Heartland Payment Systems Reports Third Quarter Financial Results

http://www.businesswire.com/news/home/20091103005387/en

PRINCETON, N.J.--(Business Wire)--
Heartland Payment Systems, Inc. (NYSE:HPY), a leading provider of
credit/debit/prepaid card processing, payroll, check management and payment
services, today announced a GAAP net loss of $13.6 million or ($0.36) per share
for the three months ended September 30, 2009. Results for the quarter are after
$35.6 million (pre-tax), or $0.59 per share, of various expenses, accruals and
reserves, all of which are attributable to the processing system intrusion,
including charges related to settlement offers made by the Company in attempts
to resolve certain processing system intrusion related claims and settlements of
certain claims deemed to be likely to be agreed upon in the near future based
upon discussions between the Company and the claimants. Excluding these
expenses, accruals and reserves, Adjusted Net Income and Earnings per Share were
$8.7 million and $0.23, respectively. Third quarter Adjusted Net Income and
Earnings per Share are non-GAAP measures that exclude certain items detailed
later in this press release under the heading "Use of Non-GAAP Financial
Measures."

Highlights for the third quarter, include:

* Small and Mid-Sized Merchant (SME) transaction processing volume of $15.8
billion, up 1.1% from a year ago
* Quarterly Net Revenue of $110 million, down marginally from the record
quarterly revenues of the year ago period due to declines in equipment-related
revenues
* Operating margin on net revenue of 13.4% compared to 20.9% for the same
quarter in 2008
* New margin installed and same store sales down 16.3% and 8.6%, respectively,
from the same quarter last year, but both representing a sequential improvement
compared to the second quarter of 2009
* SFAS 123R stock compensation expense of $1.7 million, or $0.03 per share

Robert Carr, Chairman and CEO, said, "We were able to generate solid returns
during the quarter while continuing to invest in both our processing platforms
and our new business initiatives. Certain of our key transaction processing
performance metrics are stabilizing despite the lack of any demonstrable
improvement during the quarter in the economic conditions that impact the vast
majority of our customers. We saw encouraging growth from a range of our new
product initiatives, including payroll and our new Discover and American Express
agreements. We also made some progress improving operating efficiency, as third
quarter processing and servicing costs, our largest non-pass-through cost of
services, were down relative to a year ago. Though the economic outlook remains
uncertain, we will continue to provide merchants large and small with a "Fair
Deal" and technology-driven product improvements that are responsive to their
most pressing needs and which leverages our franchise to create value for our
shareholders."

Net revenue from SME card processing and Network Services were both up in the
third quarter. However, due to a decrease in revenues from equipment-related
businesses, net revenues of $110.0 million for the quarter were little changed
from record quarterly net revenues of $110.4 million in the third quarter of
2008. SME card processing volume for the three months ended September 30, 2009
was $15.8 billion, a 1.1% improvement compared to the year ago period. Network
Services transactions processed, the basis for their revenues, totaled 757
million in the quarter compared to 771 million in the same quarter of 2008. Same
store sales in the SME segment were down 8.6% in the quarter; however,
performance in September was the best in nearly a year. Operating income as a
percentage of net revenues was 13.4% in the third quarter of 2009, down compared
to the 2008 period due to an increase in general and administrative expenses,
primarily stock compensation, legal costs, and salary, bonus and fringe
benefits. The various expenses, accruals, and reserves, all of which are
attributable to the processing system intrusion in the third quarter, were $35.6
million pre-tax, or $0.59 per share. The majority of these charges relate to
settlement offers made by the Company in attempts to resolve certain of the
claims asserted against it relating to the processing system intrusion, and
settlements of certain claims asserted against the Company that are deemed
likely to be agreed upon in the near term based upon discussions between the
Company and the claimants. This charge also includes significant legal fees.
These various expenses and accruals are shown separately in the Company`s
Statement of Operations.

Mr. Carr continued, "We believe 2010 will be a year in which we achieve
breakthroughs in enhancing payments security. The initial commercial
implementations of our new `E3` technology is expected to commence late this
year, and to be rolled out more fully in the first quarter of next year.
Consequently, we plan on getting an early start in a pivotal year with a
technology solution offering merchants and consumers what we believe to be the
highest level of payments processing data security in the industry. At a time
when economic conditions have stalled overall market growth, we believe `E3`
will provide a competitive advantage as security becomes a processing priority.
Our strategy is to continue to invest in our technology platform, expand our
product portfolio and strengthen our merchant franchise to achieve growth in the
near term while planning for accelerated growth as the economy recovers. With a
more robust platform, leading security and technology, and steady efficiency
gains, we feel strongly that our investments are creating value for
shareholders."

NINE MONTH RESULTS:

For the first nine months of 2009, GAAP net loss was $18.7 million or ($0.50)
per share. Net revenues for the first nine months of 2009 were $315.1 million,
up 11.1% compared to the first nine months of 2008. Excluding various expenses,
accruals and reserves, all of which are attributable to the processing systems
intrusion, Adjusted Net Income and Earnings per Share for the first nine months
of fiscal 2009 were $23.4 million or $0.62 per share, compared to GAAP earnings
of $33.9 million, or $0.87 per share, in the prior nine months. Year-to-date
2009, stock compensation expense has reduced earnings by $2.8 million or $0.05
per diluted share compared to $1.1 million or $0.02 per diluted share for the
same nine-month period in 2008.

Use of Non-GAAP Financial Measures

To supplement its consolidated financial statements presented in accordance with
accounting principles generally accepted in the United States ("GAAP"), the
Company provides additional measures of it operating results, net income and
earnings per share, which exclude certain costs and expenses related to the
processing system intrusion. The Company believes that these non-GAAP financial
measures are appropriate to enhance understanding of its historical performance
as well as prospects for its future performance.

This press release contains non-GAAP financial measures within the meaning of
Regulation G promulgated by the Securities and Exchange Commission. Pursuant to
Regulation G, a reconciliation of these non-GAAP financial measures with the
comparable financial measures calculated in accordance with GAAP for the
respective periods ended September 30, 2009 follows:

(In thousands, except per share)

Three Months Nine Months

Ended
Ended

September 30,
September 30,

2009
2009
Net income (loss) attributable to Heartland
Non-GAAP - Adjusted net income attributable to Heartland $ 8,715 $ 23,416
Less adjustments:
Provision for processing system intrusion 35,577 67,547
Income tax benefit of provision for processing system intrusion (13,267 ) (25,466 )
After-tax provision for processing system intrusion 22,310 42,081
GAAP - Net income (loss) attributable to Heartland $ (13,595 ) $ (18,665 )

Earnings(loss) per share
Non-GAAP - Adjusted net income per share $ 0.23 $ 0.62
Less: provision for processing system intrusion $ (0.59 ) (1.12 )
GAAP - Net income (loss) per share $ (0.36 ) $ (0.50 )

Shares used in computing GAAP net loss per share 37,461 37,484

Please see "Reconciliation of Non-GAAP Financial Measures and Regulation G
Disclosure" below for additional detail.

FULL YEAR 2009 GUIDANCE:

Economic conditions that impact the vast majority of our customers did not
evidence any demonstrable improvement in the third quarter compared to the
second quarter, so we are not changing our guidance for fiscal 2009. For the
full year 2009, we now expect net revenue (total revenues less interchange, dues
and assessments) to grow in the area of 10%, to between $420 and $425 million.
For the year, earnings per share are expected to be $0.85 - $0.90, excluding
approximately $0.08 per share of 123R stock compensation expense. The Company`s
guidance for 2009 does not include any costs or estimates for potential losses,
costs, expenses and accruals arising from the previously announced processing
system intrusion, including exposure to credit and debit card companies and
banks, exposure to various legal proceedings that are pending, or may arise, and
related fees and expenses, and other potential liabilities, costs and expenses.
Except for sums already accrued, neither the costs nor the potential losses are
estimable at this point, and further the potential losses are not currently
deemed probable.

DIVIDEND:

The Company also announced that the Board of Directors today declared a fourth
quarter dividend of $0.01 per common share. The dividend is payable to
shareholders of record on November 23, 2009 and will be paid on December 15,
2009.

CONFERENCE CALL:

Heartland Payment Systems, Inc. will host a conference call on November 3, 2009
at 8:00 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. The conference call may be accessed by
calling 877-741-4240. Please provide the operator with PIN number 5622444.

The webcast will be archived on the Company`s website within two hours of the
live call and will remain available through Wednesday, February 3, 2010.

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, including without limitation, the significantly unfavorable economic
conditions confronting the United States, the risk that we may not be successful
in developing and marketing new products, systems and services, including
without limitation our anticipated end to end encryption system and the risk
that the results and effects of the security breach of our processing system on
our results of operations and financial condition may be materially adverse,
including, the fact that we expect to incur costs for remedial actions, legal
fees and crisis management services that are expected to be material and could
adversely impact our operations, financial condition and cash flow, the risk
that we may incur material losses related to the claims that have been asserted,
or may be asserted, against us arising out of the security breach, the extent of
cardholder information compromised and consequences to our business including
effects on merchant acquisition and retention and sales and additional factors
that are 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, 2008.We undertake no obligation to update any
forward-looking statements to reflect events or circumstances that may arise
after the date of this release.

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

Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008

Total Revenues $ 442,568 $ 424,800 $ 1,232,113 $ 1,158,973
Costs of Services:
Interchange 305,059 295,452 853,666 824,559
Dues, assessments and fees 27,527 18,972 63,393 50,815
Processing and servicing 50,356 50,724 148,278 130,007
Customer acquisition costs 13,147 12,758 38,479 36,482
Depreciation and amortization 4,006 3,101 11,614 7,476
Total costs of services 400,095 381,007 1,115,430 1,049,339
General and administrative 27,784 20,689 77,247 52,917
Total expenses 427,879 401,696 1,192,677 1,102,256
Income from operations 14,689 23,104 39,436 56,717
Other income (expense):
Interest income 29 185 86 654
Interest expense (782 ) (1,199 ) (1,868 ) (2,296 )
Provision for processing system intrusion (35,577 ) - (67,547 ) -
Other, net - (136 ) 4 (215 )
Total other income (expense) (36,330 ) (1,150 ) (69,325 ) (1,857 )
Income (loss) before income taxes (21,641 ) 21,954 (29,889 ) 54,860
Provision for (benefit from) income taxes (8,070 ) 8,539 (11,240 ) 20,967
Net income (loss) (13,571 ) 13,415 (18,649 ) 33,893
Less: Net income attributable to noncontrolling minority interests 24 2 16 34
Net income (loss) attributable to Heartland $ (13,595 ) $ 13,413 $ (18,665 ) $ 33,859

Net income (loss) $ (13,571 ) $ 13,415 $ (18,649 ) $ 33,893
Other comprehensive income:
Unrealized gains (losses) on investments, net of income tax of $16, $(19), $24 and $(10) 27 (31 ) 40 (16 )
Foreign currency translation adjustment, net of income tax of $(157) and $(281) in 2008 782 (260 ) 1,251 (465 )
Comprehensive income (loss) (12,762 ) 13,124 (17,358 ) 33,412
Less: Net income attributable to 24 2 16 34
noncontrolling minority interests
Comprehensive income (loss) attributable to Heartland $ (12,786 ) $ 13,122 $ (17,374 ) $ 33,378

Earnings (loss) per common share:
Basic $ (0.36 ) $ 0.36 $ (0.50 ) $ 0.90
Diluted $ (0.36 ) $ 0.35 $ (0.50 ) $ 0.87
Weighted average number of common shares outstanding:
Basic 37,461 37,522 37,484 37,484
Diluted 38,129 38,700 37,896 38,746

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

Assets September 30, December 31,

2009
2008
Current assets:
Cash $ 39,028 $ 27,589
Funds held for payroll customers 16,836 22,002
Receivables, net 149,085 140,145
Investments held to maturity 1,304 1,410
Inventory 8,500 8,381
Prepaid expenses 5,608 6,662
Current tax asset - 2,440
Current deferred tax assets, net 23,605 6,723
Total current assets 243,966 215,352
Capitalized customer acquisition costs, net 73,147 77,737
Property and equipment, net 96,832 75,443
Goodwill 59,373 58,456
Intangible assets, net 35,971 36,453
Deposits and other assets, net 1,642 178
Total assets $ 510,931 $ 463,619

Liabilities and stockholders` equity
Current liabilities:
Due to sponsor banks $ 82,156 $ 68,212
Accounts payable 27,273 25,864
Deposits held for payroll customers 16,836 22,002
Current portion of borrowings 58,544 58,522
Current portion of accrued buyout liability 9,699 10,547
Merchant deposits and loss reserves 35,222 16,872
Accrued expenses and other liabilities 24,724 26,196
Current tax liability 304 -
Reserve for processing system intrusion 45,166 -
Total current liabilities 299,924 228,215
Deferred tax liabilities, net 4,805 6,832
Reserve for unrecognized tax benefits 1,405 1,732
Long-term portion of borrowings 10,559 16,984
Long-term portion of accrued buyout liability 33,407 30,493
Total liabilities 350,100 284,256
Commitments and contingencies - -
Equity
Common Stock, $0.001 par value, 100,000,000 shares authorized, 37,463,142 and 37,675,543 shares issued and outstanding at September 30, 2009 and December 31, 2008 38 38
Additional paid-in capital 169,465 167,337
Accumulated other comprehensive loss (854 ) (2,145 )
(Accumulated deficit) Retained earnings (7,982 ) 14,014
Total stockholders` equity 160,667 179,244
Noncontrolling minority interests 164 119
Total equity 160,831 179,363
Total liabilities and equity $ 510,931 $ 463,619

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

Nine Months Ended September 30,
2009 2008
Cash flows from operating activities
Net income (loss) attributable to Heartland $ (18,665 ) $ 33,859
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of capitalized customer acquisition costs 42,663 39,722
Other depreciation and amortization 15,823 9,753
Provision for processing system intrusion 65,547 -
Addition to loss reserves 4,375 4,529
Provision for doubtful receivables 624 1,645
Stock-based compensation 2,811 1,067
Deferred taxes (18,986 ) 4,177
Net income attributable to noncontrolling minority interests 16 34
Loss on investments - 240
Other 6 159
Changes in operating assets and liabilities:
Increase in receivables (9,513 ) (15,130 )
(Increase) decrease in inventory (105 ) 1,539
Payment of signing bonuses, net (25,504 ) (35,677 )
Increase in capitalized customer acquisition costs (12,569 ) (11,689 )
Decrease (increase) in prepaid expenses 1,070 (798 )
Decrease in current tax asset 3,059 1,627
Increase in deposits and other assets (1,142 ) (95 )
Excess tax benefits on options exercised (325 ) (1,498 )
(Decrease) increase in reserve for unrecognized tax benefits (327 ) 911
Increase in due to sponsor bank 13,944 29,613
Increase in accounts payable 1,375 4,770
(Decrease) increase in accrued expenses and other liabilities (15,990 ) 7,870
Increase in merchant deposits and loss reserves 13,974 6,230
Reserve for processing system intrusion (7,881 ) -
Payouts of accrued buyout liability (6,319 ) (5,288 )
Increase in accrued buyout liability 8,385 8,449
Net cash provided by operating activities 58,346 86,019

Cash flows from investing activities
Purchase of investments held to maturity (1,076 ) (65 )
Maturities of investments held to maturity 1,208 284
Decrease in funds held for payroll customers 5,232 3,663
Decrease in deposits held for payroll customers (5,166 ) (4,177 )
Acquisition of business, net of cash acquired (3,193 ) (102,849 )
Proceeds from disposal of property and equipment 33 -
Purchases of property and equipment (33,585 ) (22,383 )
Net cash used in investing activities (36,547 ) (125,527 )

Cash flows from financing activities
Proceeds from borrowings - 95,000
Principal payments on borrowings (6,403 ) (20,000 )
Proceeds from exercise of stock options 548 2,692
Excess tax benefits on options exercised 325 1,498
Repurchase of common stock (3,202 ) (17,995 )
Dividends paid on common stock (1,685 ) (10,101 )
Net cash (used in) provided by financing activities (10,417 ) 51,094

Net increase in cash 11,382 11,586
Effect of exchange rates on cash 57 (20 )
Cash at beginning of year 27,589 35,508
Cash at end of period $ 39,028 $ 47,074

Reconciliation of Non-GAAP Financial Measures And Regulation G Disclosure

To supplement its consolidated financial statements presented in accordance with
accounting principles generally accepted in the United States ("GAAP"), the
Company provides additional measures of its operating results, namely net income
and earnings per share, which exclude certain costs and expenses related to the
criminal breach of its payment systems environment (the "Processing System
Intrusion"). These measures meet the definition of a non-GAAP financial measure.
The Company believes that application of these non-GAAP financial measures is
appropriate to enhance understanding of its historical performance as well as
prospects for its future performance.

Use and Economic Substance of the Non-GAAP Financial Measures- Management uses
these non-GAAP measures to evaluate performance period over period, to analyze
the underlying trends in the Company`s business, to assess its on-going
operating performance relative to its competitors, and to establish operational
goals and forecasts. Costs and expenses related to the Processing System
Intrusion are not indicative of the Company`s on-going operating performance and
are therefore excluded by management in assessing the Company`s operating
performance, as well as from the measures used for making operating decisions,
although in making operating decisions management is mindful of its need to
utilize cash to pay for the costs and expenses relating to the Processing System
Intrusion.

The following is an explanation of the adjustments that management excluded as
part of its non-GAAP measures for the three and nine months ended September 30,
2009:

Provision for Processing System Intrusion - On January 20, 2009, the Company
publicly announced the discovery of the Processing System Intrusion. For the
three and nine months ended September 30, 2009, the Company expensed a total of
$35.6 million and $67.5 million, respectively, or about $0.59 and $1.12 per
share, respectively, associated with the Processing System Intrusion. The
majority of these charges, or approximately $53.0 million, related to: (i)
assessments imposed in April 2009 by MasterCard and VISA against the Company and
its sponsor banks, (ii) settlement offers made by the Company to certain card
brands in an attempt to resolve certain of the claims asserted against its
sponsor banks (who have asserted rights to indemnification from the Company
pursuant to the Company`s agreements with them), and (iii) settlements deemed
likely to be agreed upon in the near term with certain claimants.
Notwithstanding its belief that it has strong defenses against the claims that
are the subject of the settlement offers in (ii) and (iii) above, the Company
decided to make the settlement offers and engage in settlement discussions in
attempts to avoid the costs and uncertainty of litigation. The Company is
prepared to vigorously defend itself against all the claims relating to the
Processing System Intrusion that have been asserted against it and its sponsor
banks to date.

The accrual of the settlement offers during the nine months ended September 30,
2009 resulted in the Company carrying a $45.2 million Reserve for Processing
System Intrusion at September 30, 2009. To date, the Company has not received
favorable responses to the settlement offers noted in (ii) above and no
definitive agreements have been reached with respect to the settlements deemed
likely to be agreed upon. Therefore, it should not be assumed that the Company
will resolve the claims that are the subject of the settlement offers or the
subject of settlement discussions for the amounts of the settlement offers or
the settlement amounts deemed likely to be agreed upon. The Company understands
that the reserve related to the settlement offers is required by SFAS No. 5,
"Accounting for Contingencies" (ASC 450-20),based solely on the fact the Company
tendered offers of settlement in the amounts it has accrued. It is possible the
Company will end up resolving the claims that are the subject of the settlement
offers, either through settlements or pursuant to litigation, for amounts that
are significantly greater than the amount it has reserved to date. Moreover,
even if the claims that are the subject of the settlement offers were resolved
for the amount the Company has reserved, that would still leave unresolved a
significant portion of the claims that have been asserted against the Company or
its sponsor banks relating to the Processing System Intrusion. The Company feels
it has strong defenses to all the claims that have been asserted against it and
its sponsor banks relating to the Processing System Intrusion, including those
claims that are not the subject of the settlement offers.

While the Company has determined that the Processing System Intrusion has
triggered other loss contingencies, to date an unfavorable outcome is not
believed by it to be probable on those claims that are pending or have been
threatened against it, or that the Company considers to be probable of assertion
against it, and the Company does not have sufficient information to reasonably
estimate the loss it would incur in the event of an unfavorable outcome on any
such claim. Therefore, in accordance with SFAS No. 5 (ASC 450-20) no
reserve/liability has been recorded as of September 30, 2009 with respect to any
such claim, except for the assessments actually imposed by MasterCard and Visa
and the amounts of the settlement offers made by the Company and the settlement
amounts deemed likely to be agreed upon as discussed above. As more information
becomes available, if the Company should determine that an unfavorable outcome
is probable on such a claim and that the amount of such probable loss that it
will incur on that claim is reasonably estimable, it will record a reserve for
the claim in question. If and when, the Company records such a reserve, it could
be material and could adversely impact its results of operations, financial
condition and cash flow.

The remainder of the expenses and accruals related to the Processing System
Intrusion recorded in the three and nine months ended September 30, 2009 were
primarily for legal fees and costs the Company incurred for investigations,
remedial actions and crisis management services. Additional costs the Company
expects to incur for investigations, remedial actions, legal fees, and crisis
management services related to the Processing System Intrusion will be
recognized as incurred. Such costs are expected to be material and could
adversely impact the Company`s results of operations, financial condition and
cash flow.

Material Limitations Associated with the Use of Non-GAAP Financial Measures-
Non-GAAP net income and non-GAAP earnings per share that exclude the impact of
the Provision for Processing System Intrusion may have limitations as analytical
tools, and these non-GAAP measures should not be considered in isolation from or
as a replacement for GAAP financial measures, and should be considered only as
supplemental to the Company`s GAAP financial measures. Some of the limitations
associated with the use of these non-GAAP financial measures are:

* Processing System Intrusion costs and expenses that are excluded from non-GAAP
net income and non-GAAP earnings per share can have a material impact on cash
flows, GAAP net income and GAAP earnings per share.
* Other companies may calculate non-GAAP net income and non-GAAP earnings per
share that exclude the impact of similar costs and expenses differently than the
Company does, limiting the usefulness of those measures for comparative
purposes.

Usefulness of Non-GAAP Financial Measures to Investors-The Company believes that
presenting non-GAAP net income and non-GAAP earnings per share that exclude the
impact of the Provision for Processing System Intrusion in addition to the
related GAAP measures provides investors greater transparency to the information
used by the Company`s management for its financial and operational
decision-making and allows investors to see the Company`s results through the
eyes of management. Additionally, the Company believes that the inclusion of
these non-GAAP financial measures provides enhanced comparability in its
financial reporting. The Company further believes that providing this
information better enables its investors to understand the Company`s operating
performance and underlying business fundamentals, and to evaluate the
methodology used by management to evaluate and measure such performance.

This press release contains non-GAAP financial measures within the meaning of
Regulation G promulgated by the Securities and Exchange Commission. Pursuant to
Regulation G, a reconciliation of these non-GAAP financial measures with the
comparable financial measures calculated in accordance with GAAP for the three
months and nine months ended September 30, 2009 follows:

(In thousands, except per share)

Three Months Nine months

Ended
ended

September 30,
September 30,

2009
2009
Net income (loss) attributable to Heartland
Non-GAAP - Adjusted net income attributable to Heartland $ 8,715 $ 23,416
Less adjustments:
Provision for processing system intrusion 35,577 67,547
Income tax benefit of provision for processing system intrusion (13,267 ) (25,466 )
After-tax provision for processing system intrusion 22,310 42,081
GAAP - Net income (loss) attributable to Heartland $ (13,595 ) $ (18,665 )

Earnings(loss) per share
Non-GAAP - Adjusted net income per share $ 0.23 $ 0.62
Less: provision for processing system intrusion $ (0.59 ) $ (1.12 )
GAAP - Net income (loss) per share $ (0.36 ) $ (0.50 )

Shares used in computing GAAP net loss per share 37,461 37,484

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

Copyright Business Wire 2009