Despite posting a fourth-quarter loss, largely on expenses resulting from a data breach, Heartland Payment Systems Inc. reported "encouraging progress" in small and midsize merchant transaction processing volume and same-store sales.

"After more than a year of tremendous legal and related distractions, we are optimistic that we are close to returning to more normalized operations," Robert Carr, Heartland's chairman and chief executive, said on a conference call with analysts Thursday.

The Princeton, N.J., processor swung to a net loss of $9.6 million last quarter from a profit of $8 million a year earlier. Revenue climbed 5%, to $105.1 million.

Expenses from the 2008 network data breach totaled $23.7 million, including charges tied to settling breach-related claims.

"Heartland is making progress, but part of the progress is having big expenses" from the breach, said David J. Koning, a senior research analyst with Robert W. Baird & Co. in Milwaukee.

Small and midsize merchant processing volume rose 5%, to $14.8 billion, "a nice improvement from 1% growth in the third quarter," Bob Baldwin, Heartland's president and chief operating officer, said on the call.

Though same-store sales decreased 5.2% year over year, they improved 340 basis points from the third quarter of 2009. It is "the second consecutive quarter of sequential improvement," Baldwin said. (Same-store sales are those at merchants for which Heartland has comparable data from a prior period.)

Heartland disclosed in January 2009 that its payment network was attacked and an undisclosed amount of transaction data was stolen. The company reached a settlement with Visa Inc. last month and agreed to pay $60 million to issuers of Visa cards for expenses caused by the breach.

The processor settled with American Express Co. for $3.6 million in December. Also that month, Heartland reached a $2.4 million settlement with cardholders. "While we have certainly made progress in resolving claims related to the processing intrusion, several matters have yet to be fully resolved," Carr said.

Despite the fallout from the intrusion, the number of Heartland clients that did not renew contracts grew just 0.1% last year, Carr said. The processor retained 98 of its top 100 sales representatives, "one of the best sales retention rates among top producers in our history," he said.

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