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) May 1, 2008

HEARTLAND PAYMENT SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-32594	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 May 1, 2008, Heartland Payment Systems, Inc., a Delaware corporation (the “Company”), issued a press release announcing its financial results for the first quarter ended March 31, 2008. 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 May 1, 2008, the Company conducted a previously-scheduled conference call to discuss its results of operations for the first quarter ended March 31, 2008 and to answer any questions raised by the call’s audience.

Item 8.01 Other Events

Cash Dividend

On April 30, 2008, the board of directors of the Company declared a quarterly cash dividend of $0.09 per share of the Company’s common stock, which will be payable on June 15, 2008 to stockholders of record as of May 23, 2008. 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 May 1, 2008

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: May 1, 2008

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 REPORTS RECORD FIRST QUARTER EARNINGS

EARNINGS PER SHARE UP 35% TO $0.23

Processing Volume Grows over 18%, Operating Income Up 36%

Princeton, NJ – May 1, 2008 – Heartland Payment Systems, Inc. (NYSE: HPY), a leading provider of credit/debit/prepaid card processing, payroll, check management and payment services, today announced record first quarter net income of $9.0 million and fully diluted earnings per share of $0.23.

Highlights for the First Quarter include:

• Net income up 31% from the first quarter of 2007

• Transaction processing volume of $13.2 billion, up 18.3%

• New margin installed increased by 17.4%

• Net Revenue up 19.9%, with payroll revenues advancing 41%

• Total period end merchants up 15.1% to 165,900

• Operating margin on net revenue of 17.7%, an improvement of 210 basis points from the first quarter of last year

Robert Carr, Chairman and CEO, said, “Our record first quarter is a reflection of the momentum in our core business built on our strong value proposition, our focus on improving efficiency through technology investments, and solid progress from our new growth initiatives. The key to our success is the sustained growth and increasing success of our team of relationship managers, which this quarter grew to 1,191. We are clearly facing a difficult economy, which limited same store sales growth in the quarter to only 0.6%, with our restaurant segment declining by 0.4%. Notwithstanding this environment, our relationship managers increased new margin installed by 17.4% over the first quarter of last year. At the same time, we continue to exploit the advantages of our own platform; in the first quarter, 84.7% of new merchants installed and 81% of total transactions were on HPS Exchange. By driving an increasing proportion of transactions onto our proprietary platforms, our operating margin on net revenue increased by 210 basis points from the first quarter of 2007. Our “Fair Deal” philosophy, competitive products, superior technology and dedicated sales organization are sustaining our growth while delivering value to our expanding international base of merchants.”

-more-

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Total revenues in the first quarter were $340 million, an increase of 19.5% compared to $284 million in the first quarter of 2007. Card processing volume for the three months ended March 31, 2008 increased 18.3% to $13.2 billion from $11.2 billion during the same period in 2007. The Company’s active bank card merchant count rose to 158,900 at March 31, 2008, a 14.2% increase over the past twelve months. 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, “We are making good progress on many of this year’s exciting new growth initiatives. Our Collective POS acquisition for the first time expands our sales and processing capabilities across borders, into the Canadian market. We are pleased to announce that we have just signed an acquiring agreement with Discover, so that our merchants’ Discover card processing will be consolidated with Visa and MasterCard. Development work to integrate Discover and American Express on our card transaction processing platform remains on schedule. Also, our payroll, remote deposit, and campus card programs are all showing the market opportunity we believe offers significant growth potential. To build value for our shareholders, we are making strategic investments which broaden our functionality, capabilities, and applications to expand the Heartland brand throughout the merchant processing market.”

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%; operating income as a percentage of net revenue to be 20% - 21%; and earnings per share of $1.13 - $1.17.

DIVIDEND:

The Company also announced that the Board of Directors has declared a second quarter dividend of $0.09 per common share. The dividend is payable to shareholders of record on May 23, 2008 and will be paid on June 15, 2008.

Conference Call:

Heartland Payment Systems, Inc. will host a conference call on May 1, 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.

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The webcast will be archived on the Company’s website within two hours of the live call and will remain available through Friday, May 30, 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 165,000 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 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.

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 Income

(In thousands, except per share data)

(unaudited)

	Three Months Ended March 31,
	2008			2007
Total Revenues	$	339,619		$	284,212
Costs of Services:
Interchange		245,277			205,337
Dues and assessments		12,342			10,459
Processing and servicing		36,929			31,330
Customer acquisition costs		11,450			10,391
Depreciation and amortization		1,910			1,724
Total costs of services		307,908			259,241
General and administrative		17,174			14,299
Total expenses		325,082			273,540
Income from operations		14,537			10,672
Other income (expense):
Interest income		300			459
Interest expense		(346	)		(112	)
Loss on investment		(103	)		—
Other, net		23			(95	)
Total other income (expense)		(126	)		252
Income before income taxes		14,411			10,924
Provision for income taxes		5,434			4,072
Net income	$	8,977		$	6,852
Net income	$	8,977		$	6,852
Other comprehensive income, net of tax:
Unrealized gains on investments		21			3
Foreign currency translation adjustment		(259	)		—
Comprehensive income	$	8,739		$	6,855
Earnings per common share:
Basic	$	0.24		$	0.18
Diluted	$	0.23		$	0.17
Weighted average number of common shares outstanding:
Basic		37,542			37,507
Diluted		38,863			39,971

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Heartland Payment Systems, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except share data)

(unaudited)

	March 31, 2008			December 31, 2007
Assets
Current assets:
Cash and cash equivalents	$	32,501		$	35,508
Funds held for payroll customers		26,761			24,201
Receivables, net		124,044			122,613
Investments		1,132			1,119
Inventory		4,923			5,383
Prepaid expenses		3,431			3,478
Current tax asset		692			5,449
Current deferred tax assets, net		831			690
Total current assets		194,315			198,441
Capitalized customer acquisition costs, net		73,143			70,498
Deferred tax assets, net		3,187			3,878
Property and equipment, net		51,231			50,248
Goodwill		14,542			5,489
Deposits and other assets		1,619			635
Total assets	$	338,037		$	329,189
Liabilities and stockholders’ equity
Current liabilities:
Due to sponsor banks	$	68,042		$	49,798
Accounts payable		18,655			20,495
Deposits held for payroll customers		26,761			24,201
Current portion of accrued buyout liability		11,023			11,521
Merchant deposits and loss reserves		15,783			14,757
Accrued expenses and other liabilities		14,111			15,266
Total current liabilities		154,375			136,038
Reserve for unrecognized tax benefits		1,188			1,230
Long-term portion of accrued buyout liability		28,203			26,252
Total liabilities		183,766			163,520
Commitments and contingencies		—			—
Stockholders’ equity
Common Stock, $0.001 par value, 100,000,000 shares authorized, 37,311,009 and 39,804,322 shares issued at March 31, 2008 and December 31, 2007; 37,311,009 and 37,989,622 shares outstanding at March 31, 2008 and December 31, 2007		38			40
Additional paid-in capital		163,249			173,346
Accumulated other comprehensive loss		(300	)		(62	)
Retained earnings		(8,716	)		36,729
Treasury stock, at cost (1,814,700 shares at December 31, 2007)		—			(44,384	)
Total stockholders’ equity	$	154,271			165,669
Total liabilities and stockholders’ equity	$	338,037		$	329,189

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Heartland Payment Systems, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flow

(In thousands)

(unaudited)

	Three Months Ended March 31,
	2008			2007
Cash flows from operating activities
Net income	$	8,977		$	6,852
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of capitalized customer acquisition costs		12,522			10,062
Other depreciation and amortization		2,673			2,131
Addition to loss reserves		1,829			527
Provision for doubtful receivables		260			80
Stock-based compensation		404			389
Deferred taxes		498			(263	)
Loss on investment		103			—
Other		2			—
Changes in operating assets and liabilities:
Increase in receivables		(1,240	)		(4,723	)
Decrease in inventory		591			188
Payment of signing bonuses, net		(11,433	)		(9,488	)
Increase in capitalized customer acquisition costs		(3,734	)		(3,055	)
Decrease (increase) in prepaid expenses		55			(173	)
Decrease in current tax asset		4,775			4,380
(Increase) decrease in deposits and other assets		(11	)		41
Excess tax benefits on options exercised under SFAS No. 123R		(254	)		(1,951	)
(Decrease) increase in reserve for unrecognized tax benefits		(43	)		276
Increase in due to sponsor bank		18,244			4,755
(Decrease) increase in accounts payable		(2,108	)		948
(Decrease) increase in accrued expenses and other liabilities		(1,650	)		1,574
Decrease in merchant deposits and loss reserves		(807	)		(1,051	)
Payouts of accrued buyout liability		(1,209	)		(2,229	)
Increase in accrued buyout liability		2,663			3,384
Net cash provided by operating activities		31,107			12,654
Cash flows from investing activities
Purchase of investments		(25	)		(32	)
Maturities of investments		—			13
Increase in funds held for payroll customers		(2,617	)		(6,233	)
Increase in deposits held for payroll customers		2,560			6,251
Acquisition of business, net of cash acquired		(9,988	)		—
Purchases of property and equipment		(3,438	)		(5,708	)
Net cash used in investing activities		(13,508	)		(5,709	)
Cash flows from financing activities
Proceeds from borrowings		20,000			—
Principal payments on borrowings and financing arrangements		(20,000	)		(77	)
Proceeds from exercise of stock options		806			2,385
Excess tax benefits on options exercised under SFAS No. 123R		254			1,951
Repurchase of common stock		(17,995	)		(625	)
Dividends paid on common stock		(3,356	)		(1,874	)
Net cash (used in) provided by financing activities		(20,291	)		1,760
Net (decrease) increase in cash and cash equivalents		(2,692	)		8,705
Effect of exchange rates on cash		(315	)		—
Cash and cash equivalents at beginning of year		35,508			16,054
Cash and cash equivalents at end of period	$	32,501		$	24,759

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