalents at end of period $ 40,142 $ 27,290
========== =========

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Gregory FCA Communications
Joe Hassett, 610-228-2110
Heartland_ir@gregoryfca.com

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