<PAGE>
1998
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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, 1998
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, 1998: 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 January 26, 1998, February 25, 1998,
March 25, 1998, April 27, 1998, May 25, 1998, June 25, 1998, July 27, 1998,
August 25, 1998, September 25, 1998, October 26, 1998, November 25, 1998 and
December 28, 1998.
(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, 1999
--------------
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
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1997-1
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Heller Financial Inc.- Servicer
Annual Summary Statement - Restricting Events For the year ended
January 31, 1999 December 31, 1998
------------------
<S> <C>
RESTRICTING EVENTS
- ------------------
A) AVERAGE CUMULATIVE NET LOSS RATIO
The Average Cumulative Net Loss Ratio 0.49%
The Average Cumulative Net Loss Ratio exceeds 1.0% (yes / no) no
B) A Servicer Event occurred (yes/no) no
C) AN EVENT OF DEFAULT OCCURRED (YES/NO) no
BASED ON A, B AND C, A RESTRICTING EVENT OCCURRED (YES/NO) no
- ----------------------------------------------------------
</TABLE>
<PAGE>
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1997-1
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Heller Financial Inc.- Servicer
Annual Summary Statement- Limitations For the year ended
January 31, 1999 December 31, 1998
-----------------
<S> <C>
AN OBLIGOR EVENT OCCURRED no
10% SUBSTITUTION LIMIT CALCULATION
- ----------------------------------
Percentage of Substitute Contracts replacing Defaulted
Contracts and Adjusted Contracts 0.00%
Percentage of Substitute Contracts replacing Defaulted
Contracts and Adjusted Contracts exceeds 10% (yes/no) no
5% SKIPPED PAYMENT LIMIT CALCULATION
The percent of contracts with Skipped Payment modifications 0.18%
0.18% The DCB exceeds 5% of the initial ADCB (yes/no) no Any
Skipped Payments have been deferred later than 12 months
prior to the Class B Maturity Date 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
(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
(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
(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
(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
(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
</TABLE>
<PAGE>
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1997-1
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Heller Financial Inc.- Servicer
Annual Summary Statement - Accounts For the year ended
January 31, 1999 December 31, 1998
-----------------
<S> <C>
Scheduled Payments, net of Excluded Amounts, Minus
Servicing Advances, Plus Payaheads 76,728,503.06
Prepayment Amounts 33,145,367.83
Recoveries 1,202,423.33
Investment Earnings - Collection Account 575,573.71
Investment Earnings - Depositied into Collection Account 65,527.24
Late Charges 72,580.45
Expired Lease Proceeds -
Servicer Advances 2,681,074.91
Available Amounts 114,471,050.53
Distributions to Noteholders and Certificateholders 114,471,050.50
Excess to Certificateholders -
</TABLE>
<PAGE>
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1997-1
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Heller Financial Inc.- Servicer
Annual Summary Statement - Schedules For the year ended
January 31, 1999 December 31, 1998
-----------------
<S> <C>
UNREIMBURSED SERVICER ADVANCES
- ------------------------------
Unreimbursed Servicer Advances distributed -
SERVICING FEE
- -------------
Monthly Servicing Fee distributed 859,389.13
CLASS A-1 INTEREST
- ------------------
Class A-1 interest distribution 76,537.03
CLASS A-2 INTEREST
- ------------------
Class A-2 interest distribution 9,908,162.86
CLASS B INTEREST
- ----------------
Class B interest distribution 431,945.39
CLASS C INTEREST
- ----------------
Class C interest distribution 296,100.59
-
CLASS D INTEREST -
- -----------------
Class D interest distribution 360,007.09
CLASS A-1 PRINCIPAL
- -------------------
Class A-1 Principal Payment Amount distributed -
CLASS A-2 PRINCIPAL
- -------------------
Class A-2 Principal Payment Amount distributed 5,574,969.97
CLASS B PRINCIPAL
- -----------------
Class B Principal Payment Amount distributed 238,927.28
CLASS C PRINCIPAL
- -----------------
Class C Principal Payment Amount distributed 159,284.85
CLASS D PRINCIPAL
- -----------------
Class D Principal Payment Amount distributed 252,859.04
RESERVE FUND
- ------------
Required Reserve Fund Amount (lesser of (i) initial ADCB * 1%
or (ii) outstanding principal of the Notes) 2,738,265.00
Draw on Reserve Fund
Required deposit to Reserve Fund -
Interest Earned on Reserve Account 163,136.52
Deposit to Certificateholder 97,636.28
Deposit to Collection Account 65,500.24
Ending Reserve Fund balance 2,738,265.00
Ending Reserve Fund balance as a percentage of ADCB 2.27%
</TABLE>
<PAGE>
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1997-1
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Heller Financial Inc.- Servicer
Annual Summary Statement - Note Factors For the year ended
January 31, 1999 December 31, 1998
-----------------
<S> <C>
CLASS A-1 CUSIP # 423327AA3
---------
Class A-1 principal balance 0.00
Initial Class A-1 principal balance 62,980,096.00
Note factor 0.000000000
CLASS A-2 CUSIP # 423327AB1
---------
Class A-2 principal balance 109,490,661.72
Initial Class A-2 principal balance 191,678,552.00
Note factor 0.571220205
CLASS B CUSIP # 423327AC9
-------
Class B principal balance 4,692,456.88
initial Class B principal balance 8,214,795.00
Note factor 0.571220205
Class C CUSIP # 423327AD7
-------
Class C principal balance 3,128,304.59
Initial Class C principal balance 5,476,530.00
Note factor 0.571220205
Class D
-------
Class D principal balance 3,600,290.36
Initial Class D principal balance 5,476,530.00
Note factor 0.657403568
</TABLE>
<PAGE>
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1997-1
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Heller Financial Inc.- Servicer
Annual Summary Statement - Pool Data For the year ended
January 31, 1999 December 31, 1998
-----------------
<S> <C>
ADCB AS OF THE DECEMBER 31, 1998 120,439,727.78
LOSS AND DELINQUENCY DATA FOR PERIOD
- ------------------------------------
DCB of Defaulted Contracts for the year ended December 31, 1998 2,274,929.87
Number of Defaulted Contracts for the year ended December 31, 1998 20
Defaulted Contracts as a percentage of ADCB (annualized) 17.12%
DCB of Adjusted Contracts for the year ended December 31, 1998 -
Number of Adjusted Contracts for the year ended December 31, 1998 -
DCB of Prepaid Contracts for the year ended December 31, 1998 24,884,498.19
Number of Prepaid Contracts for the year ended December 31, 1998 159
DCB of Substitute Contracts, excluding Warranty Contracts, added to Trust
during for the year ended December 31, 1998 0.00
Number of Substitute Contracts, excluding Warranty Contracts, added to
Trust during for the year ended December 31, 1998 0
DCB of Warranty Contracts for the year ended December 31, 1998 5,621,529.06
Number of Warranty Contracts for the year ended December 31, 1998 4
DCB of repurchased Contracts for the year ended December 31, 1998 4,834,768.23
Number of repurchased Contracts for the year ended December 31, 1998 3
DCB of Additional Contracts for the year ended December 31, 1998 2,068,713.71
Number of Additional Contracts for the year ended December 31, 1998 3
Recoveries collected relating to Defaulted Contracts
for the year ended December 31, 1998 1,202,423.33
DELINQUENCIES
Current 117,219,557.12
31-60 days past due 3,688,806.45
61-90 days past due 436,792.99
Over 90 days past due 177,073.51
-------------------
Total 121,522,230.07
31+ days past due 4,302,672.95
Current 96.46%
31-60 days past due 3.04%
61-90 days past due 0.36%
Over 90 days past due 0.15%
-------------------
Total 100.00%
31+ days past due 3.54%
(i) DCB of cumulative Defaulted Contracts 2,578,804.66
(ii) Cumulative Recoveries realized on Defaulted Contracts 1,202,423.33
Cumulative net losses to date ( (i) - (ii) ) 1,376,381.33
</TABLE>
<PAGE>
Exhibit No. 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, 1998 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 27th day of January,
1999.
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" or the "Company") and subsidiaries as of December 31, 1998, and
have issued our report thereon dated January 18, 1999. We have not audited
any financial statements of the Servicer as of any date or for any period
subsequent to December 31, 1998 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, 8, and 9 (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 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
<PAGE>
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 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.
The procedure and associated findings are as follows:
From the Monthly Servicer's Certificates prepared by the Servicer between
January 1998 and December 1998, we selected the Monthly Servicer
Certificates for the months of March, June, September and December 1998
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 Certificates,
"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.
. Within the section entitled "Collection Account" on page 3 of the
Monthly Servicer's Certificates, 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 March and June Monthly Servicer Certificates, Investment
Earnings are added to the beginning Reserve Fund balance to
compute the "Available Amount," and the distribution of these
earnings is reflected in "Distributions to Note Holders and
Certificate Holders." For the September and December Monthly
Servicer Certificates, Investment Earnings are not reflected as
an addition to compute the "Available Amount" and are thus not
reflected in "Distributions to Note Holders and Certificate
Holders." Officials of the Company have informed us that the
<PAGE>
Indenture Trustee requested this change beginning with the
September Monthly Servicer Certificate.
. For the March, 1998 Monthly Servicer Certificate, within the
section entitled "Loss, Delinquency and Pool Data for the Period"
on page 8, the dollar amount indicated as "DCB of Prepaid
Contracts as of the last day of the Collection Period" is
understated by $194,083 as compared to the Company's servicing
records.
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 18, 1999
