<PAGE>
1997
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 333-30207
HELLER FUNDING CORPORATION
(ON BEHALF OF HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1997-1)
(Exact name of registrant as specified in its charter)
Delaware 36-4165546
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
500 West Monroe Street, Chicago, Illinois 60661
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 441-7246
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [x] No __.
---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_].
Aggregate market value of voting stock held by non-affiliates: None.
Number of shares of Common Stock outstanding at December 31, 1997: None.
Documents incorporated by reference: None.
<PAGE>
PART I
ITEM 1. BUSINESS
Not applicable.
ITEM 2. PROPERTIES
The property of Heller Equipment Asset Receivables Trust 1997-1, a
limited purpose Delaware business trust (the "Trust"), consists primarily of (a)
a pool of contracts originated or acquired by Heller Financial, Inc. or its
wholly-owned subsidiary, Heller Financial Leasing, Inc., consisting of (i)
conditional sale agreements, promissory notes with related security agreements,
finance leases, installment payment agreements, and similar types of financing
agreements with end-users of printing, pre-press, machine tool, plastics,
computer hardware, computer software, restaurant, transportation, energy
related, medical, and industrial equipment, certain computer software and
related support and consulting services, together with certain rights of Heller
Financial, Inc. or Heller Financial Leasing, Inc. under finance program
agreements and assignments with vendors of financed equipment, as well as a
security interest in the equipment, and (ii) limited recourse contractual
payment obligations (which may take the form of promissory notes) payable by
vendors and secured by the vendor's interest in end-user contracts originated by
such vendor, and by the equipment related to such end-user contracts, and (b)
collections on such contracts due or received after July 31, 1997 or, in the
case of additional contracts or substitute contracts, their applicable cutoff
dates.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings with respect to the
Trust or the Registrant.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Not applicable.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Not applicable.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Not applicable.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Not applicable.
ITEM 11. EXECUTIVE COMPENSATION
Not applicable.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Not applicable.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Trust has no directors or officers, and neither the Trust nor the
Registrant is aware of any person or entity that beneficially owns in excess of
5% of any series of Notes.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Exhibits:
99.1 Annual Summary Statement
99.2 Annual Statement of Compliance
99.3 Annual Accountant's Report
(b) Reports on Form 8-K
The Registrant has filed Current Reports on Form 8-K with the
Securities and Exchange Commission dated September 25, 1997, October 27, 1997,
November 25, 1997 and December 26, 1997.
(c) See (a) above.
(d) Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, hereunto duly authorized.
Dated: March 26, 1998
--------------
HELLER FUNDING CORPORATION
By: /s/ Lauralee E. Martin
----------------------
Lauralee E. Martin
Title: President (principal executive officer) and
Director
By: /s/ Lawrence G. Hund
--------------------
Lawrence G. Hund
Title: Treasurer (principal financial and accounting
officer)
By: /s/ Deepak Rai
--------------
Deepak Rai
Title: Vice President, Secretary, Assistant Treasurer
and Director
By: /s/ Jeffrey A. Hilzinger
------------------------
Jeffrey A. Hilzinger
Title: Director
<PAGE>
EXHIBIT INDEX
Exhibit
Number Document Description
- ------ --------------------
99.1 Annual Summary Statement
99.2 Annual Statement of Compliance
99.3 Annual Accountant's Report
<PAGE>
EXHIBIT 99.1
<TABLE>
<CAPTION>
Heller Equipment Asset Receivables Trust 1997-1
- -----------------------------------------------------------------------------------------------------------------------
Heller Financial Inc.- Servicer
Annual Summary Statement - Restricting Events
January 31, 1998 Collection Period
-----------------
Aug 1997 Sep 1997 Oct 1997 Nov 1997 Dec 1997
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Restricting Events
- ------------------
A) Average Cumulative Net Loss Ratio
The Average Cumulative Net Loss Ratio 0.00% 0.00% 0.00% 0.00% 0.04%
The Average Cumulative Net Loss Ratio exceeds 1.0% (yes / no) No No No No No
B) A Servicer Event occurred (yes/no) No No No No No
C) An Event of Default occurred (yes/no) No No No No No
Based on A, B and C, a Restricting Event occurred (yes/no) No No No No No
- ----------------------------------------------------------
</TABLE>
<PAGE>
Heller Equipment Asset Receivables Trust 1997-1
- --------------------------------------------------------------------------------
Heller Financial Inc.- Servicer
Annual Summary Statement- Limitations
January 31, 1998
<TABLE>
<CAPTION>
Collection Period
-----------------
Aug 1997 Sep 1997 Oct 1997 Nov 1997 Dec 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
An Obligor Event occurred No No No No No
10% Substitution Limit Calculation
- ----------------------------------
Percentage of Substitute Contracts replacing Defaulted
Contracts and Adjusted Contracts 0.00% 0.00% 0.00% 0.00% 0.04%
Percentage of Substitute Contracts replacing Defaulted
Contracts and Adjusted Contracts exceeds 10% (yes/no) No No No No No
5% Skipped Payment Limit Calculation
- ------------------------------------
The percent of contracts with Skipped Payment modifications 0.00% 0.00% 0.00% 0.00% 0.04%
The DCB exceeds 5% of the initial ADCB (yes/no) No No No No No
Any Skipped Payments have been deferred later than 12 months
prior to the Class B Maturity Date No No No No No
Concentration Amounts (only applicable at the Cutoff Date or in the event of
- ----------------------------------------------------------------------------
a substitution)
- ---------------
(i) The ADCB of all End-User Contracts with Obligors that are
governmental entities or municipalities exceeds 1.13% of the
ADCB of the Contract Pool No No No No No
(ii) The ADCB of all End-User Contracts which finance, lease or are
related to Software exceeds 3.88% of the ADCB of the
Contract Pool No No No No No
(iii) The ADCB of all End-User Contracts with Obligors who
comprise the three largest Obligors (measured by ADCB as
of the date of determination) exceeds 5.09% of the ADBC
of the Contract Pool No No No No No
(iv) The ADCB of all End-User Contracts with Obligors who
comprise the 20 largest Obligors (measured by ADCB as of
the date of determination) exceeds 24.79% of the ADCB
of the Contract Pool No No No No No
(v) The ADCB of the End-User Contracts related to a single
Vendor, or representing a Vendor Loan of such Vendor or
affiliate thereof exceeds 23.01% of the ADCB of the
Contract Pool No No No No No
(vi) The ADCB of all End-User Contracts with Obligors thereof
located in a single State of the United States exceeds
17.73% of the ADCB of the Contract Pool No No No No No
</TABLE>
<PAGE>
Heller Equipment Asset Receivables Trust 1997-1
- --------------------------------------------------------------------------------
Heller Financial Inc.- Servicer
Annual Summary Statement - Accounts Collection Period
-----------------
January 31, 1998
<TABLE>
<CAPTION>
Aug 1997 Sep 1997 Oct 1997 Nov 1997 Dec 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Scheduled Payments, net of Excluded Amounts, Minus
Servicing Advances, Plus Payaheads 8,135,003.94 10,745,916.40 9,348,676.93 7,108,822.12 8,353,069.08
Prepayment Amounts 383,955.41 (5,288.30) 2,640,243.63 8,004,833.55 1,770,433.27
Recoveries 0.00 0.00 0.00 0.00 0.00
Investment Earnings - Collection Account 0.00 42,027.72 51,752.85 57,620.19 81,452.87
Investment Earnings - Reserve Fund 0.00 9,909.47 11,851.27 12,362.19 13,755.35
Late Charges 0.00 186.42 3,084.22 3,419.38 6,028.33
Expired Lease Proceeds 0.00 0.00 0.00 0.00 0.00
Servicer Advances 1,021,932.58 0.00 44,554.42 440,115.46 0.00
Available Amounts 9,540,891.93 10,782,844.24 12,088,312.05 15,614,810.70 10,210,983.55
Distributions to Noteholders and Certificateholders 9,540,891.93 10,782,844.24 12,088,312.06 15,614,810.71 10,210,983.56
Excess to Certificateholders 469,198.24 261,937.61 204,157.36 96,712.43 0.00
</TABLE>
<PAGE>
Heller Equipment Asset Receivables Trust 1997-1
- --------------------------------------------------------------------------------
Heller Financial Inc.- Servicer
Annual Summary Statement - Schedules Collection Period
-----------------
January 31, 1998
<TABLE>
<CAPTION>
Aug 1997 Sep 1997 Oct 1997
-------- -------- --------
<S> <C> <C> <C>
Unreimbursed Servicer Advances
Unreimbursed Servicer Advances distributed 0.00 0.00 0.00
Servicing Fee
Monthly Servicing Fee distributed 114,094.38 110,779.52 107,029.83
Class A-1 Interest
Class A-1 interest distribution 210,602.82 280,380.11 212,537.30
Class A-2 Interest
Class A-2 interest distribution 714,481.80 1,020,688.29 1,020,688.29
Class B Interest
Class B interest distribution 31,147.76 44,496.81 44,496.81
Class C Interest
Class C interest distribution 21,340.21 30,486.02 30,486.02
Class D Interest
Class D interest distribution 24,375.12 34,821.60 34,821.60
Class A-1 Principal
Class A-1 Principal Payment Amount distributed 7,955,651.60 8,999,254.28 10,434,094.85
Class A-2 Principal
Class A-2 Principal Payment Amount distributed 0.00 0.00 0.00
Class B Principal
Class B Principal Payment Amount distributed 0.00 0.00 0.00
Class C Principal
Class C Principal Payment Amount distributed 0.00 0.00 0.00
Class D Principal
Class D Principal Payment Amount distributed 0.00 0.00 0.00
Reserve Fund
Required Reserve Fund Amount (lesser of (i) initial ADCB * 1%
or (ii) outstanding principal of the Notes) 2,738,265.00 2,738,265.00 2,738,265.00
Draw on Reserve Fund 0.00 0.00 0.00
Required deposit to Reserve Fund 0.00 0.00 0.00
Interest Earned on Reserve Account 0.00 9,909.47 11,851.27
Deposit to Certificateholder 0.00 9,909.47 11,851.27
Ending Reserve Fund balance 2,738,265.00 2,738,265.00 2,738,265.00
Ending Reserve Fund balance as a percentage of ADCB 1.03% 1.07% 1.11%
<CAPTION>
Nov 1997 Dec 1997
-------- --------
<S> <C> <C>
Unreimbursed Servicer Advances
Unreimbursed Servicer Advances distributed 0.00 0.00
Servicing Fee
Monthly Servicing Fee distributed 102,682.29 96,803.45
Class A-1 Interest
Class A-1 interest distribution 175,689.02 106,041.33
Class A-2 Interest
Class A-2 interest distribution 1,020,688.29 1,020,688.29
Class B Interest
Class B interest distribution 44,496.81 44,496.81
Class C Interest
Class C interest distribution 30,486.02 30,486.02
Class D Interest
Class D interest distribution 34,821.60 34,821.60
Class A-1 Principal
Class A-1 Principal Payment Amount distributed 14,109,234.25 8,877,646.06
Class A-2 Principal
Class A-2 Principal Payment Amount distributed 0.00 0.00
Class B Principal
Class B Principal Payment Amount distributed 0.00 0.00
Class C Principal
Class C Principal Payment Amount distributed 0.00 0.00
Class D Principal
Class D Principal Payment Amount distributed 0.00 0.00
Reserve Fund
Required Reserve Fund Amount (lesser of (i) initial ADCB * 1%
or (ii) outstanding principal of the Notes) 2,738,265.00 2,738,265.00
Draw on Reserve Fund 0.00 0.00
Required deposit to Reserve Fund 0.00 0.00
Interest Earned on Reserve Account 12,362.19 13,755.35
Deposit to Certificateholder 12,362.19 13,755.35
Ending Reserve Fund balance 2,738,265.00 2,738,265.00
Ending Reserve Fund balance as a percentage of ADCB 1.18% 1.23%
</TABLE>
<PAGE>
Heller Equipment Asset Receivables Trust 1997-1
- --------------------------------------------------------------------------------
Heller Financial Inc.- Servicer
Annual Summary Statement - Note Factors Collection Period
-----------------
January 31, 1998
<TABLE>
<CAPTION>
Aug 1997 Sep 1997 Oct 1997 Nov 1997 Dec 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Class A-1 CUSIP # 423327AA3
---------
Class A-1 principal balance 55,024,444.40 46,025,190.12 35,591,095.27 21,481,861.02 12,604,214.96
Initial Class A-1 principal balance 62,980,096.00 62,980,096.00 62,980,096.00 62,980,096.00 62,980,096.00
Note factor 0.873679907 0.730789456 0.565116561 0.341089684 0.200130133
Class A-2 CUSIP # 423327AB1
---------
Class A-2 principal balance 191,678,552.00 191,678,552.00 191,678,552.00 191,678,552.00 191,678,552.00
Initial Class A-2 principal balance 191,678,552.00 191,678,552.00 191,678,552.00 191,678,552.00 191,678,552.00
Note factor 1.000000000 1.000000000 1.000000000 1.000000000 1.000000000
Class B CUSIP # 423327AC9
-------
Class B principal balance 8,214,795.00 8,214,795.00 8,214,795.00 8,214,795.00 8,214,795.00
Initial Class B principal balance 8,214,795.00 8,214,795.00 8,214,795.00 8,214,795.00 8,214,795.00
Note factor 1.000000000 1.000000000 1.000000000 1.000000000 1.000000000
Class C CUSIP # 423327AD7
-------
Class C principal balance 5,476,530.00 5,476,530.00 5,476,530.00 5,476,530.00 5,476,530.00
Initial Class C principal balance 5,476,530.00 5,476,530.00 5,476,530.00 5,476,530.00 5,476,530.00
Note factor 1.000000000 1.000000000 1.000000000 1.000000000 1.000000000
Class D
-------
Class D principal balance 5,476,530.00 5,476,530.00 5,476,530.00 5,476,530.00 5,476,530.00
Initial Class D principal balance 5,476,530.00 5,476,530.00 5,476,530.00 5,476,530.00 5,476,530.00
Note factor 1.000000000 1.000000000 1.000000000 1.000000000 1.000000000
</TABLE>
<PAGE>
Heller Equipment Asset Receivables Trust 1997-1
- --------------------------------------------------------------------------------
Heller Financial Inc.- Servicer
Annual Summary Statement - Pool Data Collection Period
-----------------
January 31, 1998
<TABLE>
<CAPTION>
Aug 1997 Sep 1997
-------- --------
<S> <C> <C>
ADCB as of the last day of the Collection Period 265,870,851.40 256,871,597.12
Loss and Delinquency Data for Period
DCB of Defaulted Contracts as of the last day of the Collection Period 0.00 0.00
Number of Defaulted Contracts as of the last day of the Collection Period 0 0
Defaulted Contracts as a percentage of ADCB (annualized) 0.00% 0.00%
DCB of Adjusted Contracts as of the last day of the Collection Period 0.00 0.00
Number of Adjusted Contracts as of the last day of the Collection Period 0 0
DCB of Prepaid Contracts as of the last day of the Collection Period 381,752.73 684,479.04
Number of Prepaid Contracts as of the last day of the Collection Period 6 6
DCB of Substitute Contracts, excluding Warranty Contracts, added to Trust
during Collection Period 0.00 0.00
Number of Substitute Contracts, excluding Warranty Contracts, added to
Trust during Collection Period 0 0
DCB of Warranty Contracts as of the last day of the Collection Period 0.00 60,339.97
Number of Warranty Contracts as of the last day of the Collection Period 0 1
DCB of repurchased Contracts as of the last day of the Collection Period 0.00 744,819.12
Number of repurchased Contracts as of the Collection Period 0 7
DCB of Additional Contracts as of the last day of the Collection Period 0.00 771,107.05
Number of Additional Contracts as of the Collection Period 0 7
Recoveries collected relating to Defaulted Contracts as of the last day of
the Collection Period 0.00 0.00
Delinquencies
Current 263,794,072.22 254,792,049.88
31-60 days past due 3,066,010.74 3,002,881.79
61-90 days past due 77,650.48 244,913.45
Over 90 days past due 150,610.04 0.00
---------- ----
Total 267,088,343.48 258,039,845.12
31+ days past due 3,294,271.26 3,247,795.24
Current 98.77% 98.74%
31-60 days past due 1.15% 1.16%
61-90 days past due 0.03% 0.09%
Over 90 days past due 0.06% 0.00%
----- -----
Total 100.00% 100.00%
31+ days past due 1.23% 1.26%
(i) DCB of cumulative Defaulted Contracts 0.00 0.00
(ii) Cumulative Recoveries realized on Defaulted Contracts 0.00 0.00
Cumulative net losses to date ( (i) - (ii) ) 0.00 0.00
</TABLE>
<TABLE>
<CAPTION>
Oct 1997 Nov 1997 Dec 1997
-------- -------- --------
<S> <C> <C> <C>
ADCB as of the last day of the Collection Period 246,437,502.27 232,328,268.02 223,251,036.49
Loss and Delinquency Data for Period
DCB of Defaulted Contracts as of the last day of the Collection Period 0.00 0.00 303,874.78
Number of Defaulted Contracts as of the last day of the Collection Period 0 0 4
Defaulted Contracts as a percentage of ADCB (annualized) 0.00% 0.00% 1.63%
DCB of Adjusted Contracts as of the last day of the Collection Period 0.00 0.00 0.00
Number of Adjusted Contracts as of the last day of the Collection Period 0 0 0
DCB of Prepaid Contracts as of the last day of the Collection Period 1,948,925.16 7,862,896.86 1,740,074.52
Number of Prepaid Contracts as of the last day of the Collection Period 24 26 10
DCB of Substitute Contracts, excluding Warranty Contracts, added to Trust
during Collection Period 0.00 0.00 0.00
Number of Substitute Contracts, excluding Warranty Contracts, added to
Trust during Collection Period 0 0 0
DCB of Warranty Contracts as of the last day of the Collection Period 3,698,332.46 0.00 0.00
Number of Warranty Contracts as of the last day of the Collection Period 2 0 0
DCB of repurchased Contracts as of the last day of the Collection Period 3,698,332.47 0.00 0.00
Number of repurchased Contracts as of the Collection Period 2 0 0
DCB of Additional Contracts as of the last day of the Collection Period 0.00 0.00 0.00
Number of Additional Contracts as of the Collection Period 0 0 0
Recoveries collected relating to Defaulted Contracts as of the last day of
the Collection Period 0.00 0.00 0.00
Delinquencies
Current 244,846,061.90 227,386,362.98 217,362,672.83
31-60 days past due 2,227,895.86 3,027,317.15 3,866,638.69
61-90 days past due 462,204.83 1,158,336.04 1,604,335.79
Over 90 days past due 196,865.94 153,222.93 735,415.89
---------- ---------- ----------
Total 247,733,028.53 231,725,239.10 223,569,063.20
31+ days past due 2,886,966.63 4,338,876.12 6,206,390.37
Current 98.83% 98.13% 97.22%
31-60 days past due 0.90% 1.31% 1.73%
61-90 days past due 0.19% 0.50% 0.72%
Over 90 days past due 0.08% 0.07% 0.33%
----- ----- -----
Total 100.00% 0.00% 100.00%
31+ days past due 1.17% 1.87% 2.78%
(i) DCB of cumulative Defaulted Contracts 0.00 0.00 303,874.78
(ii) Cumulative Recoveries realized on Defaulted Contracts 0.00 0.00 0.00
Cumulative net losses to date ( (i) - (ii) ) 0.00 0.00 303,874.78
</TABLE>
<PAGE>
Exhibit 99.2
Annual Statement of Compliance
Heller Financial, Inc.
The undersigned, a duly authorized representative of Heller Financial, Inc., as
Servicer pursuant to the Sale and Servicing Agreement dated as of September 1,
1997, among Heller Equipment Asset Receivables Trust 1997-1, as Issuer, Heller
Funding Corporation, as Trust Depositor, Heller Financial, Inc., as Servicer,
and Norwest Bank Minnesota, National Association, as Indenture Trustee, does
hereby certify that:
1. Capitalized terms used in this Annual Statement as to Compliance have
their respective meanings set forth in the Sale and Servicing
Agreement.
2. Heller Financial, Inc. is as of the date hereof the Servicer under the
Sale and Servicing Agreement.
3. The undersigned is duly authorized pursuant to execute and deliver
this Annual Statement of Compliance.
4. This Statement is delivered pursuant to Section 9.05 of the Sale and
Servicing Agreement.
5. A review of the activities of the Servicer during the year ended
December 31, 1997 and of its performance under the Sale and Servicing
Agreement was made under the undersigned's supervision.
6. Based on such review, to the best of the undersigned's knowledge, the
Servicer has performed or has caused to be performed in all material
respects all of its obligations under the Sale and Servicing Agreement
and no Servicer Default has occurred or is continuing.
In Witness Whereof, I have affixed my signature hereto this 31st day of January,
1998.
By: /s/ Julia S. Landes
-------------------------------
Julia S. Landes
Title: Vice President
<PAGE>
Exhibit 99.3
Independent Accountants' Report on Applying Agreed-Upon Procedures
------------------------------------------------------------------
To the Board of Directors of Heller Financial, Inc., Wilmington Trust Company
and Norwest Bank Minnesota, N. A.:
We have performed the procedures enumerated below in items A. and B. in
conjunction with Section 9.04 of the Sale and Servicing Agreement, dated
September 1, 1997 (the "Agreement").
A. We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of Heller Financial, Inc. (the
"Servicer") and subsidiaries as of December 31, 1997, and have issued our
report thereon dated January 23, 1998. We have not audited any financial
statements of the Servicer as of any date or for any period subsequent to
December 31, 1997 or performed any audit procedures subsequent to the date
of our report on those statements.
In connection with our audit, nothing came to our attention that caused us
to believe that the Servicer was not in compliance with any of the terms,
covenants, provisions, or conditions in Sections 3.02, 5, 7, and 8 (to the
extent such sections are applicable to Heller Financial, Inc. as Servicer)
of the Agreement in conjunction with the servicing of equipment leases and
loans owned by the Heller Equipment Asset Receivables Trust 1997-1, insofar
as they relate to accounting matters. It should be noted, however, that our
audit was not directed primarily toward obtaining knowledge of such
noncompliance.
As a part of our audit, we obtained an understanding of the Servicer's
internal control structure over the Servicer's entire equipment lease
portfolio, including those leases serviced under the Agreement, to the
extent considered necessary in order to assess control risk as required by
generally accepted auditing standards. The purpose of our consideration of
the internal control structure, which includes the accounting systems, was
to determine the nature, timing, and extent of the auditing procedures
necessary for expressing an opinion on the financial statements. Such audit
procedures, however, were not performed in order to express a separate
opinion on the the Heller Equipment Asset Receivables Trust 1997-1.
Our audit disclosed no exceptions or errors in records relating to equipment
leases and loans serviced by the Servicer that, in our opinion, Section 9.04
of the Agreement required us to report.
B. We have performed the procedure described in the following paragraph, which
was agreed to by the management of the Servicer and Norwest Bank Minnesota,
N. A. as Indenture Trustee and the Wilmington Trust Company, as Owner
Trustee (together, the "Specified Users"), with respect to Section 9.04 of
the Agreement, in conjunction with the servicing of equipment leases and
loans owned by the Heller Equipment Asset Receivables Trust 1997-1. This
agreed-upon procedure was performed in accordance with standards established
by the American Institute of Certified Public
<PAGE>
Accountants. The sufficiency of the procedure is solely the responsibility
of the Specified Users of the report. Consequently, we make no
representation regarding the sufficiency of the procedure described below
either for the purpose for which this report has been requested or for any
other purpose. For purposes of this procedure, we have reported any
difference between the item indicated on the Monthly Servicer Reports and
the Servicer's supporting documentation that exceeded $750. Any difference
below this amount was deemed to be immaterial.
The procedure and associated findings are as follows:
From the Monthly Servicer's Certificates prepared by the Servicer between
September, 1997 and December, 1997, we selected the Monthly Servicer
Certificates for the months of November, 1997 and December, 1997
Distribution Dates and performed the following:
We have compared the mathematical calculation of each amount set forth
in the Monthly Servicer's Certificates to the Servicer's computer,
accounting and other reports and found them to be in agreement, except
as noted below:
. Within the section entitled "Loss, Delinquency and Pool Data for
the Period" on page 8 of the Monthly Servicer's Reports, "ADCB as
of the last day of the Collection Period" does not agree to the
"Total" of the Delinquencies subsection. The difference is due to
the Servicer including payaheads in the "ADCB as of the last day
of the Collection Period" and excluding payaheads from the "Total"
of the Delinquencies subsection. Officials of the Company have
informed us that the Indenture Trustee is aware of this.
. For the December, 1997 Monthly Servicer Report, within the section
entitled "Loss, Delinquency and Pool Data for the Period" on page
8, the dollar amount indicated as "Current" in the "Delinquencies"
caption and the corresponding "Total" is understated by
$1,336,252.
. Within the section entitled "Collection Account" on page 3 of the
Monthly Servicer's Reports, Reimbursement of Servicer Advances are
netted within the "Servicer Advances" caption. Officials of the
Company have informed us that the Indenture Trustee is aware of
this.
. For the November, 1997 Monthly Servicer Report, within the section
entitled "Loss, Delinquency and Pool Data for the Period" on page
8, the contracts included in "DCB of Prepaid Contracts as of the
last day of the Collection Period" does not agree to the contracts
included in "Prepayment Amounts" indicated on page 3 of the
Monthly Servicer Reports under the caption "Collection Account".
The difference is due to two contracts being excluded from the
"DCB of Prepaid Contracts as of the last day of the Collection
Period". The contracts and dollar amount included within
"Prepayment Amounts" on page 3 are correct. The DCB of Prepaid
Contracts on page
<PAGE>
8 was understated by $491,438. This difference had no impact on
the cash distributions to investors nor on any other calculation
within the November, 1997 Monthly Servicer Report.
Our comparisons were based on records provided to us by the Servicer
and the methodology set forth in the Agreement.
With respect to the procedure performed in item B. above, we were not engaged
to, and did not, perform an audit, the objective of which would be the
expression of an opinion on the Monthly Servicer's Certificates described above.
Accordingly, we do not express such an opinion. Had we performed additional
procedures, other matters might have come to our attention that would have been
reported to you.
This report is intended solely for the information and use of the Specified
Users and should not be used by those who have not agreed to the procedures and
taken responsibility for the sufficiency of these procedures for these purposes.
/s/ Arthur Andersen LLP
Chicago, Illinois
March 26, 1998
