During the three months ended June 30, 2012, the Company incurred approximately $0.1 million, or less than one cent per share, for legal fees and costs it incurred related to the Processing System Intrusion. During the three months ended June 30, 2011, the Company expensed approximately $0.4 million, or less than one cent per share, related to the Processing System Intrusion. During the six months ended June 30, 2012, the Company incurred approximately $0.2 million, or less than one cent per share, for legal fees and costs it incurred related to the Processing System Intrusion. During the six months ended June 30, 2011, the Company expensed approximately $0.7 million, or less than one cent per share, related to the Processing System Intrusion.

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 share-based compensation expense and 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:
  • Share-based compensation expense, and Processing System Intrusion costs and recoveries 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 expenses and recoveries 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 and share-based compensation expense 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 and six months ended June 30, 2012 and 2011 follows:
     
(In thousands, except per share): Three Months Ended Six Months Ended
June 30, June 30,

Net income attributable to Heartland
2012 2011

 

2012
  2011
Non-GAAP - Adjusted net income attributable $ 20,313 $ 13,567

 
35,983 22,792
to Heartland

$

$
Less adjustments:
Share-based compensation expense 3,967 1,730 6,901 3,700
Income tax benefit on share-based (1,505) (653) (2,621) (1,401)
compensation expense        
After-tax share-based compensation expense   2,462   1,077   4,280   2,299
Provision for processing system intrusion 81 372 238 675
costs
Income tax impact of provision for (31) (140) (90) (255)
processing system intrusion        
After-tax provision for processing system 50 232 148 420
intrusion costs        

GAAP - Net income attributable to Heartland
$ 17,801 $ 12,258 $ 31,555 $ 20,073
 

Earnings per share
 
Non-GAAP - Adjusted net income per share $ 0.50 $ 0.34

 

$
0.89

$
0.57
Less: share-based compensation expense 0.06 0.03 0.11 0.06
Less: provision for processing system 0.01
intrusion costs        
GAAP - Net income per share $ 0.44 $ 0.31 $ 0.78 $ 0.50
 
Shares used in computing net income per
40,448 40,128 40,504 39,934
share
 

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