Results for the quarter are after $740,000 (pre-tax), or $0.01 per share, of various expenses and accruals, all of which are attributable to the processing system intrusion. Excluding these expenses and accruals, Adjusted Net Income and Earnings per Share were $8.0 million and $0.20, respectively, for the quarter ended September 30, 2010 compared to Adjusted Net Income and Earnings per Share of $8.7 million and $0.23, respectively, for the quarter ended September 30, 2009. 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:

* Record Small and Mid-Sized Merchant (SME) quarterly transaction processing volume of $16.6 billion, up 5.9% from the comparable period in 2009
* Record Quarterly Net Revenue of $115.4 million, up 4.9% from the third quarter of 2009
* Same store sales rose 2.0% compared to the third quarter of 2009, the second consecutive quarter of same store sales growth
* New margin installed of $12.5 million, with September representing the best monthly new margin installed this year. Although down 13.7% from the third quarter of last year, third quarter new margin installed represented the second consecutive quarter of sequential growth
* Operating margin on net revenue of 12.3% compared to 13.4% for the same quarter in 2009
* Stock compensation expense of $1.7 million, or $0.03 per share, in the third quarters of both years

Robert Carr, Chairman and CEO, said, "Third quarter transaction processing volume reached record levels on the strength of the second consecutive quarter of same store sales growth and the progress we are achieving improving new margin installed and reducing volume attrition. In the face of continued economic weakness, particularly for small and mid-sized merchants, these are encouraging signs that our comprehensive product offerings are meeting the needs of our target market. We also saw progress in our efficiency and productivity initiatives, as general and administrative expenses in the quarter were down from the year ago period. We believe there remains substantial opportunity to further leverage our infrastructure. Having adapted to a changed landscape of slower economic growth and heightened security concerns throughout our industry, we believe we are well-prepared to more aggressively focus on opportunities to grow and expand our franchise to create value for our shareholders."

SME card processing volume for the three months ended September 30, 2010 was a record $16.6 billion, a 5.9% improvement compared to the year ago period, as a result of better same store sales, lower volume attrition and improved new margin installed performance. For the three months ended September 30, 2010, both net revenues of $115.4 million and the 825 million Network Services transactions processed were quarterly records. Same store sales in the SME segment were up 2.0% in the quarter, a 90 basis point sequential improvement from same stores sales growth in the second quarter of this year. Operating income as a percentage of net revenues was 12.3% in the third quarter of 2010, down compared to the 2009 period due to processing and servicing costs increasing faster than net revenues. However, on an absolute basis, processing and servicing costs were marginally lower than in the second quarter of this year. The expenses attributable to the processing system intrusion in the third quarter of 2010 were $740,000 pre-tax, or $0.01 per share. These expenses are shown separately in the Company's Statement of Operations. Interest expense for the third quarter of 2010 included approximately $500,000, or $0.01 per share, related to borrowings incurred to fund the various card brand settlements.

Mr. Carr continued, "Record quarterly transaction processing volumes are certainly indicative of the health of Heartland Payment Systems, but I believe there were even greater achievements in the third quarter. A rededication to our basic sales strategy is proving effective, with new margin installed in September up over 10% from any other month this year, and October up over 10% from September's results. With the implementation of our 'E3' technology by many of our new customers, we believe we now service the largest number of merchants in the United States actively using truly effective end-to-end encryption technology to secure their transactions. To capitalize on this momentum, we are introducing new products to expand our existing line into additional markets. The claims asserted against us by all four major card brands have now been resolved, freeing management to more intently focus on our growth. At the same time, we have implemented a number of changes that better align our organization with current business activity levels, and will continue to drive cost saves in order to more effectively leverage our core infrastructure. Over the long term, there remain significant growth opportunities for Heartland Payment Systems in the evolution of electronic payments, in the increased emphasis on security, and in the ongoing value merchants place on a relationship with their provider. These are all strengths of Heartland that give us confidence that we can continue to capitalize on the growth opportunities in the small and mid-sized merchant market by leveraging our valuable brand."

NINE MONTH RESULTS:

For the first nine months of 2010, GAAP net income was $27.9 million or $0.71 per share, compared to a net loss of $42.2 million or $1.12 per share for the first nine months of 2009. Net revenues for the first nine months of 2010 were $334.4 million, up 6.1% compared to the first nine months of 2009. Excluding various expenses, accruals and reserves, all of which are attributable to the processing system intrusion, Adjusted Net Income and Earnings per Share for the first nine months of fiscal 2010 were $18.8 million or $0.48 per share, compared to $23.4 million, or $0.62 per share, in the prior year nine months. Year-to-date 2010, stock compensation expense has reduced earnings by $4.5 million pre-tax, or $0.07 per diluted share, compared to $2.8 million or $0.05 per diluted share for the same nine-month period in 2009. Interest expense for the first nine months of 2010 included approximately $1.2 million, or $0.02 per share, related to borrowings we incurred to fund the various card brand settlements.

Read the full statement here