HELLER FINANCIAL INC, 10-K, 1995-02-08

HELLER FINANCIAL INC
10-K, 1995-02-08
SHORT-TERM BUSINESS CREDIT INSTITUTIONS

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<PAGE> 1

1994
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------

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 [FEE REQUIRED]

For the Fiscal Year Ended December 31, 1994

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
[NO FEE REQUIRED]

Commission file number 1-6157

HELLER FINANCIAL, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

500 West Monroe Street, Chicago, Illinois
(Address of principal executive offices)

36-1208070
(I.R.S. Employer Identification No.)

60661
(Zip Code)

Registrant's telephone number, including area code: (312) 441-7000

Securities registered pursuant to Section 12(b) of the Act:

<TABLE>
<S> <C>
Cumulative Perpetual Senior Preferred Stock, Series A New York Stock Exchange, Inc.
</TABLE>

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. X

Aggregate market value of voting stock held by non-affiliates: None.

Number of shares of Common Stock outstanding at February 6, 1995: 100.
Documents incorporated by reference: None.

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Page 1 of 111
Index to Exhibits at Page 64
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION> NAME OF ITEM

ITEM NO. PART I PAGE
- - --------- ------------------------------------------------------------------------------ ----
<S> <C> <C>

Item 1. Business...................................................................... 3
Corporate Finance........................................................... 3
Real Estate Finance......................................................... 3
Asset Based Finance......................................................... 3
Current Asset Management.................................................... 4
Specialized Finance and Investments......................................... 4
International Factoring and Asset Based Finance............................. 4
Ownership..................................................................... 4
Summary of Total Revenues, Lending Assets and Investments..................... 5
Rates Charged; Competition; Regulation........................................ 5
Item 2. Properties.................................................................... 5
Item 3. Legal Proceedings............................................................. 5
Item 4. Submission of Matters to a Vote of Security Holders........................... 5

PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters......... 5
Item 6. Selected Financial Data....................................................... 6
Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations.................................................................. 7
Results of Operations....................................................... 7
Portfolio Composition....................................................... 9
Product Categories........................................................ 10
Credit Management......................................................... 15
Portfolio Quality......................................................... 16
Liquidity and Capital Resources............................................. 18
Risk Management........................................................... 18
Accounting Developments..................................................... 19
Item 8. Financial Statements and Supplementary Data................................... 20
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure.................................................................. 46

PART III
Item 10. Directors and Executive Officers of the Registrant............................ 47
Item 11. Executive Compensation........................................................ 50
Summary Compensation Table.................................................. 51
Retirement and Other Defined Benefit Plans.................................. 52
Compensation of Directors................................................... 52
Employment Contracts and Termination of Employment and Change of Control
Arrangements.............................................................. 53
Compensation Committee Interlocks and Insider Participation................. 53
Item 12. Security Ownership of Certain Beneficial Owners and Management................ 53
Voting Securities........................................................... 53
Equity Securities........................................................... 54

Item 13. Certain Relationships and Related Transactions................................ 55
Keep Well Agreement with Fuji Bank.......................................... 55
Tax Allocation Agreements................................................... 56
Certain Transactions with Fuji Bank and with the Parent and Its
Subsidiaries................................................................ 57
Certain Other Relationships................................................. 58

PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K............... 58
</TABLE>

2
<PAGE> 3

PART I

ITEM 1. BUSINESS

Heller Financial, Inc. (the "Company") was incorporated in 1919 under the
laws of the State of Delaware and is engaged in various aspects of the
commercial finance business. The Company and its consolidated subsidiaries
employ approximately 1,400 people. The executive offices are located at 500 West
Monroe Street, Chicago, Illinois 60661 (telephone: (312) 441-7000). Unless the
context indicates otherwise, references to the Company include Heller Financial,
Inc. and its consolidated subsidiaries.

The Company operates in the middle market segment of the commercial finance
industry, which generally includes entities in the manufacturing and service
sectors with annual sales in the range of $15 million to $200 million and in the
real estate sector with property values generally in the range of $5 million to
$40 million. The Company currently provides services in six product categories:
(1) corporate finance, (2) real estate finance, (3) asset based finance, (4)
current asset management, (5) specialized commercial finance and investments and
(6) international factoring and asset based finance.

The Company is continuing the program begun in 1990 to diversify its
portfolio and earnings sources, strengthen earnings quality, improve asset
quality and maintain its capital strength. The Company is diversifying its
portfolio and earnings sources by reducing reliance on the corporate finance
business and growing the asset based and international businesses. Earnings
quality is being strengthened by developing more stable earning streams,
reducing the level and volatility of credit quality costs and increasing
productivity. Asset quality is improving through resolution of problem accounts
and more conservative underwriting practices. The Company is pursuing these
goals in the framework of continued moderate leverage, strong reserves and
conservative liquidity.

CORPORATE FINANCE

The Corporate Finance group offers a broad spectrum of services based on
the cash flows underlying a client's business. These services are often provided
through coordination with private equity sponsors and include the financing of
corporate recapitalizations, refinancings, acquisitions and buy-outs of publicly
and privately held entities in a wide variety of industries. Loans are provided
on both a term and revolving basis for periods of up to ten years and are
typically collateralized by senior liens on the borrower's stock or assets or
both. Corporate finance transactions may also include some unsecured,
subordinated or non-voting equity financing. From time to time the Company buys
and sells assignments and participations in loans as a method of managing hold
sizes and industry concentrations.

REAL ESTATE FINANCE

The Real Estate Financial Services group provides interim financing to
owners, investors and developers primarily for the acquisition, refinancing and
renovation of commercial income producing properties in a wide range of property
types and geographic areas. These loans generally have terms ranging from one to
five years and are principally collateralized by first mortgages. The Company
also offers financing for discounted loan portfolio acquisitions, participating
junior debt financing to developers of single and multi-family housing, credit
sale-leaseback financing for single tenant properties, as well as standby
commitments for periods of one to two years.

ASSET BASED FINANCE

Asset based financing is offered by Vendor Finance, Commercial Equipment
Finance, Heller Business Credit ("Business Credit") and Heller First Capital
("First Capital"). Vendor Finance provides leasing and financing of equipment
through approximately 75 manufacturer and vendor programs, financing of
independent leasing companies and direct relationships with end users.
Individual transactions are generally under $500,000. This division finances the
machining, graphics, healthcare, communication, plastics and production
equipment markets. Commercial Equipment Finance provides financing of general
equipment transactions

3
<PAGE> 4

with an average size of $3 million to a diverse group of businesses for
expansion, replacement and modernization or refinancing of existing equipment
obligations.

Business Credit provides working capital and term financing to middle
market companies in a variety of industries for refinancings, recapitalizations
and acquisitions. The group also serves as co-lender on or participates in
transactions agented by other asset based lenders. The average commitment and
loan sizes are $17 million and $8 million, respectively, and are usually for
periods of 3 to 5 years. These loans consist of revolving credit facilities
secured by accounts receivable and inventory and to a lesser extent, term loans
secured by property, plant and equipment. The revolving credit facilities and
term loans are generally cross-collateralized.

First Capital is a provider of long-term financial products for small
businesses under U.S. Small Business Administration loan programs, which
guarantee from 60% to 90% of such financings. These loans generally have an
average size of $347,000 and are made to small businesses in a wide variety of
industries for working capital, equipment and owner-occupied facilities. The
guaranteed portions of these loans are generally sold in the secondary market,
with servicing rights retained by First Capital.

CURRENT ASSET MANAGEMENT

The Current Asset Management group primarily offers factoring services to
the apparel, textile and home furnishings industries. In return for a
commission, the group purchases the client's accounts receivable and provides
collection and management information services. Working capital is provided by
advancing on a formula basis a percentage of the purchase price of the client's
factored accounts receivable. In 1994, the Company was one of the largest
factors in the highly competitive United States factoring industry, with volume
of $6.6 billion.

SPECIALIZED FINANCE AND INVESTMENTS

Specialized financing and investments are generally originated by four
units: Aircraft Finance, Project Investment and Advisory, Heller Equity Capital
and Heller Investments. Aircraft Finance offers financing for commercial
aircraft and equipment through leases or junior secured loans to an operating
lessor, with terms ranging from 2 to 10 years. Project Investment and Advisory
offers financing to independent power producers and industrial projects in the
form of senior and junior secured loans, equity investments and development
loans. Heller Equity Capital and Heller Investments make investments in middle
market companies. Heller Equity Capital invests primarily in established middle
market companies, while Heller Investments provides capital to companies
requiring an operational or financial turnaround.

INTERNATIONAL FACTORING AND ASSET BASED FINANCE

The Company provides factoring and asset based financing outside the United
States through investments in commercial finance companies located in 19
countries in Europe, Asia, Australia and Latin America. These companies, which
may be wholly-owned or joint ventures, offer factoring, asset based finance,
acquisition finance, leasing, vendor finance and/or trade finance programs to
the mid-sized corporate sector. During 1994, the Company continued to pursue new
international opportunities as it invested in a factoring joint venture in
Argentina. In addition to these joint venture activities, the Company has
expanded support of the international needs of existing domestic customers.

OWNERSHIP

All of the outstanding Common Stock of the Company is owned by Heller
International Corporation (the "Parent"), a wholly-owned subsidiary of The Fuji
Bank, Limited ("Fuji Bank"), headquartered in Tokyo, Japan. Fuji Bank also
directly owns 21% of the outstanding shares of Heller International Group, Inc.,
a consolidated subsidiary of the Company engaged in international factoring and
asset based financing activities. Fuji Bank is one of the largest banks in the
world, with total deposits of approximately $386 billion at September 30, 1994.
For a discussion of the "Keep Well Agreement" between Fuji Bank and the Company,
see "Certain Relationships and Related Transactions -- Keep Well Agreement with
Fuji Bank."

4
<PAGE> 5

SUMMARY OF TOTAL REVENUES, LENDING ASSETS AND INVESTMENTS

A summary of total revenues, lending assets and investments by product
category is included in the "Portfolio Composition" section of "Management's
Discussion and Analysis of Financial Condition and Results of Operations." This
summary closely corresponds to a classification by operating unit. For
information about international operations, see Note 15 to the Consolidated
Financial Statements.

RATES CHARGED; COMPETITION; REGULATION

Rates charged by the Company vary depending on the risk and maturity of the
loan, competition, current cost of borrowing to the Company, state usury laws
and other governmental regulations. The Company's portfolio of receivables
primarily earns interest at variable rates. These variable rates float in
accordance with various agreed upon reference rates, including the London
Inter-bank Offered Rate, the prime rate or corporate base lending rates.
Competition varies by operating group. In general, the Company is subject to
competition from a variety of financial institutions, including commercial
finance companies, banks and leasing companies.

As a subsidiary of Fuji Bank, the Company is subject to the limitations
imposed by the Bank Holding Company Act of 1956, as amended, and related
regulations adopted by the Board of Governors of the Federal Reserve System.
Those regulations restrict the Company to activities that have been defined as
being so closely related to banking as to be incidental thereto and also
restrict certain lending activities. Certain of the Company's equity investment
and small business lending activities are subject to the supervision and
regulation of the Small Business Administration. To date, such regulations have
not had a material adverse effect on the Company.

ITEM 2. PROPERTIES

The Company leases executive offices located at 500 West Monroe Street,
Chicago, Illinois 60661 and maintains various offices throughout the United
States, Europe, Asia and Australia, all of which are leased premises. For
information concerning the Company's lease obligations, see Note 7 to the
Consolidated Financial Statements.

ITEM 3. LEGAL PROCEEDINGS

The Company is party to a number of legal proceedings as plaintiff and
defendant, all arising in the ordinary course of its business. The Company
believes that the amounts, if any, which may ultimately be funded or paid with
respect to these matters will not have a material adverse effect on the
financial condition or results of operations of the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were acted upon in the fourth quarter of 1994.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The outstanding Common Stock of the Company is owned entirely by the
Parent, which is wholly-owned by Fuji Bank. There is no public trading market
for the Company's Common Stock. The Company is prohibited from paying cash
dividends on Common Stock on a timely basis, unless full cumulative dividends on
all outstanding shares of Perpetual Preferred, Convertible Preferred and NW
Preferred Stock have been paid. All preferred stock dividends have been paid and
in 1994 the Company declared and paid a $20 million cash dividend on Common
Stock to its Parent. The Company anticipates paying future dividends on Common
Stock while maintaining its conservative capital structure.

5
<PAGE> 6

ITEM 6. SELECTED FINANCIAL DATA

The following table presents information from the Company's Consolidated
Financial Statements for the five years ended December 31, 1994, which have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their report included herein. This information should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations," and the "Financial Statements and Supplementary Data."

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------
1994 1993 1992 1991 1990
----- ----- ----- ----- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Interest income...................................... $ 702 $ 620 $ 634 $ 730 $ 813
Interest expense..................................... 336 264 295 406 488
----- ----- ----- ----- -----
Net interest income............................... 366 356 339 324 325
Fees and other income................................ 170 138 101 95 84
Income of international joint ventures............... 21 23 26 19 20
----- ----- ----- ----- -----
Operating revenues................................ 557 517 466 438 429
Operating expenses................................... 195 174 169 167 181
Provision for losses................................. 188 210 252 201 144
----- ----- ----- ----- -----
Income before income taxes, minority interest and
tax accounting credit........................... 174 133 45 70 104
Income tax provision/(benefit)....................... 51 11 (5) 3 18
Minority interest in international income............ 5 5 3 3 2
----- ----- ----- ----- -----
Income before tax accounting credit............... 118 117 47 64 84
Cumulative effect of a change in accounting principle
for income taxes.................................. -- -- 41 -- --
----- ----- ----- ----- -----
Net income........................................ $ 118 $ 117 $ 88 $ 64 $ 84
===== ===== ===== ===== =====
Ratio of earnings to combined fixed charges and
preferred stock dividends (See exhibit 12)........ 1.44x 1.43x 1.14x 1.15x 1.15x
===== ===== ===== ===== =====
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Receivables....................................... $7,585 $7,012 $7,420 $7,116 $7,218
Allowance for losses of receivables............... 227 211 221 167 155
Investments....................................... 634 370 280 184 174
Investment in international joint ventures........ 174 144 140 129 123
Total assets...................................... $8,476 $7,913 $7,952 $7,529 $7,772
====== ====== ====== ====== ======
Senior debt:
Commercial paper and short-term borrowings..... $2,451 $1,981 $2,422 $2,797 $3,268
Notes and debentures........................... 3,930 3,893 3,521 2,809 2,252
Subordinated debt................................. -- -- -- 88 196
Junior subordinated debt.......................... -- 75 225 230 234
------ ------ ------ ------ ------
Total debt..................................... $6,381 $5,949 $6,168 $5,924 $5,950
====== ====== ====== ====== ======
Preferred stock................................... $ 150 $ 150 $ 150 $ 25 $ 300
Common equity..................................... 1,180 1,103 994 943 891
------ ------ ------ ------ ------
Total stockholders' equity..................... $1,330 $1,253 $1,144 $ 968 $1,191
====== ====== ====== ====== ======
Ratio of commercial paper and short-term
borrowings to total debt....................... 38% 33% 39% 47% 55%
====== ====== ====== ====== ======
Ratio of debt to total stockholders' equity....... 4.8x 4.7x 5.4x 6.1x 5.0x
====== ====== ====== ====== ======
</TABLE>

6
<PAGE> 7

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

During 1994, operations and financial condition strengthened as asset
quality improved, earnings and portfolio diversification increased and balance
sheet strength was maintained. Earnings quality improved as operating revenues
of newer businesses grew, while credit quality costs continued to decline. Asset
quality improved due to the continued workout of problem accounts, the positive
credit performance in the developing asset based businesses and the favorable
credit experience of newer financings in the corporate finance and real estate
businesses. The Company continued to balance the portfolio by growing the asset
based businesses and reducing the level of corporate financings. Although
progress has been made in these areas, initiatives to strengthen earnings
quality, diversify assets and improve asset quality will continue.

RESULTS OF OPERATIONS

The following table summarizes the Company's operating results for the
years ended December 31, 1994, 1993, and 1992.

<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, DECEMBER 31,
--------------------------- ---------------------------
PERCENT PERCENT
1994 1993 CHANGE 1993 1992 CHANGE
---- ---- ------- ---- ---- -------
(DOLLARS IN (DOLLARS IN
MILLIONS) MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Interest income........................ $702 $620 13 % $620 $634 (2)%
Interest expense....................... 336 264 27 264 295 (11)
---- ---- ---- ----
Net interest income............... 366 356 3 356 339 5
Fees and other income.................. 170 138 23 138 101 37
Income of international joint
ventures............................. 21 23 (9) 23 26 (14)
---- ---- ---- ----
Operating revenues................ 557 517 8 517 466 11
Operating expenses..................... 195 174 12 174 169 3
Provision for losses................... 188 210 (10) 210 252 (16)
---- ---- ---- ----
Income before income taxes,
minority interest and tax
accounting credit............... 174 133 31 133 45 196
Income tax provision/(benefit)......... 51 11 364 11 (5) --
Minority interest in international
income............................... 5 5 -- 5 3 67
---- ---- ---- ----
Income before tax accounting
credit.......................... 118 117 1 117 47 149
Cumulative change in accounting
principle for income taxes........... -- -- -- -- 41 --
---- ---- ---- ----
Net income........................ $118 $117 1 % $117 $ 88 33 %
==== ==== ==== ====
</TABLE>

1994 vs. 1993

The Company achieved record pre-tax income of $174 million, an increase of
$41 million or 31%. This increase reflects higher fees and other income from
several product categories and a lower provision for losses as portfolio quality
improved. These factors offset increased spending on developing businesses and a
higher provision for income taxes, as net income slightly exceeded 1993's record
level.

Net interest income increased as growth in the level of average earning
funds and a reduction in the cost to carry nonearning assets was partially
offset by modest spread compression. Average earning funds grew 2% and the
portfolio mix shifted towards lower risk, lower priced assets, resulting in some
spread compression. Interest income increased due to higher market interest rate
levels. Rates charged on 81% of average earning funds employed were based on
floating indices such as the three month London Inter-bank Offered Rate, which
increased to 4.7% for 1994 from 3.3%. Interest expense increased as a result of
the rise in the average borrowing rate to 5.5% from 4.4% and the higher level of
debt used to finance portfolio growth.

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<PAGE> 8

Fees and other income increased $32 million or 23% reflecting revenues from
several sources including higher revenues from certain real estate activities,
higher gains from equity interests and investments and higher revenues from
asset based businesses.

The income of international joint ventures was somewhat lower, while the
income from overall international operations increased primarily due to the
improved performance of wholly-owned subsidiaries. This improvement resulted
from subsidiaries in the Asia/Pacific region as well as gains on Brazilian
investments.

Operating expenses were higher principally due to the increased spending on
developing businesses in the asset based product category. While the Company
will continue to spend appropriately on developing businesses, the rate of
increased spending will slow as these businesses mature.

The provision for losses declined in 1994 as the level of problem assets
continued to recede and the performance of new financings over the past four
years remained strong. The allowance for losses was maintained at 3% of
receivables, which equaled 90% of nonearning receivables at December 31, 1994.

The Company's effective tax rate increased to 30% from 8% for the prior
year, in which higher deferred tax benefits were recognized. The Company's
provision for income taxes is lower than the statutory rate due to the favorable
resolution of a tax issue and the recognition of additional deferred tax
benefits during the second quarter.

1993 vs. 1992

The Company achieved record net income of $117 million, an increase of $70
million or 149%, before a tax accounting credit recorded in 1992. This increase
reflects lower credit quality costs, strong gains on investments and increased
fees and other income from newer business initiatives, as well as continued
growth in net interest income. These factors more than offset increased spending
on new business initiatives and a higher provision for income taxes.

Net interest income increased due to improved funding spreads resulting
from the low interest rate environment, coupled with increased turnover in the
portfolio. Interest income decreased as a result of lower floating rate indices.
While average earning funds employed remained relatively stable, a shift in the
composition of the portfolio occurred, as average corporate financings decreased
and average asset based and specialized financing and investments increased.
Rates charged on 86% of total average earning funds employed were based on
floating rate indices such as the average three month London Inter-bank Offered
Rate, which decreased to 3.3% from 3.8% in 1992. Interest expense decreased as a
result of a reduction in the average borrowing rate to 4.4% from 4.7% in 1992.
The effect of the lower average borrowing rate was partially offset by an
increase in the costs associated with the extension of the average maturity of
the debt portfolio.

Fees and other income increased $37 million, principally as a result of
strong gains on investments from specialized and corporate financings and
increased income from real estate and small business loan activities.

Although income of international joint ventures declined primarily as the
result of a sale of an interest in a leasing joint venture, overall
international operations achieved a $7 million increase in net income,
reflecting a lower provision for losses.

Operating expenses were higher as spending for diversification efforts
increased in 1993. This increase was partially offset by the benefits of
productivity enhancements and expense controls in core businesses.

Although the provision for losses declined in 1993, significant progress
was made in addressing the risks associated with troubled credits in the
corporate financing and real estate portfolios. The Company maintained its
reserve levels at 3% of receivables or 99% of nonearning receivables at December
31, 1993, even though the level of problem accounts receded and the performance
of new financings over the last three years has remained strong.

The 8% effective tax rate reflects the recognition of deferred tax
benefits.

8
<PAGE> 9

PORTFOLIO COMPOSITION

Lending assets and investments increased $701 million or 9% during 1994.
The following tables present lending assets and investments and total revenues
by product category. The asset based finance category includes current asset
management, equipment and working capital financing and small business finance
activities.

<TABLE>
<CAPTION>
LENDING ASSETS AND INVESTMENTS AS OF
DECEMBER 31,
-------------------------------------------------------------
1994 1993 1992
----------------- ------------------ ------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------- ------- ------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
BY PRODUCT CATEGORY:
Corporate finance......................... $3,309 39% $ 3,572 46% $ 4,478 56%
Real estate finance....................... 2,152 25 1,956 25 1,855 23
Asset based finance....................... 2,103 25 1,512 20 1,089 14
Specialized finance and investments....... 505 6 417 5 328 4
International factoring and asset based
finance................................ 374 5 285 4 260 3
------ ------- ------- ------- ------- -------
Total lending assets and investments... $8,443 100% $ 7,742 100% $ 8,010 100%
====== ===== ====== ===== ====== =====
<CAPTION>
Lending assets include receivables and repossessed assets.
<S> <C> <C> <C> <C> <C> <C>
BY ASSET TYPE:
Receivables............................... $7,585 90% $ 7,012 90% $ 7,420 93%
Repossessed assets........................ 50 1 216 3 170 2
------ ------- ------- ------- ------- -------
Total lending assets................... 7,635 91 7,228 93 7,590 95
Investments............................... 634 7 370 5 280 3
International joint ventures.............. 174 2 144 2 140 2
------ ------- ------- ------- ------- -------
Total investments...................... 808 9 514 7 420 5
------ ------- ------- ------- ------- -------
Total lending assets and investments... $8,443 100% $ 7,742 100% $ 8,010 100%
====== ===== ====== ===== ====== =====
</TABLE>

Total revenues include interest income and fees and other income from
wholly-owned domestic and international operations, and the Company's share of
the net income of its international joint ventures.

<TABLE>
<CAPTION>
TOTAL REVENUES FOR THE
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1994 1993 1992
----------------- ------------------ ------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------- ------- ------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Corporate finance........................... $ 367 41% $ 389 50% $ 428 56%
Real estate finance......................... 218 25 161 21 141 19
Asset based finance......................... 214 24 151 19 123 16
Specialized finance and investments......... 48 5 41 5 25 3
International factoring and asset based
finance................................... 46 5 39 5 44 6
------ ------- ------- ------- ------- -------
Total revenues......................... $ 893 100% $ 781 100% $ 761 100%
====== ===== ====== ===== ====== =====
</TABLE>

Lending Assets and Investments. During the last several years the Company
has developed a more balanced, lower risk portfolio, while maintaining its
market position in business value and real estate finance. During 1994, asset
based lending assets and investments increased $591 million to 25% of total
lending assets and investments. Real estate lending assets and investments
remained relatively stable at 25% of the portfolio while the level of corporate
finance lending assets and investments decreased to 39% of the portfolio.
Overall, lending assets increased $407 million and total investments increased
$294 million.

The increase in investments is primarily attributable to corporate finance
equity investments, participating interests in real estate development loans and
an investment in securities collateralized by mobile home park loans.

9
<PAGE> 10

Concentrations of lending assets of 5% or more at December 31, 1994 or
1993, based on the standard industrial classification of the borrower, are as
follows:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1994 1993
----------------- -----------------
AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------ -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Department and general merchandise retail stores..... $673 9% $506 7%
Textiles and apparel manufacturing................... 562 7 502 7
General industrial machines.......................... 462 6 450 6
General purpose office buildings..................... 447 6 504 7
Food, grocery and other miscellaneous retail......... 443 6 314 4
Mobile home parks.................................... 308 4 414 6
Apartments........................................... 229 3 371 5
</TABLE>

The majority of lending assets in the department and general merchandise
retail stores and textile and apparel manufacturing categories is comprised of
factored accounts receivable which represent short-term trade receivables from
numerous customers. The general industrial machines classification is
distributed among machinery used for many different industrial applications. The
receivables in the general purpose office building, mobile home parks and
apartment categories represent interim financing for properties principally
located in major U.S. cities, with no concentration in any one geographic
location.

Total Revenues. The $112 million, 14% growth in total revenues is primarily
attributable to higher interest income from increased market interest rates,
higher overall average earning funds and a $32 million increase in fees and
other income. Consistent with the shift in lending assets, corporate finance
revenues decreased while real estate and asset based revenues increased.

PRODUCT CATEGORIES

Corporate finance. During the last several years, the Company has financed
transactions with smaller retained balances and lower debt multiples and has
used its syndication capabilities to reduce the amounts of individual exposures.
The Company's efforts were facilitated by liquidity in the debt and equity
markets. While the number of new transactions during 1994 was similar to the
prior year, corporate finance lending assets and investments decreased $263
million to 39% of the total portfolio, as new loans of $1,153 million were more
than offset by $1,341 million of repayments and syndications. The average
retained size of corporate finance lending assets decreased to $18 million at
December 31, 1994 from $21 million at the end of the prior year.

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1994 1993 1992
------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Lending assets............................................ $3,116 $3,479 $4,403
Investments............................................... 193 93 75
------ ------ ------
Total lending assets and investments................. $3,309 $3,572 $4,478
====== ====== ======
Nonearning assets......................................... $ 124 $ 294 $ 392
====== ====== ======
Average balance of lending assets......................... $ 18 $ 21 $ 26
====== ====== ======
Number of investments..................................... 58 65 61
====== ====== ======
Ratio of nonearning assets to lending assets.............. 4.0% 8.5% 8.9%
====== ====== ======
</TABLE>

Corporate finance investments increased principally reflecting two equity
investments.

10
<PAGE> 11

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
----------------------
1994 1993 1992
---- ---- ----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Interest income............................................... $330 $349 $397
Fees and other income......................................... 37 40 31
---- ---- ----
Total revenues........................................... $367 $389 $428
==== ==== ====
Net writedowns................................................ $ 77 $125 $154
==== ==== ====
Ratio of net writedowns to average lending assets............. 2.3% 3.1% 3.5%
==== ==== ====
</TABLE>

Interest income decreased as the lower level of average corporate finance
funds employed more than offset the effects of higher floating interest rates.
Fees and other income were relatively stable in 1994 due to continued strong
gains from the sale of various equity investments. Net writedowns of corporate
financings were reduced by $48 million or 38% and nonearning assets were reduced
by 58% as portfolio quality continued to improve.

At December 31, 1994, the Company was contractually committed to finance an
additional $1,149 million to new and existing borrowers, generally contingent
upon the maintenance of specific credit standards. Since many of the commitments
are expected to remain unused, the total commitment amounts do not necessarily
represent future cash requirements. No significant commitments exist to provide
additional financing for nonearning assets.

Corporate financings are generally considered by certain regulatory
agencies as highly leveraged transactions.

Real estate finance. During 1994, the group continued to diversify its
assets through a number of lending programs, while maintaining its credit
discipline and the relative size of its portfolio. Real estate lending assets
and investments increased $196 million, as financings of $898 million were
partially offset by $623 million of repayments and loan sales. The majority of
the increase in real estate lending assets is attributable to the financing of
discounted loan portfolio acquisitions and self storage facilities.

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1994 1993 1992
------- ------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Lending assets............................................... $ 2,000 $ 1,919 $ 1,836
Investments.................................................. 152 37 19
------- ------- -------
Total lending assets and investments.................... $ 2,152 $ 1,956 $ 1,855
====== ====== ======
Nonearning assets............................................ $ 150 $ 98 $ 128
====== ====== ======
Average balance of lending assets............................ $ 6 $ 8 $ 7
====== ====== ======
Ratio of nonearning assets to lending assets................. 7.5% 5.1% 7.0%
====== ====== ======
</TABLE>

11
<PAGE> 12

The increase in investments is principally attributable to participating
debt financings and securities collateralized by mobile home park loans.

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
-------------------
1994 1993 1992
----- ----- -----
(DOLLARS IN
MILLIONS)
<S> <C> <C> <C>
Interest income................................................... $ 185 $ 143 $ 136
Fees and other income............................................. 33 18 5
----- ----- -----
Total revenues............................................... $ 218 $ 161 $ 141
==== ==== ====
Net writedowns.................................................... $ 79 $ 71 $ 30
==== ==== ====
Ratio of net writedowns to average lending assets................. 3.9% 3.8% 1.8%
==== ==== ====
</TABLE>

Interest income increased, due to higher market interest rates and the
higher level of average real estate funds employed. Fees and other income
increased primarily due to income from participating interests received in
connection with development loans and discounted loan portfolio financings and
from the securitization and sale of $245 million of mobile home park loans.

The continued high level of real estate writedowns reflects management's
efforts to resolve problem real estate accounts. General purpose office
buildings originated under a lending philosophy employed prior to 1990,
accounted for the majority of the writedowns. The new philosophy includes
financing smaller individual transactions and increasing the diversification of
the portfolio in terms of geographic location and collateral type. The level of
nonearning assets increased principally reflecting one general purpose office
building loan and one large apartment complex loan, both originated prior to
1990. General purpose office building loans accounted for 54% of real estate
nonearning assets, while the apartment complex represents another 30% of the
real estate nonearning assets. The majority of these assets are located in
California, reflecting its slow recovery relative to the national economic
recovery.

During 1994, the group continued its efforts to move toward increased
diversification of the portfolio. At December 31, 1994 and 1993, real estate
lending assets and investments were distributed as follows:
<TABLE>
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
California......... 19% 19%
Midwest............ 16 19
Mid-Atlantic
States........... 14 17
Florida............ 14 13
New York........... 13 12
Southwest.......... 12 9
New England........ 5 4
Other.............. 7 7
------ ------
100% 100%
====== ======

<CAPTION>
1994 1993
------ ------
<S> <C> <C>
General purpose
office
buildings........ 21% 26%
Mobile home parks.. 16 21
Apartments......... 13 19
Industrial......... 11 9
Retail............. 10 10
Loan portfolios.... 10 6
Hotel.............. 7 4
Other.............. 12 5
------ ------
100% 100%
====== ======
</TABLE>

The real estate portfolio is geographically dispersed throughout the United
States and, as of December 31, 1994, over 97% of real estate loans were
collateralized by first mortgages. In an effort to reduce its exposure to
general purpose office buildings, the Company has limited fundings in this
sector since 1990. Loan portfolios are financings of borrowers engaged in the
acquisition of discounted residential, commercial and industrial loans. The
other category includes several product types that are individually less then 5%
of the portfolio.

Asset based finance. The asset based lending portfolio is comprised of
factored accounts receivable, equipment loans and leases, working capital
financings and other collateralized loans. Asset based lending assets and
revenues increased 39% and 42%, respectively, through the expansion of various
lending products.

12
<PAGE> 13

Traditional factored accounts are short-term trade receivables primarily
from department and general merchandise retailers. These accounts, which are
purchased from approximately 575 clients, are highly liquid with an average
turnover of 51 days, and are managed continuously by evaluating the consolidated
exposure from all clients to a particular customer. Credit files are maintained
for approximately 208,000 customers in order to control this credit exposure.

Vendor Finance originates equipment loans and leases generally made with
recourse to the vendor and finances independent finance and leasing companies.
Commercial Equipment Finance provides financing of equipment that is essential
to a borrower's operations. Business Credit provides loans secured primarily by
receivables and inventory and to a lesser extent, by property, plant and
equipment.

The asset based portfolio and revenues are presented below:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
(DOLLARS IN MILLIONS)
Current Asset Management..................................... $ 768 $ 713 $ 677
Vendor Finance............................................... 561 410 316
Commercial Equipment Finance................................. 344 168 17
Business Credit.............................................. 300 103 --
First Capital................................................ 98 55 30
Other........................................................ 32 63 48
------- ------- -------
Total lending assets.................................... $ 2,103 $ 1,512 $ 1,088
Investments.................................................. -- -- 1
------- ------- -------
Total lending assets and investments.................... $ 2,103 $ 1,512 $ 1,089
====== ====== ======
Nonearning assets............................................ $ 8 $ 16 $ 18
====== ====== ======
Ratio of nonearning assets to total lending assets........... 0.4% 1.0% 1.6%
====== ====== ======
</TABLE>

The lending assets in each of the asset based categories grew significantly
while the low level of nonearning assets decreased during 1994.

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
-------------------
1994 1993 1992
----- ----- -----
(DOLLARS IN
MILLIONS)
<S> <C> <C> <C>
Interest income................................................... $ 143 $ 89 $ 65
Fees and other income............................................. 71 62 58
----- ----- -----
Total revenues............................................... $ 214 $ 151 $ 123
==== ==== ====
Net writedowns.................................................... $ 19 $ 12 $ 9
==== ==== ====
Ratio of net client writedowns to average lending assets.......... .63% .42% .38%
==== ==== ====
Factoring customer net writedowns to factoring volume............. .11% .10% .08%
==== ==== ====
</TABLE>

The revenues generated by asset based businesses increased $63 million or
42% primarily as the result of higher funds levels and the effects of the
increasing interest rate environment. Although these increases were partially
offset by competitive pressures on pricing, these products continued to
demonstrate favorable credit experience as evidenced by the ratios of net client
writedowns to average lending assets and factoring customer net writedowns to
factoring volume.

13
<PAGE> 14

Specialized finance and investments. The level of specialized financings
and investments increased due to new project financings, while exposure to
aircraft financings was controlled.

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1993 1992
---- ---- ----
(DOLLARS IN
MILLIONS)
<S> <C> <C> <C>
Aircraft Finance................................................ $202 $199 $202
Project Investment and Advisory................................. 156 91 50
Heller Equity Capital........................................... 109 93 55
Heller Investments.............................................. 38 34 21
---- ---- ----
Total lending assets and investments....................... $505 $417 $328
---- ---- ----
Nonearning assets............................................... $ 20 $ 14 $ 5
==== ==== ====
</TABLE>

Aircraft Finance offers financing of commercial aircraft and equipment
through leases or junior secured loans to operating lessors. Substantially all
of the leasing assets were under lease at December 31, 1994. One aircraft loan
underwritten prior to 1990 accounted for the majority of the increase in
nonearning assets during 1994.

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
--------------------
1994 1993 1992
---- ---- ----
(DOLLARS IN
MILLIONS)
<S> <C> <C> <C>
Total revenues.................................................. $ 48 $ 41 $ 25
==== ==== ====
Net writedowns.................................................. $ 2 $ 5 $ --
==== ==== ====
</TABLE>

Total revenues increased during 1994 as gains were recognized on a number
of equity interests and investments.

International factoring and asset based finance. The financial information
presented includes wholly-owned subsidiaries and joint ventures in commercial
finance companies in 19 countries. The majority of the assets of wholly-owned
subsidiaries are located in Australia and Singapore, while joint ventures
consist of investments in 50% or less owned companies in 17 countries in Europe,
Asia and Latin America. A number of these companies hold leading positions in
their served markets.

Consistent with the presentation in the Consolidated Financial Statements,
the investment in and income of international joint ventures represents the
Company's ownership share of the net assets and income of the less than
wholly-owned companies, while the assets, liabilities and results of operations
of the wholly-owned companies are consolidated line by line.

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1993 1992
---- ---- ----
(DOLLARS IN
MILLIONS)
<S> <C> <C> <C>
Receivables and investments of wholly-owned international
subsidiaries.................................................. $180 $129 $120
Investments in international joint ventures..................... 174 144 140
Other investments............................................... 20 12 --
---- ---- ----
Total receivables and investments.......................... $374 $285 $260
==== ==== ====
</TABLE>

The higher level of investments in joint ventures is the result of 1994
joint venture income and additional equity investments made in Argentina and
existing joint ventures, net of distributions. The increase in

14
<PAGE> 15

receivables and investments of wholly-owned subsidiaries reflects the growth of
factoring receivables in Singapore and Australia. Other investments are
comprised of trading securities in Brazil.

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
--------------------
1994 1993 1992
---- ---- ----
(DOLLARS IN
MILLIONS)
<S> <C> <C> <C>
TOTAL REVENUES:
Income of international joint ventures........................... $21 $23 $26
Revenues from wholly-owned subsidiaries.......................... 17 15 18
Other revenues................................................... 8 1 --
---- ---- ----
Total international revenues....................................... $46 $39 $44
==== ==== ====
</TABLE>

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
--------------------
1994 1993 1992
---- ---- ----
(DOLLARS IN
MILLIONS)
<S> <C> <C> <C>
TOTAL INCOME:
Income of international joint ventures........................... $21 $23 $26
Income of wholly-owned subsidiaries.............................. 7 4 4
Other income..................................................... 7 1 --
---- ---- ----
Total international income......................................... $35 $28 $30
==== ==== ====
</TABLE>

The $7 million improvement in overall international income principally
reflects increased profits from the Asia/Pacific region and gains on Brazilian
trading securities. The international income amounts shown above are before the
central administration expenses, provisions for losses and costs of financing
the Company's investments.

CREDIT MANAGEMENT

The Company manages credit risk through its underwriting procedures,
centralized approval of individual transactions and active portfolio and account
management. Underwriting procedures have been developed for each product
category which enable the Company to assess a prospective borrower's ability to
perform in accordance with established loan terms. These procedures may include
analyzing business or property cash flows and collateral values, performing
financial sensitivity analyses and assessing potential exit strategies.
Financing and restructuring transactions over a certain amount are reviewed by
an independent corporate credit function and require approval by a centralized
credit committee.

The Company manages the portfolio by monitoring transaction size and
diversification by industry, geographic area and property type. Through these
methods, management identifies and limits exposure to unfavorable risks, and
seeks favorable financing opportunities. Loan grading systems are used to
monitor the performance of loans by product category and an overall risk
classification system is used to monitor the risk characteristics of the total
portfolio. These systems generally consider debt service coverage, the
relationship of loan to underlying business or collateral value, industry
characteristics, principal and interest risk and credit enhancements such as
guarantees, irrevocable letters of credit and recourse provisions. When problem
accounts are identified, professionals that specialize in various industries
formulate strategies to accelerate the resolution process. A centralized
department, independent of operations, periodically reviews the ongoing credit
management of the individual portfolios and reports its findings to senior
management and the Audit Committee of the Board of Directors.

15
<PAGE> 16

PORTFOLIO QUALITY

During 1994, portfolio quality continued to improve reflecting the lower
level of risk in the newer businesses, the favorable performance of real estate
and corporate financings originated since 1990, and the continued reduction of
the pre-1990 corporate finance and office building portfolios. As a result,
nonearning assets decreased $127 million to 4% of total lending assets.

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1994 1993 1992
------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
LENDING ASSETS AND INVESTMENTS:
Receivables....................................................... $7,585 $7,012 $7,420
Repossessed assets................................................ 50 216 170
------ ------ ------
Total lending assets......................................... $7,635 $7,228 $7,590
Investments....................................................... 808 514 420
------ ------ ------
Total lending assets and investments......................... $8,443 $7,742 $8,010
====== ====== ======
NONEARNING ASSETS:
Nonearning receivables............................................ $ 253 $ 214 $ 380
Repossessed assets................................................ 50 216 170
------ ------ ------
Total nonearning assets...................................... $ 303 $ 430 $ 550
====== ====== ======
Ratio of total nonearning receivables to receivables.............. 3.3% 3.1% 5.1%
====== ====== ======
Ratio of total nonearning assets to total lending assets.......... 4.0% 5.9% 7.2%
====== ====== ======
ALLOWANCES FOR LOSSES:
Allowance for losses of receivables............................... $ 227 $ 211 $ 221
Valuation allowance for repossessed assets........................ 10 15 9
------ ------ ------
Total allowances............................................. $ 237 $ 226 $ 230
====== ====== ======
Ratio of allowance for losses of receivables to receivables....... 3.0% 3.0% 3.0%
====== ====== ======
Ratio of allowance for losses of receivables to nonearning
receivables.................................................... 90% 99% 58%
====== ====== ======
DELINQUENCIES:
Earning loans delinquent 60 days or more.......................... $ 103 $ 145 $ 215
Ratio of earning loans delinquent 60 days or more to
receivables.................................................... 1.4% 2.1% 2.9%
====== ====== ======
TROUBLED DEBT RESTRUCTURES:......................................... $ 54 $ 53 $ 57
====== ====== ======
</TABLE>

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
--------------------
1994 1993 1992
---- ---- ----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
NET WRITEDOWNS OF LENDING ASSETS:
Net writedowns........................................................ $179 $213 $193
Ratio of net writedowns to average lending assets..................... 2.4% 2.8% 2.6%
==== ==== ====
</TABLE>

Nonearning Assets. Receivables are classified as nonearning when there is
significant doubt as to the ability of the debtor to meet current contractual
terms as evidenced by loan delinquency, reduction of cash flows, deterioration
in the loan to value relationship or other considerations. Nonearning assets
decreased $127 million, from 5.9% to 4.0% of total lending assets during 1994,
through the positive performance of the new portfolio and resolution and
writedown of problem accounts. Although the level of nonearning assets is within
the 3% to 5% targeted range, the Company will continue to seek to lower the
proportion of nonearning

16
<PAGE> 17

assets in the portfolio and reduce credit quality costs. The table below
presents nonearning assets by product category.

<TABLE>
<CAPTION>
NONEARNING ASSETS BY PRODUCT CATEGORY
------------------------------------------------------
1994 1993 1992
---------------- ---------------- ----------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------ ------- ------ -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Corporate finance....................... $124 41% $294 68% $392 72%
Real estate finance..................... 150 50 98 23 128 23
Asset based finance..................... 8 3 16 4 18 3
Specialized finance and investments..... 20 6 14 3 5 1
International factoring and asset
based finance......................... 1 -- 8 2 7 1
------ ------- ------ ------- ------ -------
Total nonearning assets................. $303 100% $430 100% $550 100%
====== ===== ====== ===== ====== =====
</TABLE>

Corporate finance nonearning assets decreased $170 million and at December
31, 1994, the remaining corporate finance nonearning assets are principally
comprised of four accounts which were underwritten prior to 1990. The increase
in real estate nonearning assets is primarily due to two large credits
originated prior to 1990. At December 31, 1994, 54% of the real estate
nonearning assets represent financings of general purpose office buildings and
30% is due to one apartment credit, underwritten prior to 1990.

Allowances for Losses. The allowance for losses of receivables is a general
reserve available to absorb losses in the entire portfolio. This allowance is
established through direct charges to income and losses are charged to the
allowance when all or a portion of a receivable is deemed uncollectible. The
allowance is reviewed periodically and adjusted when necessary given the size
and loss experience of the overall portfolio, the effect of current economic
conditions and the collectibility and workout potential of identified risk
accounts. The allowance for losses of receivables was maintained at 3% of
receivables at December 31, 1994. The ratio of the prior year end total
allowance for losses to total net writedowns increased to 126% in 1994 from 108%
in the prior year, with further improvement anticipated in 1995. For repossessed
assets, if the fair value declines after the time of repossession, a valuation
allowance is established to reflect this reduction in value.

Delinquent Earning Accounts and Troubled Debt Restructurings. The level of
delinquent earning accounts changes between periods based on the timing of
payments and the effects of changes in general economic conditions on the
Company's borrowers. Consistent with the improvement in overall portfolio
quality, the ratio of delinquent earning accounts to receivables decreased.
Loans in the real estate portfolio accounted for approximately 68% of the
troubled debt restructures at December 31, 1994 and 1993.

Writedowns. Total net writedowns decreased during 1994 as the reduction in
corporate finance net writedowns more than offset the increase in net writedowns
of the real estate portfolio. Real estate net writedowns continued at a high
level principally due to losses on general purpose office building loans
originated under the lending philosophy employed prior to 1990.

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1994 1993 1992
----------------- ----------------- -----------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------ ------- ------ -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
NET WRITEDOWNS OF LENDING ASSETS:
Corporate finance................... $ 77 43% $125 59% $154 80%
Real estate finance................. 79 44 71 33 30 16
Asset based finance................. 19 11 12 6 9 4
Specialized finance and
investments...................... 2 1 5 2 -- --
International factoring and asset
based finance.................... 2 1 -- -- -- --
------ ------- ------ ------- ------ -------
Total net writedowns................ $179 100% $213 100% $193 100%
====== ===== ====== ===== ====== =====
</TABLE>

17
<PAGE> 18

While management plans to continue to resolve problem accounts, it believes
that, if favorable forecasted economic conditions continue, total net writedowns
will decrease again in 1995.

LIQUIDITY AND CAPITAL RESOURCES

During 1994 lending assets and investments increased $701 million, $878
million of notes and debentures were retired and dividends totaling $32 million
were paid on common and preferred stock. To meet these funding requirements, the
Company supplemented its improved cash flow from operations by issuing $841
million of senior notes and debentures, increasing commercial paper and
short-term borrowings by $470 million, and selling $245 million of securitized
mobile home park receivables.

Leverage and the level of commercial paper and short-term borrowings remain
conservative relative to other similarly rated finance companies and are within
the ranges targeted by the Company to maintain a strong financial position. The
ratio of commercial paper and short-term borrowings to total debt was 38% at
December 31, 1994, compared with 33% and 39% at December 31, 1993 and 1992,
respectively. The ratio of debt to total stockholders' equity at December 31,
1994, was 4.8x, compared with 4.7x and 5.4x at December 31, 1993 and 1992,
respectively.

The Company plans to continue to be active in issuing senior debt during
1995, primarily due to the need to replace $459 million of maturing debt and
support the combined growth of the asset based and other portfolios. The Company
also anticipates paying future dividends on common stock, while maintaining its
conservative capital structure.

The Company increased its bank credit facilities to $2.3 billion from $2.1
billion effective May 31, 1994. These arrangements include a $1,150 million
three-year credit facility and a $1,150 million one-year credit facility. The
one-year credit facility includes a term loan option which expires one year
after the option exercise date. In addition, on March 30, 1994 the Company
further increased its liquidity support from unaffiliated financial institutions
by entering into an agreement to sell, from time to time, an undivided interest
in a designated pool of factored accounts receivable of up to $500 million.
Under this agreement, the amount of liquidity provided by unaffiliated financial
institutions increased to $450 million from $65 million under a similar
agreement which it replaced.

The bank credit facilities together with $500 million in liquidity support
from Fuji Bank under the "Keep Well Agreement," and $494 million available under
the factored accounts receivable sale program provide the Company with an
aggregate amount of $3,294 million of committed credit and sale facilities which
represent 134% of outstanding commercial paper and short-term borrowings.
Committed credit and sale facilities from unaffiliated entities amounted to 112%
of outstanding commercial paper and short-term borrowings at December 31, 1994.
The liquidity provided by the bank credit facilities and the Keep Well Agreement
remained unused at December 31, 1994. Extensions of the bank credit facilities
will be requested in 1995.

The consolidated international subsidiaries are funded primarily through
committed and uncommitted foreign bank credit facilities totaling $47 million
and $111 million, respectively, at December 31, 1994.

RISK MANAGEMENT

The Company maintains a conservative currency and interest rate risk
posture by using derivatives as an integral part of its asset/liability
management program to reduce its overall level of financial risk. These
derivatives, particularly interest rate swap agreements, are used to lower
funding costs, diversify sources of funding or alter interest rate exposure
arising from mismatches between assets and liabilities.

Before entering into a derivative agreement, management determines that an
inverse correlation exists between the value of a hedged item and the value of
the derivative. At the inception of each agreement, management designates the
derivative to specific assets, pools of assets or liabilities. The risk that a
derivative will become an ineffective hedge is generally limited to the
possibility that an asset being hedged will prepay before the related derivative
expires. Accordingly, after inception of a hedge, asset/liability managers
monitor its effectiveness through an ongoing review of the amounts and
maturities of asset, liability and swap positions. This information is reported
to the Financial Risk Management Committee ("FRMC") which determines the

18
<PAGE> 19

direction the Company will take with respect to its asset/liability position.
This position and the related activities of the FRMC are reported regularly to
the Executive Committee of the Board of Directors and to the Board of Directors.

The Company has numerous swap agreements with commercial banks and
investment banking firms with notional amounts aggregating $3.9 billion at
December 31, 1994. Before the effect of these swap agreements, the Company's
variable rate assets exceeded variable rate liabilities by $1.9 billion or 23%
of total assets. After the effect of these interest rate swap agreements,
variable rate liabilities exceeded variable rate assets by approximately $171
million or 2% of total assets. The average interest rates paid by the Company on
outstanding indebtedness, before and after the effect of swap agreements, during
the three years ended December 31, 1994 are summarized below. These swap
agreements increased net interest income by $40 million during 1994. If no
management actions were taken to alter the gap position existing at December 31,
1994, a one percent parallel shift in the yield curve would have a $3 million
effect on 1995 net interest income.

<TABLE>
<CAPTION>
WEIGHTED
INTEREST INTEREST AVERAGE
RATES RATES INTEREST
ON OTHER DEBT ON OTHER DEBT RATES
INTEREST EXCLUDING THE INCLUDING THE INCLUDING THE
RATES ON EFFECT OF EFFECT OF EFFECT OF
COMMERCIAL SWAP SWAP SWAP
YEAR PAPER AGREEMENTS AGREEMENTS AGREEMENTS
-------------------------- ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
1994...................... 4.6% 7.1% 6.0% 5.5%
1993...................... 3.4 7.0 4.9 4.4
1992...................... 3.9 7.6 5.3 4.7
</TABLE>

In addition, at December 31, 1994, the Company entered into $212 million of
foreign currency forward exchange contracts in order to hedge the exposure to
foreign currency fluctuations arising from the translation of international
earnings and investments.

ACCOUNTING DEVELOPMENTS

The Financial Accounting Standards Board has released Statements of
Financial Accounting Standards ("SFAS") No. 114, "Accounting by Creditors for
Impairment of a Loan," and No. 118, "Accounting by Creditors for Impairment of a
Loan -- Income Recognition and Disclosure," which the Company is required to
adopt no later than 1995. SFAS 114 requires impaired loans to be measured based
on the present value of expected future cash flows discounted at the loan's
effective interest rate or the value of the collateral if the loan is collateral
dependent.

SFAS Nos. 114 and 118 require changes in the disclosures of impaired loans.
When the Company adopts the provisions of these statements, receivables that are
now treated as in-substance repossessed collateral will be presented as impaired
receivables until the underlying collateral is physically possessed or legally
foreclosed by the Company, at which time it will be presented as a repossessed
asset. Upon adoption, this provision will be retroactively applied resulting in
the reclassification of $31 million of in-substance repossessed assets to
impaired receivables at December 31, 1994. The Company does not expect the
adoption of these pronouncements to have a material effect on its results of
operations or financial position.

19
<PAGE> 20

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

HELLER FINANCIAL, INC. AND SUBSIDIARIES

MANAGEMENT REPORT ON RESPONSIBILITY FOR FINANCIAL REPORTING

The management of Heller Financial, Inc. and its subsidiaries has the
responsibility for preparing the accompanying financial statements and is
responsible for their integrity and objectivity. The statements were prepared in
accordance with generally accepted accounting principles and are not misstated
due to material fraud or error. The financial statements include amounts that
are based on management's best estimates and judgments. Management also prepared
the other information in the December 31, 1994 annual report filed on Form 10-K
and is responsible for its accuracy and consistency with the financial
statements.

The Company's financial statements have been audited by Arthur Andersen
LLP, independent public accountants selected by the holder of the common stock.
Management has made available to Arthur Andersen LLP all the Company's financial
records and related data, as well as the minutes of the stockholders' and
directors' meetings. Furthermore, management believes that all representations
made to Arthur Andersen LLP during its audit were valid and appropriate.

Management of the Company has established and maintains a system of
internal control that provides reasonable assurance as to the integrity and
reliability of the financial statements, the protection of assets from
unauthorized use or disposition, and the prevention and detection of fraudulent
financial reporting. The system of internal control provides for appropriate
division of responsibility and is documented by written policies and procedures
that are communicated to employees with significant roles in the financial
reporting process and updated as necessary. Management monitors the system of
internal control for compliance. The Company maintains an internal auditing
program that independently assesses the effectiveness of internal controls and
recommends possible improvements. The Company's independent public accountants
have developed an overall understanding of our accounting and financial controls
and have conducted other tests they consider necessary to support their opinion
on the financial statements. Management has considered the internal auditors'
and Arthur Andersen LLP's recommendations concerning the Company's system of
internal control and has taken actions that it believes are cost-effective in
the circumstances to respond appropriately to these recommendations. Management
believes that, as of December 31, 1994, the Company's system of internal control
is adequate to accomplish the objectives discussed above.

Management also recognizes its responsibility for fostering a strong
ethical climate so that the Company's affairs are conducted according to the
highest standards of personal and corporate conduct. This responsibility is
characterized and reflected in the Company's code of ethical business practices,
which is publicized throughout the Company. The code of ethical business
practices addresses, among other things, the necessity of ensuring open
communication within the Company, potential conflicts of interest, compliance
with all domestic and foreign laws, including those relating to financial
disclosure, and the confidentiality of proprietary information.

MICHAEL S. BLUM
Chairman and Chief Executive Officer

RICHARD J. ALMEIDA
Executive Vice President and
Chief Financial Officer

ANTHONY O'B. BEIRNE
Senior Vice President and Controller

20
<PAGE> 21

HELLER FINANCIAL, INC. AND SUBSIDIARIES

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Heller Financial, Inc.:

We have audited the accompanying consolidated balance sheets of HELLER
FINANCIAL, INC. (a Delaware corporation) AND SUBSIDIARIES as of December 31,
1994 and 1993, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1994. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Heller Financial, Inc. and
Subsidiaries as of December 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted accounting principles.

We have also previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheets as of December 31, 1992,
1991 and 1990, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the two years in the period
ended December 31, 1991 (none of which are presented herein), and we have
expressed an unqualified opinion on those financial statements. In our opinion,
the information set forth in the selected financial data for each of the five
years in the period ending December 31, 1994, appearing on page 6 is fairly
stated in all material respects in relation to the consolidated financial
statements from which it has been derived.

ARTHUR ANDERSEN LLP

Chicago, Illinois,
January 26, 1995

21
<PAGE> 22

HELLER FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT FOR INFORMATION ON SHARES)

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1994 1993
------ ------
<S> <C> <C>
Cash and cash equivalents................................................... $ 99 $ 170
Receivables (Note 2)
Commercial loans
Term loans............................................................. 2,786 2,807
Revolving loans........................................................ 1,071 935
Real estate loans......................................................... 2,000 1,886
Equipment loans and leases................................................ 943 664
Factored accounts receivable.............................................. 785 720
------ ------
Total receivables................................................. 7,585 7,012
Less: Allowance for losses of receivables (Note 2)........................ 227 211
------ ------
Net receivables................................................... 7,358 6,801
Investments (Note 3)........................................................ 634 370
Investments in international joint ventures................................. 174 144
Other assets (Note 3)....................................................... 211 428
------ ------
$8,476 $7,913
====== ======

LIABILITIES AND STOCKHOLDERS' EQUITY
Senior debt (Note 4)
Commercial paper and short-term borrowings................................ $2,451 $1,981
Notes and debentures...................................................... 3,930 3,893
Junior subordinated notes................................................... -- 75
------ ------
Total debt........................................................ 6,381 5,949
Credit balances of factoring clients........................................ 452 433
Other payables and accruals................................................. 274 243
------ ------
Total liabilities................................................. 7,107 6,625
Minority interest in equity of Heller International Group, Inc.............. 39 35
Stockholders' equity (Notes 8 and 9)
Cumulative Perpetual Senior Preferred Stock, Series A ("Perpetual
Preferred Stock") ($.01 Par Value; stated value, $25; 8.125%; 5,000,000
shares authorized and outstanding)..................................... 125 125
Cumulative Convertible Preferred Stock, Series D (No Par Value; 1/2% under
prime; 1,000 shares authorized and outstanding)........................ 25 25
Common Stock ($.25 Par Value; 1,000 shares authorized; 100 shares
outstanding) and additional paid-in capital............................ 663 663
Retained earnings......................................................... 517 440
------ ------
Total stockholders' equity........................................ 1,330 1,253
------ ------
$8,476 $7,913
====== ======
</TABLE>

The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.

22
<PAGE> 23

HELLER FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
----------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Interest income....................................................... $702 $620 $634
Interest expense...................................................... 336 264 295
---- ---- ----
Net interest income.............................................. 366 356 339
Fees and other income................................................. 170 138 101
Income of international joint ventures................................ 21 23 26
---- ---- ----
Operating revenues............................................... 557 517 466
Operating expenses (Note 10).......................................... 195 174 169
Provision for losses (Note 2)......................................... 188 210 252
---- ---- ----
Income before taxes, minority interest and cumulative effect
of change in accounting principle.............................. 174 133 45
Income tax provision (benefit) (Note 12).............................. 51 11 (5)
Minority interest in income of Heller International Group, Inc........ 5 5 3
---- ---- ----
Income before cumulative effect of change in accounting
principle....................................................... 118 117 47
Cumulative effect of change in accounting principle for income
taxes............................................................... -- -- 41
---- ---- ----
Net income....................................................... $118 $117 $ 88
==== ==== ====
</TABLE>

The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.

23
<PAGE> 24

HELLER FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income.................................................... $ 118 $ 117 $ 88
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for losses....................................... 188 210 252
Loans originated for resale................................ (90) (39) (17)
Net proceeds from sales of loans originated for resale..... 81 30 11
Decrease (increase) in net deferred tax asset.............. 46 (49) (65)
Increase in accounts payable and accrued liabilities....... 11 7 6
Undistributed income of international joint ventures....... (12) (17) (18)
Increase (decrease) in interest payable.................... 14 (4) (1)
Other...................................................... 23 23 (4)
------- ------- -------
Net cash provided by operating activities................ 379 278 252
INVESTING ACTIVITIES
Longer-term loans funded...................................... (2,796) (1,930) (1,722)
Collections of principal...................................... 1,836 1,825 1,007
Sales of longer-term loans.................................... 583 248 119
Net (increase) decrease in short-term loans and advances to
factoring clients.......................................... (343) 32 50
Investment in equity interests, equipment on lease, and other
investments................................................ (158) (103) (141)
Sales of investments and equipment on lease................... 55 29 31
Other......................................................... (29) 9 (14)
------- ------- -------
Net cash (used for) provided by investing activities..... (852) 110 (670)
FINANCING ACTIVITIES
Senior note issues............................................ 841 1,020 1,853
Retirement of notes and debentures............................ (878) (799) (1,235)
Increase (decrease) in commercial paper and other short-term
borrowings................................................. 470 (441) (375)
Net decrease (increase) in advances to affiliates............. 2 (25) 7
Dividends paid on preferred and common stock.................. (32) (12) (3)
Proceeds from Perpetual Preferred Stock issuance.............. -- -- 125
Proceeds from non-recourse debt............................... -- -- 65
Repurchase of Heller International Group, Inc. Common Stock... -- -- (22)
Other......................................................... (1) (9) (12)
------- ------- -------
Net cash provided by (used for) financing activities..... 402 (266) 403
Effect of exchange rates on cash................................ -- -- 2
(Decrease) increase in cash and cash equivalents................ (71) 122 (13)
Cash and cash equivalents at the beginning of the year.......... 170 48 61
------- ------- -------
Cash and cash equivalents at the end of the year................ $ 99 $ 170 $ 48
======= ======= =======
</TABLE>

The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.

24
<PAGE> 25

HELLER FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN MILLIONS)

<TABLE>
<CAPTION>
CUMULATIVE COMMON
CONVERTIBLE STOCK AND
PERPETUAL PREFERRED ADDITIONAL
PREFERRED STOCK, PAID-IN RETAINED
STOCK SERIES D CAPITAL EARNINGS TOTAL
--------- ----------- ---------- -------- ------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1991..................... $ -- $25 $689 $254 $ 968

Net income....................................... -- -- -- 88 88

Issuance of preferred stock...................... 125 -- (4) -- 121

Repurchase of Heller International Group, Inc.
Common Stock................................... -- -- (22) -- (22)

Preferred stock dividends (Notes 8 and 9)........ -- -- -- (3) (3)

Deferred translation adjustment, net of tax...... -- -- -- (8) (8)
--------- --- ---------- -------- ------
BALANCE AT DECEMBER 31, 1992..................... 125 25 663 331 1,144

Net income....................................... -- -- -- 117 117

Preferred stock dividends (Notes 8 and 9)........ -- -- -- (12) (12)

Unrealized gains on securities available for
sale, net of tax (Note 3)...................... -- -- -- 9 9

Deferred translation adjustment, net of tax...... -- -- -- (5) (5)
--------- --- ---------- -------- ------
BALANCE AT DECEMBER 31, 1993..................... 125 25 663 440 1,253

Net income....................................... -- -- -- 118 118

Preferred stock dividends (Notes 8 and 9)........ (12) (12)

Common stock dividends (Note 9).................. -- -- -- (20) (20)

Changes in unrealized gains on securities
available for sale, net of tax (Note 3)........ -- -- -- (4) (4)

Deferred translation adjustment, net of tax...... -- -- -- (5) (5)
--------- --- ---------- -------- ------
BALANCE AT DECEMBER 31, 1994..................... $ 125 $25 $663 $517 $1,330
======= ======== ======= ====== ======
</TABLE>

At December 31, 1994, 1993, 1992 and 1991, the retained earnings balance
included deferred foreign currency translation adjustments of $(17), $(12),
$(7), and $1, respectively. Retained earnings also included $5 and $9 of
unrealized gains on securities available for sale, net of tax, at December 31,
1994 and 1993, respectively.

The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.

25
<PAGE> 26

HELLER FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF ACCOUNTING POLICIES

Description of the Reporting Entity and Basis of Presentation --

Heller Financial, Inc. and its subsidiaries ("The Company") are engaged
principally in furnishing commercial finance services to businesses in the
United States and investing in and operating commercial finance companies
throughout the world. All of the common stock of the Company is owned by Heller
International Corporation (the "Parent"), which is a wholly-owned subsidiary of
The Fuji Bank, Limited ("Fuji Bank") of Tokyo, Japan. Fuji Bank also directly
owns 21% of the outstanding shares of Heller International Group, Inc.
("International Group"), a consolidated subsidiary, through which the Company
holds its international operations. The remaining 79% of the outstanding shares
of International Group are owned by the Company. The accompanying consolidated
financial statements include the accounts of the Company and its majority-owned
subsidiaries. All intercompany accounts and transactions have been eliminated in
consolidation. Investments in affiliated companies owned 50% or less are
accounted for by the equity method. Certain temporary interests are included in
investments and are carried at cost.

Cash and Cash equivalents --

Cash and cash equivalents consist of cash deposits maintained in banks and
short-term debt securities with original maturities of less than 60 days. The
fair value of cash equivalents approximates their carrying value.

Receivables --

Receivables are presented net of unearned income and are carried at net
realizable value. Unearned income generally includes deferred loan origination
and commitment fees, direct loan origination costs and other amounts attributed
to the fair value of equity interests and other investments received in
connection with certain financings. These amounts are amortized to interest
income using the effective interest method over the life of the related loan or
commitment period. From time to time, the Company finances certain loans which
it may elect to sell if the aggregate amount of these loans reaches a sufficient
size and market conditions are favorable. These receivables are also presented
net of unearned income and are carried at net realizable value. In the event the
Company sells a portion of a loan that it had originated, any deferred fees or
discounts relating to the portion of the loan sold are recognized in income as
part of the gain or loss on sale. For loan sales that qualify as syndications,
fees received are generally recognized in income, subject to certain yield
tests, when the syndication is complete.

As a commercial finance company, income recognition is reviewed on an
account by account basis. Collateral is evaluated regularly primarily by
assessing the related current and future cash flow streams. Loans are classified
as nonearning and all unearned income amortization is suspended when there is
significant doubt as to the ability of the debtor to meet current contractual
terms. Numerous factors including loan covenant defaults, deteriorating
loan-to-value relationships, delinquencies greater than 120 days, the sale of
major income generating assets or other major operational or organizational
changes may lead to income suspension. An account taken nonearning may be
restored to earning status either when all delinquent principal and interest
have been paid under the original contractual terms or the account has been
restructured and has demonstrated both the capacity to service the amended terms
of the debt and adequate loan to value coverage.

Allowance for Losses -- The allowance for losses of receivables is
established through direct charges to income. Losses are charged to the
allowance when all or a portion of a receivable is deemed impaired and
uncollectible as determined by account management procedures. These procedures
include assessing how the borrower is affected by economic and market
conditions, evaluating operating performance and reviewing loan-to-value
relationships.

26
<PAGE> 27

HELLER FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Management evaluates the general allowance for losses on a quarterly basis.
Nonearning assets and all loans with certain loan grading characteristics are
reviewed to determine if there is a potential risk of loss under varying
scenarios of performance. The estimates of potential loss for these individual
loans are aggregated and added to a general reserve requirement, which is based
on the total of all other loans in the portfolio. This total reserve requirement
is then compared to the existing allowance for losses and adjustments are made,
if necessary.

Statement of Financial Accounting Standards ("SFAS") No. 114, "Accounting
by Creditors for Impairment of a Loan," and SFAS No. 118, "Accounting by
Creditors for Impairment of a Loan - Income Recognition and Disclosures," an
amendment to SFAS No. 114, require that impairment of a loan be measured based
on the present value of expected future cash flows discounted at the loan's
effective interest rate, at the observable market price of the loan, or at the
fair value of the collateral if the loan is collateral dependent. The Company
expects to adopt the new standard prospectively in 1995. Adoption of the new
standard is not expected to have a significant effect on either the financial
statements or current loan valuation procedures related to impaired loans.

Securitized receivables --

From time to time certain receivables are securitized and sold to investors
with limited recourse. Upon sale of the loans, a gain is recognized for the
difference between the net carrying value of the receivables and the fair value
of the securities sold. The gain on the sale is reduced by a reserve established
for estimated probable future losses. The gain recognized is recorded in fees
and other income. Income from the acceleration of discounts and deferred fees
attributed to the loans sold is recorded as interest income. The Company may
choose to retain a portion of the securitized receivables. Under these
circumstances, the amount of the gain related to the retained portion is
deferred and amortized over the life of the securities. The retained securities
are recorded as debt securities available for sale.

Investments in Joint Ventures --

Investments in unconsolidated joint ventures represent investments in
companies in 17 foreign countries. The Company accounts for its investments in
joint ventures under the equity method of accounting. Under this method, the
Company recognizes its share of the earnings or losses of the joint venture in
the period in which they are earned by the joint venture. Dividends received
from joint ventures reduce the carrying amount of the investment.

Investments --

Equity interests and investments -- Investments in warrants, certain common
and, preferred stocks and other equity investments which are not subject to the
provisions of SFAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," are carried at cost. The valuation of these investments is
periodically reviewed and the investment balance is written down to reflect
declines in value determined to be other than temporary. Gains or losses
recognized upon sale or write-down of these investments is recorded in fees and
other income.

Equipment on lease -- Aircraft and related equipment under lease are
recorded at cost and depreciated over their estimated useful lives principally
using the straight line method. Rental revenue is reported over the lease term
as it becomes receivable according to the provisions of the lease.

Available for sale, trading, and held to maturity securities -- Investments
designated as available for sale securities are carried at fair value using the
specific identification method with unrealized gains or losses included in
stockholders' equity, net of related taxes. Trading securities are carried at
fair value with the related unrealized gains or losses included currently in
fees and other income. Securities that are held to

27
<PAGE> 28

HELLER FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

maturity such as $72 million of short-term debt securities included in cash
equivalents, are recorded at amortized cost but are written down to fair value
to reflect declines in value determined to be other than temporary.

Acquisition, development, and construction investments -- The Company
provides financing through certain loan arrangements that are recorded as
investments by the Company. These investments are accounted for under the cost
recovery method. Income is generally recognized only to the extent that cash
received exceeds the investment carrying amount.

Other Assets --

Repossessed Assets -- Assets which have been legally or substantively
acquired in satisfaction of receivables are carried at fair value less selling
costs and are included in other assets, net of the related valuation allowance.
After repossession, operating costs are expensed and cash receipts are applied
to reduce the asset balance. In connection with the adoption of SFAS No. 114 in
1995, an in-substance repossessed receivable will be presented as an impaired
receivable until the related collateral is physically possessed or legally
foreclosed by the Company, at which time it will be accounted for as a
repossessed asset.

Income Taxes --

The Company and its wholly-owned domestic subsidiaries are included in the
consolidated United States federal income tax return of the Parent. The
International Group files a separate United States federal income tax return.
The Company reports income tax expense as if it were a separate taxpayer and
records future tax benefits as soon as it is more likely than not that such
benefits will be realized.

Derivative Financial Instruments --

The Company is a party to interest rate swap, cross currency and basis swap
agreements which have been designated by the Company to hedge its exposure to
interest rate risk on specific assets, pools of assets or liabilities. The swap
agreements are generally held to maturity and the differential paid or received
under these agreements is recognized over the life of the related agreement.

The Company periodically enters into forward currency exchange contracts
which are designated as hedges of its exposure to foreign currency fluctuations
from the translation of its foreign currency denominated investments in certain
European and Asian joint ventures and subsidiaries. Through these contracts, the
Company primarily sells the local currency and buys U.S. dollars. Gains and
losses resulting from translation of foreign currency financial statements and
the related effects of the hedges of net investments in joint ventures and
subsidiaries outside the United States are accumulated in stockholders' equity,
net of related taxes, until the international investment is sold or
substantially liquidated.

The Company also periodically enters into forward currency exchange
contracts designated to hedge its exposure to foreign exchange fluctuations
resulting from the translation of earnings from certain joint ventures and
subsidiaries. These contracts are carried at fair value, with gains or losses
included in the determination of net income.

28
<PAGE> 29

HELLER FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. LENDING ASSETS

Lending assets include receivables and repossessed assets.

Diversification of Credit Risk --

Concentrations of lending assets of 5% or more, based on the standard
industrial classification of the borrower, are as follows:

The majority of lending assets in the department and general merchandise
retail stores and textile and apparel manufacturing categories is comprised of
factored accounts receivable which represent short-term trade receivables from
numerous customers. The general industrial machines classification is
distributed among machinery used for many different industrial applications. The
receivables in the general purpose office building, mobile home park and
apartment categories represent interim financing for properties principally
located in major U.S. cities, with no concentration in any one geographic
location.

The Company's corporate finance group provides financing for
recapitalizations, refinancings, acquisitions and corporate buy-outs. As of
December 31, 1994, total corporate finance lending assets amounted to $3,116
million, consisting of 177 accounts with an average balance of $18 million, to
borrowers in a wide variety of industries. Total corporate finance lending
assets as of December 31, 1993 were $3,479 million and consisted of 164 accounts
having an average balance of $21 million. The corporate finance portfolio is
predominantly collateralized by senior liens on the borrower's stock or assets,
or both. Such financing transactions are generally considered highly leveraged
transactions.

Commercial loans consist principally of corporate finance and asset based
receivables. Asset based receivables are collateralized by inventory,
receivables, property, plant and equipment of the borrowers. Real estate loans
are principally collateralized by first mortgages on commercial and residential
real estate. Equipment loans and leases are secured by the underlying equipment
and the Company often has recourse to the equipment vendor.

29
<PAGE> 30

HELLER FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Contractual Maturity of Loan Receivables --

The contractual maturities of the Company's receivables at December 31,
1994, which are presented in the table below, should not be regarded as a
forecast of cash flows (in millions):

<TABLE>
<CAPTION>
AFTER
1995 1996 1997 1998 1999 1999 TOTAL
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Commercial loans................. $ 677 $ 693 $ 655 $ 603 $ 609 $ 620 $3,857
Real estate loans................ 491 333 209 352 355 260 2,000
Equipment loans and leases....... 219 178 176 136 79 155 943
Factored accounts receivable..... 785 -- -- -- -- -- 785
------ ------ ------ ------ ------ ------ ------
Total............................ $2,172 $1,204 $1,040 $1,091 $1,043 $1,035 $7,585
====== ====== ====== ====== ====== ====== ======
</TABLE>

Nonearning Assets and Troubled Debt Restructurings --

The Company has loans for which it has ceased to recognize interest and fee
income. The following table sets forth information regarding nonearning
receivables and repossessed assets.

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1993 1992
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Nonearning receivables......................................... $253 $214 $380
Repossessed assets............................................. 50 216 170
---- ---- ----
Total nonearning assets.............................. $303 $430 $550
==== ==== ====
Ratio of total nonearning assets to total lending assets....... 4.0% 5.9% 7.2%
==== ==== ====
</TABLE>

Nonearning assets have decreased $127 million to 4.0% from 5.9% of total
lending assets during 1994 due to the resolution and writedown of several
problem accounts in the corporate finance and real estate portfolios and the
favorable performance of loans originated since 1990 in both the core and
developing businesses. The remaining nonearning assets are principally comprised
of $124 million from corporate finance and $150 million from real estate which
are primarily attributed to accounts underwritten prior to 1990.

Repossessed assets include in-substance repossessions of $31 million, $50
million and $45 million at December 31, 1994, 1993 and 1992, respectively, which
were accounted for in the same manner as collateral that had been formally
repossessed, even though the Company did not hold legal title. Upon adoption of
SFAS No. 114 and SFAS No. 118 in the first quarter of 1995, similar amounts will
be reclassified and reported as impaired receivables.

At December 31, 1994 and 1993, the Company had $54 million and $53 million,
respectively, of loans which resulted from troubled debt restructurings. At
December 31, 1994, the Company was not committed to lend significant additional
funds in connection with nonearning assets or troubled debt restructurings. The
following table indicates the effect on income if interest on nonearning loans
and troubled debt restructurings outstanding at year-end had been recognized at
original contractual rates during the year.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
--------------------
1994 1993 1992
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Interest income which would have been recorded................... $33 $29 $38
Interest income recorded......................................... 16 10 17
---- ---- ----
Effect on interest income........................................ $17 $19 $21
==== ==== ====
</TABLE>

30
<PAGE> 31

HELLER FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Allowance for Losses --

At December 31, 1994, $66 million of the $227 million allowance for losses
of receivables was related to nonearning receivables. The changes in the
allowance for losses of receivables and in the valuation allowance for
repossessed assets were as follows:

<TABLE>
<CAPTION>
ALLOWANCE FOR LOSSES OF
RECEIVABLES
-----------------------
1994 1993 1992
----- ----- -----
(IN MILLIONS)
<S> <C> <C> <C>
Balance at the beginning of the year........................ $ 211 $ 221 $ 167
Provision for losses........................................ 156 184 241
Writedowns.................................................. (164) (214) (197)
Recoveries.................................................. 22 21 15
Transfers and other......................................... 2 (1) (5)
----- ----- -----
Balance at the end of the year.............................. $ 227 $ 211 $ 221
===== ===== =====
</TABLE>

Writedowns occurring at the time of repossession are considered writedowns
of receivables.

<TABLE>
<CAPTION>
VALUATION ALLOWANCE
FOR REPOSSESSED
ASSETS
--------------------
1994 1993 1992
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Balance at the beginning of the year........................... $ 15 $ 9 $ 5
Provision for losses........................................... 32 26 11
Writedowns..................................................... (37) (20) (11)
Transfers and other............................................ -- -- 4
---- ---- ----
Balance at the end of the year................................. $ 10 $ 15 $ 9
==== ==== ====
</TABLE>

31
<PAGE> 32

HELLER FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. INVESTMENTS AND OTHER ASSETS

The following table sets forth a summary of the major components of
investments and other assets (in millions):

<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1994 1993
---- ----
<S> <C> <C>
Investments:
Equity interests and investments................................... $275 $155
Equipment on lease................................................. 166 148
Available for sale securities
Debt securities................................................. 49 --
Equity securities............................................... 23 20
Trading securities................................................. 20 12
Other investments.................................................. 101 35
---- ----
Total investments.......................................... $634 $370
==== ====
Other Assets:
Repossessed assets................................................. 40 201
Deferred income tax benefits, net of allowance of $11 and $13 in
1994 and 1993, respectively..................................... 63 109
Prepaid expenses and other assets.................................. 56 67
Net advances to affiliates......................................... 29 31
Furniture, fixtures and equipment.................................. 23 20
---- ----
Total other assets......................................... $211 $428
==== ====
</TABLE>

Equity interests and investments principally include warrants and common
and preferred stocks received in connection with certain financings. During the
year ended December 31, 1994, $117 million of positions in repossessed companies
were converted to equity investments as a result of significant cash equity
infusions into the companies by independent third parties.

Equipment on lease is comprised of aircraft and related equipment.
Noncancellable future minimum rental payments under the leases are $23 million,
$20 million, $14 million, $4 million and $2 million for 1995 through 1999.
Substantially all equipment was under lease as of December 31, 1994.

The available for sale debt securities principally consist of subordinated
securities retained in connection with the securitization of certain mobile home
park receivables during the fourth quarter of 1994. The mobile home park
securities mature on dates ranging to 2004 based on the related stated maturity
dates of the underlying receivables. The Company has established a reserve of $1
million for estimated probable losses related to these securities.

The available for sale equity securities are principally comprised of
common stocks. Unrealized holding gains on these securities amounted to $16
million and $13 million at December 31, 1994 and 1993, respectively, and are
recognized in stockholders' equity net of tax. The Company also realized $6
million in gains from sales of these equity securities during the year ended
December 31, 1994 from related proceeds approximating $11 million.

Repossessed assets are shown net of an allowance of $10 million and $15
million at December 31, 1994 and 1993, respectively. During 1994, $59 million of
receivables were classified as repossessed assets and $51 million of repossessed
assets were resolved and returned to receivables. The comparable amounts for
1993 were $87 million and $25 million, and for 1992, $132 million and $33
million, respectively.

32
<PAGE> 33

HELLER FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company holds certain foreign investments which are classified as
trading securities. Net gains of $7 million and $1 million related to these
investments were recorded in income for the years ended December 31, 1994 and
1993, respectively.

Other investments include real estate financings in which the Company
receives cash flow or residual participation interests.

4. SENIOR DEBT

Commercial Paper and Short-Term Borrowings -- The table below sets forth
information concerning commercial paper. The average amounts are computed based
on the average daily balances outstanding during the year. The Company issues
commercial paper with maturities ranging up to 270 days.

<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Commercial Paper:
End of period borrowings.......................................... $2,338 $1,912 $2,368
Average borrowings................................................ $2,228 $2,177 $2,728
Maximum month-end borrowings...................................... $2,486 $2,538 $3,035
Average interest rate --
During the year................................................ 4.30% 3.16% 3.74%
During the year, including the effect of commitment fees....... 4.57% 3.42% 3.95%
At year-end, including the effect of commitment fees........... 5.83% 3.30% 3.56%
</TABLE>

In addition, the consolidated international subsidiaries had short-term
borrowings of $113 million, $69 million and $54 million at December 31, 1994,
1993 and 1992, respectively, which are used to finance international operations.

Available credit and asset sale facilities -- At December 31, 1994, the
Company had committed credit and asset sale facilities which totaled $3,294
million. This total includes $2,300 million in bank facilities, $500 million in
liquidity support from Fuji Bank as part of the Keep Well Agreement, and $494
million of additional liquidity available under a receivables purchase
agreement.

The receivables purchase agreement expires March 24, 1999 and provides that
the Company may sell to Freedom Asset Funding Corporation ("Freedom"), with
limited recourse, an undivided interest of up to $500 million in a designated
pool of its factored accounts receivable. The Company had sold $6 million of
receivables for cash at December 31, 1994. Freedom has entered into a revolving
liquidity facility and an operating agreement with Fuji Bank and one of its
affiliates. Under the terms of existing debt agreements at December 31, 1994,
the Company could have borrowed an additional $6.4 billion of debt.

33
<PAGE> 34

HELLER FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Notes and debentures -- The scheduled maturities of debt outstanding at
December 31, 1994, other than commercial paper and short-term borrowings and
excluding unamortized discount, are as follows:

<TABLE>
<CAPTION>
SCHEDULED MATURITIES AT DECEMBER 31,
------------------------------------------------------
1995 1996 1997 1998 1999 2000 TOTAL
---- ---- ---- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Various fixed rate notes and debentures...... $313 $225 $359 $730 $483 $400 $2,510
Fixed contractual weighted average
rate.................................. 7.61% 8.83% 6.13% 9.01% 8.37% 6.06% 7.81%
Various floating rate notes and debentures... $146 $350 $425 $242 $260 $ -- $1,423
Floating contractual weighted average
rate.................................. 6.56% 6.38% 5.56% 3.43% 6.14% -- 5.61%
Total notes and debentures................... $459 $575 $784 $972 $743 $400 $3,933
</TABLE>

The Company had fixed rate debt of $2,510 million and $2,405 million at
December 31, 1994 and 1993 respectively. At December 31, 1994, total fixed rate
debt included $146 million of fixed rate debt denominated in Japanese yen which
pays interest at the contractual rate of 3.8%. The Company had fixed the
exchange rate of Japanese yen to U.S. dollar at 103 Japanese yen and had an
effective rate of interest on this debt of 5.59% at December 31, 1994 due to a
cross currency interest rate swap agreement.

The contractual interest rates for remaining U.S. dollar denominated fixed
rate debt range between 5.625% and 9.7% and 5.625% and 13% at December 31, 1994
and 1993, respectively. The weighted average interest rates of the U.S. dollar
denominated fixed rate debt at December 31, 1994 and 1993 are 7.12% and 5.22%,
after the effect of related swap agreements which converted certain of the
Company's fixed rate debt to floating rate debt. Excluding swaps, the weighted
average interest rate on this debt would have been 8.06% and 8.28% at December
31, 1994 and 1993, respectively.

The Company's floating rate debt was $1,423 million and $1,565 million at
December 31, 1994 and 1993 respectively, which included $328 million of floating
rate debt denominated in Japanese yen. The yen denominated floating rate debt
consists of two issuances in principal amounts of $200 million and $128 million.
The Company had fixed the exchange rate of Japanese yen to U.S. dollars at 125
and 117 Japanese yen, respectively. The notes combined had an effective interest
rate of 6.94% and 3.88% at December 31, 1994 and 1993, respectively, due to
cross currency interest rate swap agreements.

The contractual rates on the remaining U.S. dollar denominated floating
rate debt are based primarily on indices such as the Constant Maturity Treasury
Index less a range of .12% to .40%, the Federal Funds rate plus .275% to .38%,
the three month London Inter-bank Offered Rate plus .17% to .95%, or Prime less
2.28%. The weighted average interest rates on this debt at December 31, 1994 and
1993 including the effect of basis swap agreements, were 6.39% and 3.90%.
Excluding the effect of swaps, the weighted average rate on U.S. dollar
denominated floating rate debt would have been 6.46% and 4.49% at December 31,
1994 and 1993.

Notes redeemable solely at the option of the Company prior to the final
maturity date are reflected in the table above as maturing on the final maturity
date. As part of the Company's liability management program, certain debt issues
totaling $70 million were repurchased during 1994 before they were contractually
due.

5. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

The Company is a party to several agreements involving financial
instruments with off-balance sheet risk. These instruments are used to meet the
financing needs of borrowers and to manage the Company's own exposure to
interest rate and currency exchange rate fluctuations. These instruments
principally include interest rate swap agreements, forward currency exchange
contracts, loan commitments, letters of credit, and guarantees. All of the
Company's derivative financial instruments are held for purposes other than
trading.

Derivative financial instruments used for risk management purposes --
Derivatives are used as an integral part of the Company's overall
asset/liability management program to manage its exposure to

34
<PAGE> 35

HELLER FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

fluctuations in interest rates and currency exchange rates arising from normal
business operations. The Company is not an interest rate swap dealer nor is it a
trader in derivative securities, and it has not used speculative derivative
products for the purpose of generating earnings from changes in market
conditions.

Before entering into a derivative agreement, management determines that an
inverse correlation exists between the value of the hedged item and the value of
the derivative. At the inception of each agreement, management designates the
derivative to specific assets, pools of assets or liabilities. The risk that a
derivative will become an ineffective hedge is generally limited to the
possibility that an asset or liability being hedged will prepay before the
related derivative expires. Accordingly, after inception of a hedge,
asset/liability managers monitor its effectiveness through an ongoing review of
the amounts and maturities of assets, liabilities and swap positions. This
information is reported to the Financial Risk Management Committee (FRMC) which
determines the direction the Company will take with respect to its
asset/liability position. The asset/liability position of the Company and the
related activities of the FRMC are reported regularly to the Executive Committee
of the Board of Directors and to the Board of Directors.

The following table summarizes the notional amounts of the Company's
interest rate and foreign exchange contracts. The credit risk associated with
these instruments is limited to amounts earned but not collected and to any
additional amounts which may be incurred to replace the instrument under then
current market conditions. These amounts are substantially less than the
notional amounts of these agreements. The Company manages this risk by
establishing minimum credit ratings for each counterparty and by limiting the
exposure to individual counterparties as measured by the total notional amount
and the current replacement cost of existing agreements. The Company has not
experienced nonperformance by any counterparty related to its derivative
financial instruments.

<TABLE>
<CAPTION>
CONTRACT OR
NOTIONAL AMOUNT
------------------
1994 1993
------- -------
<S> <C> <C>
(IN MILLIONS)
Interest rate swap agreements...................................... $ 3,102 $ 2,951
Cross currency interest rate swap agreements....................... 474 328
Basis swap agreements.............................................. 347 195
Spot and forward currency exchange contracts....................... 212 201
Sale of factored accounts receivable............................... 6 6
Interest rate cap agreements....................................... -- 25
</TABLE>

Interest rate swaps are primarily used to convert fixed rate financings to
variable rate debt. Less frequently, when the issuance of debt denominated in a
foreign currency is deemed more cost effective, cross currency interest rate
swaps are employed to convert foreign currency denominated debt to U.S. dollar
denominated debt. The Company also uses swap agreements to alter the
characteristics of specific asset pools to more closely match the interest terms
of the underlying financing. These agreements enhance the correlation of the
interest rate and currency characteristics of the Company's assets and
liabilities and thereby mitigate its exposure to interest rate volatility. Basis
swap agreements involve the exchange of two different floating rate interest
payment obligations and are used to manage the basis risk between different
floating rate indices.

Forwards are contracts for the delivery of an item in which the buyer
agrees to take delivery of an instrument or currency at a specified price and
future date. The Company periodically enters into forward contracts which hedge
its exposure to foreign currency fluctuations from the translation of
investments in and earnings from its European and Asian joint ventures and
subsidiaries. The Company also periodically enters into forward contracts to
hedge receivables denominated in foreign currencies or may purchase foreign
currencies in the spot market in order to settle a foreign currency denominated
liability.

35
<PAGE> 36

HELLER FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Commitments, letters of credit and guarantees -- The Company generally
enters into various commitments, letters of credit and guarantees in response to
the financing needs of its customers. As many of the agreements are expected to
expire unused, the total commitment amount does not necessarily represent future
cash requirements. The credit risk involved in issuing these instruments is
essentially the same as that involved in extending loans to borrowers and the
credit quality and collateral policies are similar to those involved in the
Company's normal lending transactions. The contractual amount of the Company's
commitments, letters of credit and guarantees are shown below:

<TABLE>
<CAPTION>
CONTRACT AMOUNT
----------------
1994 1993
------ ------
(IN MILLIONS)
<S> <C> <C>
Loan commitments.................................................... $1,911 $1,662
Letters of credit and financial guarantees.......................... 504 497
Factoring credit guarantees......................................... 327 335
</TABLE>

Commitments to fund new borrowers generally have fixed expiration dates and
termination clauses and typically require payment of a fee. For factoring credit
guarantees, the Company receives a fee for guaranteeing the collectibility of
certain factoring clients' accounts receivable. Under this arrangement, clients
generally retain the responsibility for collection and bookkeeping. Losses
related to these services have historically not been significant. Letters of
credit and financial guarantees are conditional commitments issued by the
Company to guarantee the performance of a borrower or an affiliate to a third
party. At December 31, 1994, the contractual amount of guarantees includes $20
million related to affiliates.

Other financial instruments with off-balance sheet risk -- As of December
31, 1994, the Company had sold $6 million of factored receivables for cash,
under a receivables purchase agreement with limited recourse. As the average
maturity of factored accounts receivable is 51 days and the historical loss
experience is substantially less than 1%, the Company's recourse exposure is
considered minimal.

6. LEGAL PROCEEDINGS

7. RENTAL COMMITMENTS

The Company and its consolidated subsidiaries have minimum rental
commitments under noncancellable operating leases at December 31, 1994, as
follows (in millions):

<TABLE>
<S> <C>
1995....................................... $14
1996....................................... 14
1997....................................... 13
1998....................................... 11
1999....................................... 10
Thereafter................................. 20
---
$82
===
</TABLE>

The total rent expense, net of rental income from subleases, was $17
million, $15 million and $12 million in 1994, 1993 and 1992, respectively.

36
<PAGE> 37

HELLER FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. PREFERRED STOCK

Redeemable Preferred Stock -- The Company has authorized the issuance of
100,000 shares of a series of preferred stock designated NW Preferred Stock,
Class B (No Par Value) ("NW Preferred Stock"), pursuant to the "Keep Well
Agreement" between the Company and Fuji Bank wherein, among other things, Fuji
Bank has agreed to purchase NW Preferred Stock in an amount required to maintain
the Company's net worth at $500 million. The Company's net worth was $1,330
million at December 31, 1994. If and when issued, dividends will be paid
quarterly on NW Preferred Stock at a rate per annum equal to 1% over the
three-month London Inter-bank Offered Rate. Subject to certain conditions, NW
Preferred Stock will be redeemable at the option of the holder within a
specified period of time after the end of a calendar quarter in an aggregate
amount not greater than the excess of the net worth of the Company as of the end
of such calendar quarter over $500 million and at a redemption price equal to
the price paid for such stock plus accumulated dividends. No purchases of NW
Preferred Stock have been made by Fuji Bank under this agreement.

Other Preferred Stock -- The Perpetual Preferred Stock is not redeemable
prior to September 22, 2000. On or after that date, the Perpetual Preferred
Stock will be redeemable at the option of the Company, in whole or in part at a
redemption price of $25 per share, plus accrued and unpaid dividends. The
Perpetual Preferred Stock ranks senior with respect to payment of dividends and
liquidation to other outstanding or authorized preferred stock of the Company.

The Company's Cumulative Convertible Preferred Stock, Series D
("Convertible Preferred Stock") is held by the Parent. The Convertible Preferred
Stock has a dividend yield established quarterly at a rate of 1/2% less than the
announced prime commercial lending rate of Morgan Guaranty Trust Company of New
York, payable quarterly. Under the terms of the Convertible Preferred Stock, the
Company is prohibited from paying cash dividends on Common Stock unless full
cumulative dividends on all outstanding shares of Convertible Preferred Stock
for all past dividend periods have been paid. The Convertible Preferred Stock is
convertible into Common Stock of the Company at the conversion price of one
share of Common Stock for each 200 shares of Convertible Preferred Stock.
Subject to certain conditions, the Convertible Preferred Stock is redeemable at
any time at the option of the Company at a redemption price equal to the price
paid for such stock plus accumulated dividends.

9. DIVIDEND RESTRICTIONS AND PAYMENTS

Dividends may legally be paid only out of the Company's surplus, as
determined under the provisions of the Delaware General Corporation Law, or net
profits for either the current or preceding fiscal year, or both. In addition,
the Company is prohibited from paying cash dividends on Common Stock or any
other preferred stock that ranks, with respect to payment of dividends, equal or
junior to the Perpetual Preferred Stock, unless full cumulative dividends on the
Perpetual Preferred Stock have been paid.

The Company declared and paid $10 million of Perpetual Preferred Stock
dividends in both 1994 and 1993 and a $1 million dividend in 1992. Dividends
declared and paid on the Company's Convertible Preferred Stock amounted to $2
million each year during 1994, 1993 and 1992. The Company also declared and paid
a $20 million cash dividend on Common Stock in 1994.

37
<PAGE> 38

HELLER FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. OPERATING EXPENSES

The following table sets forth a summary of the major components of
operating expenses:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
(IN MILLIONS)
Employee salaries................................................. $ 79 $ 69 $ 64
Other compensation................................................ 48 43 40
Space costs....................................................... 17 18 13
Equipment costs................................................... 13 10 10
Travel and entertainment.......................................... 10 9 7
Other............................................................. 28 25 35
---- ---- ----
Total........................................................ $195 $174 $169
==== ==== ====
</TABLE>

The Parent performs services for the Company and charges the Company for
the related costs incurred. These charges are reflected in certain of the above
captions.

38
<PAGE> 39

HELLER FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. BENEFIT PLANS AND OTHER POST RETIREMENT BENEFITS

The Company has various incentive compensation plans and a savings and
profit-sharing plan which provide for annual contributions to eligible employees
based on the Company's achievement of certain financial objectives and employee
achievement of certain objectives.

In addition, the Company has noncontributory defined benefit pension plans
covering substantially all of its domestic employees. Certain foreign employees
are covered by contributory or noncontributory defined contribution plans. The
Company's policy is to fund, at a minimum, pension contributions as required by
the Employee Retirement Income Security Act of 1974. Benefits are based on an
employee's years of service and average earnings for the five highest
consecutive years of compensation occurring during the last ten years before
retirement.

The following table summarizes the funded status of the defined benefit
pension plans at December 31, 1994 and 1993:

<TABLE>
<CAPTION>
1994 1993
------- -------
(IN MILLIONS)
<S> <C> <C>
Actuarial present value of vested benefit obligations................ $ 11 $ 12
==== ===
Plan assets at fair value............................................ $ 28 $ 30
Projected benefit obligations for service rendered to date........... 23 25
------- -------
Plan assets in excess of projected benefit obligation.............. $ 5 $ 5
==== ===
Prepaid pension cost................................................. $ -- $ 2
==== ===
</TABLE>

In accordance with the provisions of SFAS No. 87 "Employers' Accounting for
Pensions" and SFAS No. 106 "Employers' Accounting for Postretirement Benefits
Other Than Pensions," the Company adjusts the discount, salary and health care
cost trend rates, as well as the rates of return on assets, to reflect market
conditions at the measurement date. At December 31, 1994, the Company increased
the discount rate used to calculate the projected pension benefit obligation to
8.5%, reflecting the change in the interest rate environment. The increase in
the discount rate had no effect on 1994 pension expense, which was $2 million
compared to $1 million in 1993 and 1992. The discount rate change is expected to
decrease 1995 pension expense by less than $1 million. Due to market conditions,
the Company had decreased the discount rate at December 31, 1993 to 7.5% which
increased 1994 pension expense by approximately $1 million. The Company also
reduced the salary rate assumption from 7% to 6% at December 31, 1993, based on
the Company's experience. This rate reduction had no effect on 1993 pension
expense but reduced 1994 pension expense by less than $1 million.

The Company also provides health care benefits for eligible retired
employees and their eligible dependents. At December 31, 1994 and 1993, $6
million and $7 million of the transition obligation remains unamortized. This
obligation, under the terms of the amended healthcare plan, was calculated using
relevant actuarial assumptions and health care cost trend rates projected at
annual rates ranging from 11.0% in 1994 to 5.5% in 2004 and thereafter. The
effect of a 1.0% annual increase in these assumed cost trend rates would
increase the accumulated postretirement benefit obligation by approximately $1
million, while annual service and interest cost components in the aggregate
would not be materially affected. Consistent with the changes in the pension
plan discount rate at December 31, 1994 and 1993, the discount rate used to
calculate the accumulated postretirement benefit obligation was increased to
8.5% at December 31, 1994 from 7.5% at December 31, 1993. The increase in the
discount rate at December 31, 1994 had no effect on the 1994 expense and it is
expected to decrease 1995 expense by less than $1 million. The decrease in the
discount rate at December 31, 1993 increased 1994 expense by less than $1
million. The net postretirement benefit liability and associated expense was $1
million for the years ended December 31, 1994 and 1993, respectively.

39
<PAGE> 40

HELLER FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Postretirement benefit expense was less than $.3 million for 1992, when retiree
medical claims were expensed as incurred.

12. INCOME TAXES

Although the Company files a consolidated U.S. tax return with its Parent,
the Company reports income tax expense as if it were a separate taxpayer and
records deferred tax benefits for deductible temporary differences if it is more
likely than not that these benefits will be realized. Included in income tax
expense are amounts relating to the International Group, which files a separate
United States federal income tax return. Income taxes paid by the International
Group amounted to $1 million in 1994 and 1993.

The provision for income taxes is summarized in the following table:

<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Current:
Federal....................................................... $ 33 $ 75 $ 20
Utilization of investment, foreign tax and AMT credits........ (29) (32) (7)
---- ---- ----
Net federal........................................... 4 43 13
State......................................................... (2) 16 5
Foreign....................................................... 1 1 1
---- ---- ----
Total current......................................... 3 60 19
---- ---- ----
Deferred:
Federal....................................................... 41 (41) (21)
State......................................................... 7 (6) (3)
Effect of change in tax rates................................. -- (2) --
---- ---- ----
Total deferred........................................ 48 (49) (24)
---- ---- ----
$ 51 $ 11 $ (5)
==== ==== ====
</TABLE>

In accordance with the provisions of the current tax allocation agreement,
net payments of $1 million were made to the Parent in 1994 for the Company's
estimated current income tax liability. In 1993 and 1992, income taxes paid
amounted to $56 million and $24 million, respectively.

During 1993, the statutory federal income tax rate increased to 35% from
34%, the rate in effect for 1992. The reconciliation between the statutory
federal income tax provision and the actual effective tax provision for each of
the three years ended December 31 is as follows:

<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Tax provision at statutory rate................................. $ 61 $ 47 $ 16
State and foreign income taxes, net of federal income tax
effects....................................................... 9 12 2
Income of foreign subsidiaries.................................. (12) (9) (10)
Actual and deemed foreign distributions......................... 4 1 4
Resolution of tax issues........................................ (6) -- (6)
Change in valuation allowance................................... (2) (42) (4)
Change in tax rate.............................................. -- (2) --
Rate differential between alternative minimum tax and regular
tax........................................................... -- -- (3)
---- ---- ----
Other, net...................................................... (3) 4 (4)
---- ---- ----
$ 51 $ 11 $ (5)
==== ==== ====
</TABLE>
40
<PAGE> 41

HELLER FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The tax benefits of deductible temporary differences are shown net of a
valuation allowance of $11 million and $13 million, respectively. The valuation
allowance was reduced in 1993 and in 1994 as a result of management's increased
confidence in the recognition of the benefit of deductible temporary
differences.

The significant components of the deferred tax assets and deferred tax
liabilities at December 31, 1994 and 1993 are shown below:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1994 1993
---- ----
(IN MILLIONS)
<S> <C> <C>
Deferred Tax Assets:
Allowance for loan losses........................................... $ 98 $133
Accrued expenses.................................................... 11 7
Foreign tax credits................................................. 8 4
Equity interests and other investments.............................. 3 --
Alternative minimum tax credit carryforward......................... 2 1
Other............................................................... -- 3
---- ----
Gross deferred tax assets............................................. 122 148
Valuation allowance................................................... (11) (13)
---- ----
Gross deferred tax assets, net of valuation allowance................. 111 135
---- ----
Deferred Tax Liabilities:
Tax benefit of non-consolidated investments......................... $(28) $ (1)
Deferred income from lease financing................................ (12) (18)
Unrealized appreciation of securities available for sale............ (3) (5)
Equity interests and other investments.............................. -- (2)
Other............................................................... (5) --
---- ----
Gross deferred tax liabilities........................................ (48) (26)
---- ----
Net deferred tax asset................................................ $ 63 $109
==== ====
</TABLE>

Provision has not been made for United States or additional foreign taxes
on $82 million of undistributed earnings of subsidiaries outside the United
States, as those earnings are intended to be reinvested. Such earnings would
become taxable upon the sale or liquidation of these international operations or
upon the remittance of dividends. Given the availability of foreign tax credits
and various tax planning strategies, management believes any tax liability which
may ultimately be paid on these earnings would be substantially less than that
computed at the statutory federal income tax rate. Upon remittance, certain
foreign countries impose withholding taxes that are then available, subject to
certain limitations, for use as credits against the Company's U.S. tax
liability, if any. The amount of withholding tax that would be payable upon
remittance of the entire amount of undistributed earnings would be approximately
$9 million.

During 1994, the Company utilized alternative minimum tax credit and
investment tax credit carryforwards of $5 million. The Company had unused
foreign tax credit carryforwards of $8 million at December 31, 1994. Due to
substantial restrictions on the utilization of foreign tax credits imposed by
the Tax Reform Act of 1986, the Company may not be able to utilize a significant
portion of foreign tax credit carryforwards prior to expiration. Accordingly,
the Company has recognized a valuation allowance equal to the amount of foreign
tax credits recorded at December 31, 1994 and 1993.

13. RELATED PARTIES

Several financial, administrative or other service arrangements exist
between the Company and Fuji Bank, the Parent or related affiliates. In
management's opinion, the terms of these arrangements are similar to

41
<PAGE> 42

HELLER FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

those the Company would have been able to obtain in like agreements with
unaffiliated entities in an arms-length transaction.

Services Provided by Fuji Bank and the Parent for the Company. Certain
employees of Fuji Bank and the Parent perform managerial and administrative and
other related functions for the Company. The amounts paid to Fuji Bank and the
Parent for these services were $2 million and $47 million, respectively for
1994, and $2 million and $44 million for 1993. Additionally, certain
subsidiaries of Fuji Bank periodically serve as managers for various offerings
of the Company's debt securities and the Fuji Bank and Trust Company may act as
registrar and paying agent for certain debt issuances by the Company.

Services Provided by the Company for Fuji and the Parent. The Company
performs services for its affiliates and charges them for the cost of the work
performed. The Company may also guarantee the obligations of its clients or the
clients of certain joint ventures, under letters of credit issued by financial
institutions, some of which are affiliates of the Company. The Company has
agreements with the Parent and certain other subsidiaries of the Parent which
provide for the Company to receive an annual negotiated fee for servicing assets
which have been sold by the Company to the Parent and these affiliates. The
Company continues to service these assets and all other direct costs and
expenses, including any additional advances made after the date of the
agreement, are borne by the subsidiaries of the Parent. The amount of fees for
servicing these assets in 1994, 1993 and 1992, was approximately $2 million, $4
million and $5 million, respectively. These amounts are recorded as a reduction
of operating expenses in the consolidated statements of income.

Intercompany Receivables, Transactions and Financial Instruments -- At
December 31, 1994 and 1993, other assets include net amounts due from affiliates
of $29 million and $31 million, respectively. The amounts are comprised
principally of interest bearing demand notes representing amounts due to the
Company arising from the interest rate swap agreement with the Parent, advances,
administrative fees and costs charged to other subsidiaries of the Parent. The
notes bear interest at rates which approximate the average rates on the
Company's commercial paper obligations or short-term bank borrowing rates
outstanding during the period.

In the ordinary course of its business, the Company participates in joint
financings with certain affiliates. During 1994, the Company paid $17 million to
repurchase loan participations which it previously sold to affiliates.

The Company is party to a $250 million interest rate swap agreement with
the Parent which was amended in 1992 and expires July 31, 1995. The Company is
also a party to a $200 million interest rate swap agreement with the Parent,
effective January 13, 1994 which expires December 15, 2000. The purpose of the
agreements is to manage the Company's exposure to interest rate fluctuations.
Under these agreements, the Company pays interest to the Parent at a variable
rate based on the commercial paper rate published by the Board of Governors of
the Federal Reserve System and the Parent pays interest to the Company at fixed
rates of 5.0% and 5.57%, respectively. The agreements had the effect of reducing
the Company's interest expense by $3 million in 1994, $5 million in 1993, and $7
million in 1992.

The Company is also a party to a $25 million interest rate swap agreement
with Fuji Bank, which became effective in March, 1990 and expires in February,
1995. During 1994 and 1993, $1 million was paid each year to Fuji Bank under
this agreement. Additionally, the Company entered into cross-currency basis swap
agreements with a subsidiary of Fuji Bank, which had the effect of converting
debt denominated in Japanese yen to $148 million of U.S. currency. During 1994
and 1993, $7 million and $4 million, respectively, have been paid to Fuji Bank
under these agreements.

The Company and Fuji Bank are parties to a "Keep Well Agreement," which
cannot be terminated by either party prior to December 31, 2000. After December
31, 2000, either Fuji Bank or the Company may terminate the agreement upon 30
business days prior written notice. As long as the Perpetual Preferred Stock is
outstanding and held by third parties other than Fuji Bank, the agreement may
not be terminated by either

42
<PAGE> 43

HELLER FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

party unless the Company has received written certifications from Moody's
Investors Services, Inc. and Standard and Poor's Corporation that, upon such
termination, the Perpetual Preferred Stock will be rated no lower than "a3" and
"A-", respectively. The Keep Well Agreement provides that if the Company should
lack sufficient cash or credit facilities to meet its commercial paper
obligations, Fuji Bank will lend the Company up to $500 million. That loan would
be payable on demand and the proceeds from the loan could only be used by the
Company to meet its commercial paper obligations. Commitment fees paid by the
Company to Fuji Bank under the agreement amounted to less than $.4 million in
1994, 1993 and 1992. Interest on any loans will be charged at the prime rate of
Morgan Guaranty Trust Company of New York plus .25% per annum. No loans have
been made by Fuji Bank under this agreement.

Fuji Bank and one of its subsidiaries provided uncommitted lines of credit
to consolidated international subsidiaries totaling $15 million and $13 million
at December 31, 1994 and 1993, respectively. Borrowings under these facilities
totaled $5 million and $9 million at December 31, 1994 and 1993, respectively.
In addition, Fuji Bank provides uncommitted lines of credit to certain
international joint ventures.

43
<PAGE> 44

HELLER FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

14. FAIR VALUE DISCLOSURES

SFAS No. 107 "Disclosures about Fair Value of Financial Instruments,"
requires disclosure of fair value information for certain financial instruments,
for which it is practicable to estimate that value. These values must be
estimated as there is no well established market for many of the Company's
assets and financial instruments. Fair values are based on estimates using
present value, property yield, historical rate of return and other valuation
techniques. These techniques are significantly affected by the assumptions used,
including the discount rate and estimates of future cash flows. These
assumptions are inherently judgmental and changes in such assumptions could
significantly affect fair value calculations. The derived fair value estimates
may not be substantiated by comparison to independent markets and may not be
realized in immediate liquidation of the instrument.

The book values and estimated fair market values of the Company's financial
instruments at December 31, 1994 and 1993, are as follows:

<TABLE>
<CAPTION>
1994 1993
---------------- ----------------
BOOK FAIR BOOK FAIR
VALUE VALUE VALUE VALUE
------ ------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Net receivables..................................... $7,358 $7,396 $6,801 $6,863
Total investments................................... $ 634 $ 694 $ 370 $ 421
Debt................................................ $6,381 $6,412 $5,949 $6,194
Interest rate swap agreements:
Interest rate swap agreements in a receivable
position....................................... $ 11 $ 5 $ 21 $ 176
Interest rate swap agreements in a payable
position....................................... $ 2 $ 7 $ 1 $ 8
</TABLE>

The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments. Carrying values
approximate fair values for all financial instruments which are not specifically
addressed.

For variable rate receivables that reprice frequently and have no
significant credit risk, fair values were assumed to equal carrying values. All
other receivables were pooled by loan type and risk rating. The fair value for
these receivables was estimated by discounted cash flow analyses, using interest
rates equal to the London Inter-bank Offered Rate or the Prime Rate offered as
of December 31, 1994 and 1993, plus an adjustment for normal spread, credit
quality and the remaining terms of the loans.

Book and fair values of the trading securities and securities available for
sale are based on quoted market prices. The fair values of equity interests and
other investments are calculated by first using the Company's business valuation
model to determine the estimated value of these investments as of the
anticipated exercise date. The business valuation model analyzes the cash flows
of the related company and considers values for similar equity investments. The
determined value is then discounted back to December 31, 1994 and 1993, using a
rate appropriate for returns on equity investments. Although the investments in
international joint ventures accounted for by the equity method are not
considered financial instruments and as such are not included in the above
table, management believes that the fair values of these investments
significantly exceed the carrying value of these investments.

The fair values of the debt and swap agreements were estimated using
discounted cash flow analyses, based on current incremental borrowing and swap
rates for arrangements with similar terms and remaining maturities, as quoted by
independent financial institutions as of December 31, 1994 and 1993. As market
interest rates increased during 1994, the fair value of debt decreased relative
to book value. Accordingly, the fair value of the interest rate swap agreements
moved toward a payable position. The fair values of loan commitments, letters of
credit and guarantees are negligible.

44
<PAGE> 45

HELLER FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

15. FINANCIAL DATA BY REGION

The following table shows certain financial information by geographic
region for the years ended December 31, 1994, 1993 and 1992.

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
UNITED STATES EUROPE ASIA-PACIFIC OTHER CONSOLIDATED
------------- ------ ------------ ----- ------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Assets
1994.................................... $ 7,913 $271 $241 $51 $8,476
1993.................................... 7,457 238 183 35 7,913
1992.................................... 7,652 158 104 38 7,952
Interest income, fees and other income,
and income of international joint
ventures
1994.................................... $ 839 $ 24 $ 19 $11 $ 893
1993.................................... 742 26 11 2 781
1992.................................... 720 24 11 6 761
Income before taxes, minority interest and
cumulative effect of change in
accounting principle
1994.................................... $ 145 $ 12 $ 7 $10 $ 174
1993.................................... 104 24 4 1 133
1992.................................... 18 19 4 4 45
Net income
1994.................................... $ 92 $ 11 $ 6 $ 9 $ 118
1993.................................... 89 24 3 1 117
1992.................................... 62 19 3 4 88
</TABLE>

45
<PAGE> 46

HELLER FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

16. SUMMARY OF QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The following financial information for the calendar quarters of 1994, 1993
and 1992, is unaudited. In the opinion of management, all adjustments necessary
to present fairly the results of operations for such periods have been included.

<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------
MARCH 31 JUNE 30 SEPT. 30 DEC. 31
-------- ------- -------- -------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Net interest income --
1994..................................................... $ 82 $ 90 $ 99 $ 95
1993..................................................... 86 90 92 88
1992..................................................... 82 82 82 93
Operating revenues --
1994..................................................... $140 $ 125 $145 $ 147
1993..................................................... 118 137 127 135
1992..................................................... 111 110 115 130
Provision for losses --
1994..................................................... $ 50 $ 40 $ 48 $ 50
1993..................................................... 48 57 53 52
1992..................................................... 44 48 51 109
Net income --
1994..................................................... $ 28 $ 35 $ 30 $ 25
1993..................................................... 25 37 28 27
1992..................................................... 59 17 11 1
</TABLE>

Net income for the quarter ended March 31, 1992 includes $41 million of
income for the cumulative effect of the recognition of a deferred tax asset
resulting from the adoption of SFAS No. 109, "Accounting for Income Taxes."

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

46
<PAGE> 47

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The names and ages of all directors and all persons nominated or chosen to
become directors and executive officers of the Company as of December 31, 1994,
and a biographical summary for each such person appear in the following pages.
No family relationship exists among the persons named below.

<TABLE>
<CAPTION>
NAME, AGE & POSITIONS FROM TO
- - ----------------------------------------------------------------- --------------- -------
<S> <C> <C>
DIRECTORS
MICHAEL S. BLUM (55)
Director......................................................... July, 1986 Present
Chairman of the Board and Chief Executive Officer................ November, 1990 Present
Director, Heller International Corporation ("Parent") and
Heller International Group, Inc. ("International")............. July, 1986 Present
Chairman of the Board and Chief Executive Officer, International;
Chairman of the Board, Chief Executive Officer and President,
Parent......................................................... November, 1990 Present
Director, Chairman of the Board and Chief Executive Officer,
Heller International Holdings, Inc. ("Holdings")............... December, 1992 Present
Vice Chairman of the Board....................................... 1987 1990
President, Heller Real Estate Financial Services group........... 1986 1990

HAJIME MAEDA (53)
Director, the Company, Parent, International and Holdings........ nominee*
Managing Director, The Fuji Bank, Limited ("Fuji Bank").......... November, 1994 Present
Director and General Manager, Fuji Bank, Head Office Corporate
Banking Division I............................................. 1992 1994
General Manager, Fuji Bank, Business Information Division........ 1990 1992
* In December, 1994, Mr. Maeda was nominated to fill the Board
positions held by Mr. Kamio and was subsequently elected to
those positions in January, 1995.

TOMOHIRO KAMIO (54)
Director, the Company, Parent and International.................. June, 1992 Present**
Director, Holdings............................................... December, 1992 Present**
Managing Director, Fuji Bank..................................... May, 1992 Present
Director and General Manager, Fuji Bank, International Planning
Division....................................................... 1991 1992
Director and General Manager, Fuji Bank, New York Branch......... 1990 1991
Director, the Company and Parent................................. 1990 1991
General Manager, Fuji Bank, Americas Division.................... 1989 1990
** Mr. Kamio's term expired in January, 1995 at which time
Mr. Maeda was elected to fill the Board positions Mr. Kamio
had held.

RICHARD J. ALMEIDA (52)
Director, Executive Vice President and Chief Financial Officer,
the Company, Parent and International.......................... November, 1987 Present
Director, Executive Vice President and Chief Financial Officer,
Holdings....................................................... December, 1992 Present

TETSUYA FUKABORI (42)
Director, the Company, Parent and International.................. May, 1992 Present
Senior Vice President, Parent.................................... June, 1992 Present
Director, Holdings............................................... December, 1992 Present
Senior Vice President, Fuji Bank, Americas Division.............. 1990 1992
Senior Vice President, Fuji Bank, New York Office, International
Project Finance Division....................................... 1990 1990
Senior Manager, Fuji Bank Head Office, Corporate Banking Division
II............................................................. 1987 1990
</TABLE>

47
<PAGE> 48

<TABLE>
<CAPTION>
NAME, AGE & POSITIONS FROM TO
- - ----------------------------------------------------------------- --------------- -------
<S> <C> <C>
HIROKAZU ISHIKAWA (48)
Director, the Company and Parent................................. May, 1992 Present
General Manager, Fuji Bank, Chicago Branch....................... April, 1992 Present
Deputy General Manager, Fuji Bank, International Division........ 1991 1992
Deputy General Manager, Fuji Bank, Personnel Affairs Division.... 1987 1991

MINORU ITOSAKA (45)
Director, the Company, Parent, International and Holdings........ July, 1993 Present
General Manager, Fuji Bank, Americas Division.................... July, 1993 Present
Deputy General Manager, Fuji Bank, International Planning
Division....................................................... 1989 1993

MARK KESSEL (53)
Director, the Company and Parent................................. July, 1992 Present
Partner, law firm of Shearman & Sterling......................... 1977 Present
Director, CEI Holdings Corporation, a subsidiary of Graseby
p.l.c.......................................................... 1983 1991

MICHAEL J. LITWIN (47)
Director, the Company and Parent................................. April, 1990 Present
Senior Group President........................................... October, 1990 Present
Executive Vice President, International.......................... January, 1989 Present
Executive Vice President, Holdings............................... December, 1992 Present
President, Leveraged Funding group............................... 1987 1990

DENNIS P. LOCKHART (47)
Director, the Company, Parent and International; President,
International; Executive Vice President, Parent................ January, 1988 Present
Director and President, Holdings................................. December, 1992 Present
Director, Tri Valley Corp. ...................................... 1981 Present

LAURALEE E. MARTIN (44)
Director, the Company and Parent................................. May, 1991 Present
Senior Group President........................................... October, 1990 Present
Director and President, Heller Financial Leasing, Inc. .......... December, 1993 Present
Executive Vice President, Heller Real Estate Financial
Services....................................................... 1986 1990

KENJI MIYAMOTO (47)
Director, the Company, Parent, International and Holdings........ May, 1994 Present
General Manager, Fuji Bank, Atlanta Agency....................... May, 1992 1994
Senior Vice President, Fuji Investment Management Co., Ltd. ..... May, 1987 1992

OSAMU OGURA (37)
Director, the Company and Parent................................. November, 1994 Present
Deputy General Manager, Fuji Bank, Americas Division............. November, 1994 Present
Senior Manager, Fuji Bank, Americas Division..................... 1993 1994
Manager, Fuji Bank, International Division....................... 1992 1993
Manager, Fuji Bank, Personnel Affairs Division................... 1987 1992

ATSUSHI TAKANO (49)
Director, the Company and Parent................................. July, 1992 Present
General Manager, Fuji Bank, New York Branch...................... May, 1994 Present
General Manager, Fuji Bank, Los Angeles Agency................... 1992 1994
General Manager, Fuji Bank, International Treasury Division...... 1989 1992
Joint General Manager, Fuji Bank, New York Branch................ 1984 1992
</TABLE>

48
<PAGE> 49

<TABLE>
<CAPTION>
NAME, AGE & POSITIONS FROM TO
- - ----------------------------------------------------------------- --------------- -------
<S> <C> <C>
MITCHELL F. VERNICK (39)
Director, the Company and Parent................................. May, 1991 Present
Senior Group President........................................... October, 1990 Present
Executive Vice President, International.......................... June, 1989 Present
Executive Vice President, Holdings............................... December, 1992 Present
President, Capital Markets group................................. 1987 1990

KENJI WATANABE (48)
Director, the Company and Parent................................. May, 1994 Present
General Manager, Fuji Bank, Los Angeles Agency................... May, 1994 Present
General Manager, Fuji Bank, Hamamatsucho Branch.................. 1992 1994
Deputy General Manager, Fuji Head Office, Corporate Banking
Planning....................................................... 1987 1992

MASASHI YAMAMOTO (48)
Director, the Company and Parent................................. May, 1992 Present
President, The Fuji Bank and Trust Company, New York............. April, 1992 Present
Senior Joint General Manager, Fuji Bank, New York Branch......... 1991 1992
Senior Executive Vice President, The Fuji Bank and Trust Company,
New York Branch................................................ 1991 1992
Deputy General Manager, Fuji Bank Head Office, International
Planning Division.............................................. 1987 1991

EXECUTIVE OFFICERS

ANTHONY O'B. BEIRNE (46)
Senior Vice President and Controller, the Company, Parent and
International.................................................. March, 1988 Present
Senior Vice President and Controller, Holdings................... December, 1992 Present

JAMES B. CURRIE (46)
Executive Vice President, General Counsel and Secretary, the
Company, Parent, International and Holdings.................... December, 1993 Present
Senior Vice President, Secretary and General Counsel, Coldwell
Banker Real Estate Group....................................... 1990 1993
Vice President, Secretary and General Counsel, Coldwell Banker
Real Estate Group.............................................. 1986 1990
Senior Vice President and Director, Sears Savings Bank........... 1990 1993
Vice President, Homart Development Co., Coldwell Banker
Residential Affiliates, Inc., Coldwell Banker Real Estate and
Sears Mortgage Corporation..................................... 1990 1993
Vice President and Director, BorrowersChoice Corp. .............. 1991 1993

CHRISTOPHER L. GILLOCK (40)
Senior Vice President, Corporate Development and Investments,
the Company and Parent......................................... July, 1990 Present
Managing Director and Senior Vice President, Investment group.... 1988 1990

MICHAEL P. GOLDSMITH (41)
Group President, Heller Real Estate Financial Services group..... April, 1994 Present
Executive Vice President, Division Manager, Project Management
Organization................................................... 1990 1994
</TABLE>

49
<PAGE> 50

<TABLE>
<CAPTION>
NAME, AGE & POSITIONS FROM TO
- - ----------------------------------------------------------------- --------------- -------
<S> <C> <C>
JOHN L. GUY, JR. (42)
Senior Vice President and Treasurer, the Company and Parent...... July, 1992 Present
Senior Vice President, Internal Audit............................ April, 1992 1992
Vice President, Internal Audit................................... 1989 1992

TOMONORI KOBAYASHI (45)
Senior Vice President, Corporate Planning & Administration,
the Company and Parent......................................... January, 1991 Present
Senior Vice President, Parent.................................... 1990 1991
Deputy General Manager, Fuji Bank, Capital Markets Planning
Division....................................................... 1987 1990

CHALLIS M. LOWE (49)
Senior Vice President, Human Resources, the Company and Parent... September, 1993 Present
Senior Vice President, Administrative Services, Sanwa Business
Credit Corporation............................................. 1985 1993

MICHAEL J. ROCHE (43)
Group President, Current Asset Management group.................. November, 1994 Present
Senior Vice President and Chief Information Officer, Information
Technology..................................................... 1990 1994
Senior Vice President and Chief Information Officer, Information
Technology, Parent............................................. 1991 1994
Managing Director, Information Technology, Continental Illinois
National Bank.................................................. 1988 1990
</TABLE>

Each of the officers and directors of the Company are elected at the annual
meeting for a term of one year until their successors are duly elected and
qualified.

ITEM 11. EXECUTIVE COMPENSATION

The following information is furnished as to all plan and non-plan
compensation awarded to, earned by, or paid to the Chief Executive Officer of
the Company and the four next most highly compensated executive officers of the
Company (as determined at December 31, 1994) for services rendered in all
capacities to the Company and its subsidiaries during the years ended December
31, 1994, 1993 and 1992.

50
<PAGE> 51

SUMMARY COMPENSATION TABLE (1)(2)

<TABLE>
<CAPTION>
OTHER ANNUAL ALL OTHER
COMPENSATION($) COMPENSATION($)
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) (4) (6)
- - -------------------------------------- ---- --------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Michael S. Blum....................... 1994 731,250 (3 ) 811,706 4,617
(Chairman of the Board and Chief 1993 656,250 408,713 330,750 4,481
Executive Officer) 1992 581,250 478,223 302,831 4,361
Richard J. Almeida.................... 1994 291,000 (3 ) 229,026 4,620
(Chief Financial Officer) 1993 268,000 150,000 104,435 4,487
1992 259,875 175,000 91,866 4,363
Lauralee E. Martin.................... 1994 245,667 (3 ) 197,418 4,620
(Senior Group President) 1993 227,292 150,000 86,632 4,497
1992 201,875 125,000 71,363 4,364
Mitchell F. Vernick................... 1994 245,667 (3 ) 300,574(5) 4,620
(Senior Group President) 1993 230,833 130,000 155,476(5) 4,497
1992 212,250 125,000 125,030(5) 4,363
Dennis P. Lockhart.................... 1994 246,667 (3 ) 197,418 4,620
(President, Heller International 1993 233,000 115,000 88,808 4,496
Group, Inc.) 1992 222,000 110,000 78,477 4,355
</TABLE>

- - ---------------
(1) All numbers are rounded to the nearest whole dollar.

(2) Certain executive officers of the Company whose compensation is included
above are employed and paid by the Parent. Pursuant to a management
agreement between the Company and the Parent, the Company reimburses the
Parent for their services.

(3) The cash bonus under the management incentive plan for services rendered to
the Company and its subsidiaries during the year ended December 31, 1994
was not calculable as of the date of this report. Such amounts will be
disclosed in the Company's annual report for the subsequent fiscal year in
the appropriate column for the year in which earned. Annual bonus amounts
are earned and accrued during the year shown, and paid subsequent to the
end of such year.

(4) Accruals under the Company's Long Term Incentive Plans ("LTIPs") are based
upon the Company's performance in one year and are not affected by the
Company's performance in subsequent years. As a result, the Company reports
annual accruals under its LTIPs as annual compensation as defined by the
SEC. During 1994, the Company had a LTIP that commenced on January 1, 1994
and will terminate on December 31, 1996 ("1994-96 LTIP") and the Company
also had a LTIP that commenced on January 1, 1992 and terminated on
December 31, 1994 ("1992-94 LTIP"). Under the terms of the 1994-96 LTIP,
payouts of accruals will be made after the termination of the 1994-96 LTIP
to officers who are active employees of the Company and participants in the
1994-96 LTIP through its termination date (subject to exceptions in the
case of disability, death or retirement). Payouts of all accruals under the
1992-94 LTIP will be made in March 1995. Accruals under the 1994-96 LTIP
and 1992-94 LTIP, respectively, for calendar year 1994 were as follows: Mr.
Blum, $395,034 and $415,022; Mr. Almeida, $114,513 and $114,513; Ms.
Martin, $98,709 and $98,709; Mr. Vernick, $98,709 and $98,709; and Mr.
Lockhart, $98,709 and $98,709.

The amount of Other Annual Compensation shown for Mr. Blum includes $1,650
reimbursed during 1994 for the payment of taxes. Perquisites and other
personal benefit amounts for each of the named executive officers fall
below the minimum level for disclosure and therefore have been excluded.

(5) Significant portions of the 1994, 1993 and 1992 amounts consist of special
payments attributable to the performance of specific business units and
investments.

(6) Amounts reported reflect the Company's contribution made in the form of a
match on amounts deferred by the officer in the Company's Savings and
Profit Sharing Plan, that is qualified under Section 501(a) of the Internal
Revenue Code. This Plan is available to all employees who work at least 900
hours per year.

51
<PAGE> 52

The Company makes matching contributions equal to 50% of the employee's
contribution provided, however, that the Company's contribution will not
exceed 2.5% of the employee's base salary.

RETIREMENT AND OTHER DEFINED BENEFIT PLANS

The Company has a defined benefit retirement income plan (the "Retirement
Plan") for the benefit of its employees that is a qualified plan under Section
401 of the Internal Revenue Code of 1986 (the "Code"). Substantially all
domestic employees of the Company who have one year of service, including
executive officers and directors of the Company, and also certain executive
officers and directors of International, participate in the Retirement Plan.
Non-employee directors are not eligible for retirement benefits.

The Company adopted a Supplemental Executive Retirement Plan ("SERP"),
effective October 28, 1987, which provides benefits to all officers at the level
of Senior Vice President and above who participate in the Company's LTIP and the
Retirement Plan, which are in excess of the limitations imposed by Sections
401(a)(17) and 415 of the Internal Revenue Code, as amended from time to time.

Under a defined benefit plan, such as the Company's, contributions are not
specifically allocated to individual participants. The table below shows
estimated annual retirement benefits for executives in specified remuneration
and service classifications.

ESTIMATED ANNUAL RETIREMENT BENEFITS

<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
FINAL -----------------------------------------------------------
AVERAGE 25 AND
PAY 5 10 15 20 OVER
- - --------------------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000............. $13,000 $ 26,000 $ 39,000 $ 52,000 $ 65,000
125,000............. 16,250 32,500 48,750 65,000 81,250
150,000............. 19,500 39,000 58,500 78,000 97,500
175,000............. 22,750 45,500 68,250 91,000 113,750
200,000............. 26,000 52,000 78,000 104,000 130,000
225,000............. 29,250 58,500 87,750 117,000 146,250
250,000............. 32,500 65,000 97,500 130,000 162,500
275,000............. 35,750 71,500 107,250 143,000 178,750
300,000............. 39,000 78,000 117,000 156,000 195,000
400,000............. 52,000 104,000 156,000 208,000 260,000
450,000............. 58,500 117,000 175,500 234,000 292,500
500,000............. 65,000 130,000 195,000 260,000 325,000
600,000............. 78,000 156,000 234,000 312,000 390,000
</TABLE>

In general, remuneration covered by the retirement plan consists of the
annual base salary determined before any salary reduction contributions to the
Company's Savings and Profit Sharing Plan.

The number of years of credited service as of December 31, 1994, and the
actual average remuneration for their respective years of credited service with
the Company for those individuals listed on the Summary Compensation Table are
as follows: Michael S. Blum, $533,333, 8 years 6.5 months, Richard J. Almeida,
$256,463, 7 years 5 months, Lauralee E. Martin, $204,696, 8 years 4.5 months,
Mitchell F. Vernick, $208,715, 8 years 4.5 months, and Dennis P. Lockhart,
$223,813, 7 years.

The figures shown in the table above include benefits payable under the
SERP as described above. However, the figures shown are prior to offsets for
Social Security, Retirement Plan and Company match benefits (under its Savings
and Profit Sharing Plan) as specified by the SERP benefit formula. The estimates
assume that benefits commence at age 65 under a straight life annuity form.

COMPENSATION OF DIRECTORS

Directors of the Company are not compensated for provision of services as a
director to the Company.

52
<PAGE> 53

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS

Michael S. Blum has an employment contract with the Parent which expires on
December 31, 1996 and provides that if his employment is terminated by the
Parent without cause (as defined in the contract), or if he resigns in response
to a significant diminution of his assigned duties and responsibilities by the
Parent, he will be entitled to receive full salary and all executive perquisites
through the later of December 31, 1996, or the last day of the twelfth month
following the month in which his termination occurred (the "Cutoff Date"). He
will also receive a pro rata portion of his estimated incentive plan payments
for the year of termination and will continue to be covered under certain
benefit plans through the Cutoff Date. If Mr. Blum's employment is terminated
pursuant to either of the situations described above, he will receive 50% of his
full salary from the Cutoff Date until August 30, 1998. In the event that Mr.
Blum and the Parent do not reach an agreement regarding the terms of an
extension or renewal of his contract, Mr. Blum is entitled to receive full
salary until the later of December 31, 1996, or nine months from the date the
Parent informs him that it does not intend to extend his employment and
thereafter at the rate of 50% of his full salary through August 30, 1998
(subject to reduction for compensation received from another employer). Mr. Blum
would also receive coverage under certain benefit plans through August 30, 1998
and perquisites through December 31, 1997.

Mitchell Vernick participates in special incentive arrangements with the
Company pursuant to which he is eligible to receive payments based upon the
performance of specific business units and investments.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Michael S. Blum and Tomohiro Kamio served as members of the Compensation
Committee of the Board of Directors of the Company throughout calendar year
1994. Kenji Miyamoto served as a member of the Company's Compensation Committee
from May 25, 1994 through December 31, 1994. Mr. Miyamoto's predecessor, Osamu
Kita, served as a member of the Company's Compensation Committee from January 1,
1994 through May 25, 1994.

Mr. Blum also served as Chairman and Chief Executive Officer of the
Company, and its subsidiaries, International and Holdings. In addition, Mr. Blum
served as the Chairman of the Board, Chief Executive Officer and President of
the Parent and served as a member of the Compensation Committee of the Parent,
International, and Holdings. Messrs. Miyamoto and Kita, each also served as
executive officers of the Parent during their tenure as a member of the
Compensation Committee of the Company.

As identified below, several directors of the Company also served as
executive officers of one or more of the other companies for whom Mr. Blum
served as a member of the Compensation Committee of the Board of Directors: Mr.
Almeida, Parent, International and Holdings; Mr. Fukabori, Parent; Mr. Litwin,
International and Holdings; Mr. Lockhart, Parent, International and Holdings;
Mr. Vernick, International and Holdings.

No other relationships exist between the members of the Compensation
Committee of the Company, the Parent, International or Holdings and the
directors and executive officers of those companies.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

VOTING SECURITIES

The following table sets forth the ownership of all of the outstanding
common stock of the Company, as of February 1, 1995:

<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
--------------------------------------------------------- ----------------------- --------
<S> <C> <C>
Heller International Corporation (Parent)................ 100 Shares 100%
500 West Monroe Street
Chicago, Illinois 60661
</TABLE>

53
<PAGE> 54

EQUITY SECURITIES

All of the outstanding common stock of the Parent is owned by Fuji Bank. As
of December 31, 1994, certain directors and executive officers of the Company
owned beneficially certain amounts of Fuji Bank's common stock, all as indicated
below.

<TABLE>
<CAPTION>
NAME OF AMOUNT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP
------------------------------------------------------------------- --------------------
<S> <C>
Michael S. Blum.................................................... 0
Hajime Maeda....................................................... 20,716 Shares
Tomohiro Kamio..................................................... 22,974 Shares
Richard J. Almeida................................................. 0
Tetsuya Fukabori................................................... 2,000 Shares
Hirokazu Ishikawa.................................................. 3,258 Shares
Minoru Itosaka..................................................... 2,848 Shares
Mark Kessel........................................................ 0
Michael J. Litwin.................................................. 0
Dennis P. Lockhart................................................. 0
Lauralee E. Martin................................................. 0
Kenji Miyamoto..................................................... 2,192 Shares
Osamu Ogura........................................................ 0
Atsushi Takano..................................................... 2,714 Shares
Mitchell Vernick................................................... 0
Kenji Watanabe..................................................... 1,410 Shares
Masashi Yamamoto................................................... 5,305 Shares
--------------------
Total Shares.................................................. 63,417 Shares
===============
</TABLE>

In addition, Messrs. Fukabori, Ishikawa, Itosaka, Miyamoto, Ogura, Takano,
Watanabe and Yamamoto participate in a Fuji Bank employee stock purchase plan
and, as of December 31, 1994, beneficially held a total of approximately 35,469
shares.

The aggregate number of shares of Fuji Bank common stock that are
beneficially owned by the Company's directors and officers, considered as a
group, including those shares held in the Fuji Bank employee stock purchase
plan, does not exceed 1% of the outstanding shares of such stock.

54
<PAGE> 55

The following table sets forth the ownership by all directors, nominees and
executive officers, of all outstanding equity securities of the Company, and its
subsidiaries, as of February 1, 1995:

<TABLE>
<CAPTION>
NAME OF AMOUNT OF PERCENT OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- - ---------------------------------- --------------------------------- -------------------- ----------
<S> <C> <C> <C>
Heller Financial, Inc.
Cumulative Convertible Preferred
Stock, Series D.............. Heller International Corporation 1,000 Shares 100%
(Parent)
8 1/8% Cumulative Perpetual
Senior Preferred Stock,
Series A..................... Michael S. Blum 4,000 Shares (a)
Hajime Maeda 0 0
Tomohiro Kamio 0 0
Richard J. Almeida 0 0
Tetsuya Fukabori 0 0
Hirokazu Ishikawa 0 0
Minoru Itosaka 0 0
Mark Kessel 0 0
Michael J. Litwin 0 0
Dennis P. Lockhart 0 0
Lauralee E. Martin 0 0
Kenji Miyamoto 0 0
Osamu Ogura 0 0
Atsushi Takano 0 0
Mitchell Vernick 0 0
Kenji Watanabe 0 0
Masashi Yamamoto 0 0
All Directors and Executive
Officers as a Group (a) (a)
</TABLE>

- - ---------------
(a) The aggregate number of shares of 8 1/8% Cumulative Perpetual Senior
Preferred Stock, Series A that were beneficially owned did not exceed 1% of
the outstanding shares of such stock.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

KEEP WELL AGREEMENT WITH FUJI BANK

The Company entered into a Keep Well Agreement (the "Agreement") with Fuji
Bank on April 23, 1983 in order to assist the Company in maintaining its credit
rating. The Agreement was amended and supplemented on January 26, 1984, in
connection with the consummation of the purchase of the Company by Fuji Bank and
has been amended since that date from time to time.

The Agreement provides that Fuji Bank will maintain the Company's net worth
in an amount equal to $500 million. Accordingly, if the Company should
determine, at the close of any month, that its net worth is less than $500
million, then Fuji Bank will purchase, or cause one of its subsidiaries to
purchase, shares of the Company's NW Preferred Stock, Class B (No Par Value)
("NW Preferred Stock") in an amount necessary to increase the Company's net
worth to $500 million. If and when issued, dividends will be paid quarterly on
the NW Preferred Stock at a rate per annum equal to 1% over the three-month
London Inter-bank Offered Rate. Such dividends will not be paid during a default
in the payment of principal or interest on any of the outstanding indebtedness
for money borrowed by the Company. Subject to certain conditions, the NW
Preferred Stock will be redeemable at the option of the holder, within a
specified period of time after the end of a calendar quarter in an aggregate
amount not greater than the excess of net worth of the Company as of the end of
such calendar quarter over $500 million.

55
<PAGE> 56

The Agreement further provides that if the Company should lack sufficient
cash, other liquid assets or credit facilities to meet its payment obligations
on its commercial paper, then Fuji Bank will lend the Company up to $500 million
(the "Liquidity Commitment"), payable on demand, which the Company may use only
for the purpose of meeting such payment obligations. Any such loan by Fuji Bank
to the Company (a "Liquidity Advance") will bear interest at a fluctuating
interest rate per annum equal to the announced prime commercial lending rate of
Morgan Guaranty Trust Company of New York plus .25% per annum. Each Liquidity
Advance will be repayable on demand at any time after the business day following
the 29th day after such Liquidity Advance was made. No repayment of the
Liquidity Advance will be made during a period of default in the payment of the
Company's senior indebtedness for borrowed money.

No Liquidity Advances or purchases of NW Preferred Stock have been made by
Fuji Bank under the Agreement; other infusions of capital in the Company have
been made by International.

Under the Agreement, the Company has covenanted to maintain, and Fuji Bank
has undertaken to assure that the Company will maintain, unused short-term lines
of credit and committed credit facilities in an amount approximately equal to
75% of the amount of its commercial paper obligations from time to time
outstanding. In addition, under the Agreement, neither Fuji Bank nor any of its
subsidiaries can sell, pledge or otherwise dispose of any shares of the
Company's Common Stock or permit the Company to issue shares of its Common Stock
except to Fuji Bank or a Fuji Bank affiliate.

Neither Fuji Bank nor the Company may terminate the Agreement for any
reason prior to December 31, 2000. After December 31, 2000 either Fuji Bank or
the Company may terminate the Agreement upon 30 business days' prior written
notice. So long as the Perpetual Preferred Stock is outstanding and held by
third parties other than Fuji Bank, the Agreement may not be terminated by
either party unless the Company has received written certifications from Moody's
Investors Services, Inc. and Standard and Poor's Corporation that upon
termination the Perpetual Preferred Stock will be rated by them no lower than
"a3" and A-, respectively. For these purposes the Preferred Stock will no longer
be deemed outstanding at such time as an effective notice of redemption of all
of the Preferred Stock shall have been given by the Company and funds sufficient
to effectuate such redemption shall have been deposited with the party
designated for such purpose in the notice. In addition, any termination of the
Keep Well Agreement by the Company must be consented to by Fuji Bank. Any such
termination will not relieve the Company of its obligations in respect of any NW
Preferred Stock outstanding on the date of termination or the dividends thereon,
any amounts owed in respect of Liquidity Advances on the date of termination or
the unpaid principal or interest on those Advances or Fuji Bank's fee relating
to the Liquidity Commitment. Any such termination will not adversely affect the
Company's commercial paper obligations outstanding on the date of termination.
The Agreement can be modified or amended by a written agreement of Fuji Bank and
the Company. However, no such modification or amendment may change the
prohibition against termination before December 31, 2000. Further, no such
modification or amendment may adversely affect the Company's then-outstanding
commercial paper obligations.

Under the Agreement, the Company's commercial paper obligations and any
other debt instruments are solely the obligations of the Company. The Agreement
is not a guarantee by Fuji Bank of the payment of the Company's commercial paper
obligations, indebtedness, liabilities or obligations of any kind.

TAX ALLOCATION AGREEMENTS

Under the terms of the tax allocation agreement between the Parent and the
Company, as amended, each company covered by the agreement calculates its
current and deferred income taxes based on its separate company taxable income
or loss, utilizing separate company net operating losses, tax credits, capital
losses and deferred tax assets or liabilities. Under the terms of other tax
allocation agreements with certain of the Company's subsidiaries, the Company
and the Parent, in calculating their current income taxes, can utilize the
taxable income or loss of the subsidiaries.

56
<PAGE> 57

CERTAIN TRANSACTIONS WITH FUJI BANK AND WITH THE PARENT AND ITS SUBSIDIARIES

Services Provided by Fuji Bank and the Parent for the Company. Certain
employees of Fuji Bank and the Parent perform managerial, administrative and
other related functions for the Company. The Company compensates Fuji Bank and
the Parent for the use of such individuals' services at a rate which reflects
current costs to Fuji Bank and the Parent. The amounts paid to Fuji Bank and the
Parent for these services in 1994 were $2 million and $47 million respectively.
Additionally, certain subsidiaries of Fuji Bank periodically serve as managers
for various offerings of the Company's debt securities and the Fuji Bank and
Trust Company may act as registrar and paying agent for certain debt issuances
by the Company.

Services Provided by the Company for Affiliates. The Company performs
services for its affiliates and charges them for the cost of the work performed.
The Company may also guarantee the obligations of its clients or the clients of
certain joint ventures under letters of credit issued by financial institutions,
some of which are affiliates of the Company. The Company has agreements with the
Parent and certain other subsidiaries of the Parent which provide for the
Company to receive an annual negotiated fee for servicing assets which have been
sold by the company to the Parent and these affiliates. The Company continues to
service these assets and all other direct costs and expenses, including any
additional advances made after the date of the agreement, are borne by the
subsidiaries of the Parent. The amount of fees for servicing these assets in
1994 was approximately $2 million. Heller Capital Markets Group, Inc. ("CMG"), a
wholly-owned subsidiary of the Company, acts as placement agent for the sale of
commercial paper issued by the Parent. CMG receives compensation, based upon the
face amount of the commercial paper notes sold. For the year ending December 31,
1994, the Parent paid $.3 million to CMG as compensation pursuant to this
arrangement. Management believes the terms of this arrangement are similar to
those which might apply in any similar arrangement among unaffiliated parties.

Financial Transactions. In the ordinary course of its business, the Company
participates in joint financings with certain affiliates. During 1994, the
Company paid $17 million to repurchase loan participations which it previously
sold to affiliates. The Company believes that these joint financings with
affiliates are on terms similar to those available from unaffiliated financial
institutions and the amount paid represents the fair market value of these
assets as determined by management.

Intercompany Receivables and Financial Instruments. At December 31, 1994,
net amounts due from affiliates was $29 million. The amounts are comprised
principally of interest bearing demand notes representing amounts due to the
Company arising from the interest rate swap agreement with the Parent, advances,
administrative fees and costs charged to other subsidiaries of the Parent. The
notes bear interest at rates which approximate the average rates on the
Company's commercial paper obligations or short-term bank borrowing rates
outstanding during the period.

The Company is a party to a master swap agreement with its Parent. The
Company and its Parent have entered into two swap transactions under that
agreement. The first is a $250 million swap, which was initially entered into in
1985, and was last amended in 1992, in part, to extend the term through July 31,
1995 ("1985 agreement"). The second was a $200 million swap transaction, which
commenced on January 13, 1994 and expires on December 15, 2000 (individually the
"1994 agreement", collectively with the 1985 agreement the "agreements"). The
purpose of the agreements is to manage the Company's exposure to interest rate
fluctuations. Under the provisions of these agreements, the Company pays
interest to the Parent at a variable rate based on the commercial paper rate
published by the Board of Governors of the Federal Reserve System and the Parent
pays interest to the Company at a fixed rate of 5.0% and 5.57% under the 1985
and 1994 swap agreements, respectively. The fixed rate was determined based upon
prevailing market rates for such transactions at the time of such swap. The
agreements had the effect of reducing the Company's interest expense by $3
million in 1994.

The Company is also a party to a $25 million interest rate swap agreement
with Fuji Bank which became effective in March 1990 and expires in February
1995. During 1994, $1 million had been paid to Fuji Bank under this Agreement.
Additionally, the Company entered into cross-currency basis swap agreements with
a subsidiary of Fuji Bank which had the effect of converting debt denominated in
Japanese Yen to $148 million of U.S. currency. During 1994, $7 million had been
paid to Fuji Bank under these agreements.

57
<PAGE> 58

On February 15, 1985, the Company issued to the Parent 1,000 shares of
previously subscribed Cumulative Convertible Preferred Stock, Series D (No Par
Value) ("Convertible Preferred Stock"), which has a dividend yield established
quarterly at the rate of 1/2% under the announced prime commercial lending rate
of Morgan Guaranty Trust Company of New York, cumulative from March 30, 1984 and
payable quarterly commencing on March 31, 1989. During 1994, the Company
declared and paid $1.5 million of dividends on the Convertible Preferred Stock.
The Convertible Preferred Stock is convertible into Common Stock of the Company
at the conversion price of one share of Common Stock for each 200 shares of
Convertible Preferred Stock. Subject to certain conditions, the Convertible
Preferred Stock is redeemable, in whole or in part, at any time at the option of
the Company at a redemption price equal to the price paid for such stock plus
accumulated dividends. Upon voluntary or involuntary liquidation, the holder of
the Convertible Preferred Stock is entitled to be paid an amount equal to the
price paid for each share plus accumulated dividends.

CERTAIN OTHER RELATIONSHIPS

Certain subsidiaries of Fuji Bank serve as managers for various offerings
of the Company's debt securities. The fees paid by the Company are similar to
those the Company would pay an unaffiliated agent in an arms-length transaction.
The Fuji Bank and Trust Company acts as registrar and paying agent for various
debt issuances by the Company. Mr. Kessel, a director of the Company and Parent,
is a partner of the law firm of Shearman & Sterling which from time to time acts
as counsel in certain matters for Fuji Bank and the Company.

Financial Instruments. On March 30, 1994, the Company entered into a
receivables purchase agreement with Freedom Asset Funding Corporation
("Freedom"), which replaced the Dynamic Funding agreement. Under this agreement,
which expires March 24, 1999, the Company may sell to Freedom with limited
recourse an undivided interest of up to $500 million in a designated pool of its
factored accounts receivable. As of December 31, 1994, the Company had sold a $6
million interest to Freedom for cash. Freedom has entered into a revolving
liquidity facility and an operating agreement with Fuji Bank and one of its
affiliates.

Fuji Bank and one of its subsidiaries provided uncommitted lines of credit
to consolidated international subsidiaries totaling $15 million at December 31,
1994. Borrowings under these facilities totaled $5 million at December 31, 1994.
In addition, Fuji Bank provides uncommitted line of credit to certain
international joint ventures.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) Documents Filed as Part of This Report:

1. Financial Statements:

Heller Financial, Inc. and Subsidiaries --

Report of Independent Public Accountants -- Arthur Andersen LLP

Consolidated Balance Sheets -- December 31, 1994 and 1993

Consolidated Statements of Income for the Years Ended December 31,
1994, 1993 and 1992

Consolidated Statements of Cash Flows for the Years Ended December
31, 1994, 1993 and 1992

Consolidated Statements of Changes in Stockholders' Equity for the
Years Ended December 31, 1994, 1993 and 1992

Notes to Consolidated Financial Statements

58
<PAGE> 59

2. Financial Statement Schedules:

Schedule II -- Heller Financial, Inc. Amounts Receivable From
Employees Other Than Related Parties.

All other schedules are omitted because they are not applicable or
because the required information appears in the financial statements or
the notes thereto.

3. Exhibits:

<TABLE>
<S> <C>
(3)(a) Amended and Restated Certificate of Incorporation of the Company as
amended on September 2, 1992 [Incorporated by reference to Exhibits 4(a)
and 4(b) to the Company's Registration Statement on Form S-3 filed
September 4, 1992 (File No. 33-51692)]
(3)(b) By-laws of the Company, as amended on June 2, 1992 [Incorporated by
reference to Exhibit 3(b) to the Company's Annual Report on Form 10-K for
the Fiscal Year Ended December 31, 1992 (File No. 1-6157)]
(4)(a) Certificate of Designation, Preferences and Rights of Cumulative
Perpetual Senior Preferred Stock, Series A, filed September 16, 1992
[Incorporated by reference to Exhibit 4(a) to the Company's Annual Report
on Form 10-K for the Fiscal Year Ended December 31, 1992 (File No.
1-6157)]
(4)(b) Heller Financial, Inc. Standard Multiple-Series Indenture Provisions
dated February 5, 1987 [Incorporated by reference to Exhibit (4)(a) to
the Company's Registration Statement on Form S-3 dated February 5, 1987
(File No. 33-11757)]
(4)(c) Form of Indenture dated as of February 5, 1987 between the Company and
The First National Bank of Chicago, Trustee, with respect to Senior
Securities [Incorporated by reference to Exhibit (4)(b) to the Company's
Registration Statement on Form S-3 dated February 5, 1987 (File No.
33-11757)]
(4)(d) Form of Indenture dated as of February 5, 1987 between the Company and
Chemical Bank, Trustee, with respect to Senior Securities [Incorporated
by reference to Exhibit (4)(c) to the Company's Registration Statement on
Form S-3 dated February 5, 1987 (File No. 33-11757)]
*(4)(e) First Supplemental Indenture dated as of December 1, 1989 to the
Indenture dated as of February 5, 1987 by and between Chemical Bank, as
Trustee and the Company
(4)(f) Form of Indenture dated as of September 30, 1991 between the Company and
The Bank of New York, Trustee, with respect to Senior Securities.
[Incorporated by reference to Exhibit (4)(h) to the Company's
Registration Statement on Form S-3 dated September 30, 1991 (File No.
33-43020)]
(4)(g) Form of Indenture dated as of September 30, 1991 between the Company and
Chemical Bank, Trustee, with respect to the Subordinated Securities.
[Incorporated by reference to Exhibit (4)(h) to the Company's
Registration Statement on Form S-3 dated September 30, 1991 (File No.
33-43020)]
(4)(h) Form of Indenture dated as of February 24, 1993 between the Company and
The First National Bank of Boston, Trustee, with respect to Senior
Securities [Incorporated by reference to Exhibit (4)(h) to the Company's
Registration Statement on Form S-3 dated February 24, 1993 (File No.
33-58716)]
(4)(i) Form of Indenture dated as of February 24, 1993 between the Company and
The First National Bank of Boston, Trustee with respect to the Junior
Subordinated Securities [Incorporated by reference to Exhibit (4)(e) to
the Company's Registration Statement on Form S-3 dated February 24, 1993
(File No. 33-58716)]
</TABLE>

59
<PAGE> 60

<TABLE>
<S> <C>
(10)(a) Amended and Restated Keep Well Agreement between Fuji Bank and the
Company dated as of August 28, 1992 (including, as Appendix A, the Keep
Well Agreement dated as of April 23, 1983 between Fuji Bank and the
Company) [Incorporated by reference to Exhibit to the Company's
Registration Statement on Form S-3 filed September 4, 1992 (File No.
33-51692)]
(10)(b) Nonrecourse Participation Agreement dated September 30, 1985 between the
Company and Interstate [Incorporated by reference to Exhibit 10(b) to the
Company's Annual Report on Form 10-K for the Fiscal Year Ended December
31, 1992 (File No. 1-6157)]
(10)(c) Amendment to Interest Rate Swap Agreement dated July 24, 1992 between the
Company and the Parent [Incorporated by reference to Exhibit 10(c) to the
Company's Annual Report on Form 10-K for the Fiscal Year Ended December
31, 1992 (File No. 1-6157)]
(10)(d) Employment Agreement dated November 27, 1990, as amended and restated as
of February 3, 1994 between the Parent and Michael S. Blum [Incorporated
by reference to Exhibit (10)(d) to the Company's Annual Report on Form
10-K for the year ended December 31, 1993 (File No. 1-6157)]
(10)(e) Service Agreement dated January 1, 1985 between the Parent and Fuji Bank
[Incorporated by reference to Exhibit (10)(e) to the Company's Annual
Report on Form 10-K for the Fiscal Year Ended December 31, 1992 (File No.
1-6157)]
(10)(f) Revised Long-Term Incentive Plan of Heller International Corporation,
effective January 1, 1992 [Incorporated by reference to Exhibit (10)(f)
to the Company's Annual Report on Form 10-K for the Fiscal Year Ended
December 31, 1993 (File No. 1-6157)]
(10)(g) Management Incentive Plan (the Parent) [Incorporated by reference to
Exhibit (10)(p) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1989 filed with the SEC on March 15, 1990 (File No.
1-6157)]
(10)(h) Supplemental Retirement Benefit Plan, effective October 28, 1987
[Incorporated by reference to Exhibit (10)(h) to the Company's Annual
Report on Form 10-K for the Fiscal Year Ended December 31, 1992 (File No.
1-6157)]
(10)(i) Management Agreement dated as of January 1, 1991 between Heller
International Corporation and Heller Financial, Inc. [Incorporated by
reference to Exhibit (10)(m) to the Company's Quarterly Report on Form
10-Q for the period ending March 31, 1991 (File No. 1-6157)]
(10)(j) Agreement for the Allocation of Federal, State and Foreign Tax Liability
and Benefits Among the Members of the Heller International Corporation
Affiliated Group, effective as of January 1, 1993 [Incorporated by
reference to Exhibit (10)(j) to the Company's Annual Report on Form 10-K
for the Fiscal Year Ended December 31, 1993 (File No. 1-6157)]
(10)(k) Heller Financial Inc., Capital Markets Group/Merchant Banking Division
Equity Investment Compensation Plan effective August 1, 1988 and letter
amendment dated April 18, 1989 [Incorporated by reference to Exhibit
10(k) to the Company's Annual Report on Form 10-K for the Fiscal Year
Ended December 31, 1992 (File No. 1-6157)]
(10)(l) Summary of Special Long Term Incentive Plan [Incorporated by reference to
Exhibit (10)(l) to the Company's Annual Report on Form 10-K for the
Fiscal Year Ended December 31, 1993 (File No. 1-6157)]
</TABLE>

60
<PAGE> 61

<TABLE>
<S> <C>
(10)(m) January, 1994 Amendment to Interest Rate Swap Agreement, dated July 29,
1985 between the Company and the Parent. [Incorporated by reference to
Exhibit (10)(m) to the Company's Annual Report on Form 10-K for the
Fiscal Year Ended December 31, 1993 (File No. 1-6157)]
*(10)(n) Long Term Incentive Plan of Heller International Corporation, effective
January 1, 1994.
*(10)(o) Deferred Compensation Plan, dated January 1, 1994 as amended on October
1, 1994.
*(10)(p) Cross Guaranty for the Deferred Compensation Plan
*(12) Computation of Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends
*(21) Subsidiaries of the Registrant
*(23) Consent of independent public accountants
*(24) Powers of Attorney
*(27) Financial Data Schedule
</TABLE>

- - ---------------

* Filed herewith.

Instruments defining the rights of holders of certain issues of
long-term debt of the Company have not been filed as exhibits to this
Report because the authorized principal amount of any one of such issues
does not exceed 10% of the total assets of the Company. In accordance
with paragraph (b)(4)(iii) of Item 601 of Regulation S-K, the Company
hereby agrees to furnish to the Securities and Exchange Commission, upon
request, a copy of each instrument that defines the rights of holders of
the Company's long-term debt.

(b) Current Reports on Form 8-K:

During the fourth quarter of 1994, the Company filed Current Reports on
Form 8-K dated October 27, 1994 and November 1, 1994.

On January 30, 1995, the Company filed with the U.S. Securities and
Exchange Commission a Current Report on Form 8-K, dated January 27,
1995, to announce the Company's earnings for the year ended December 31,
1994.

61
<PAGE> 62

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.

Heller Financial, Inc.

By MICHAEL S. BLUM
Michael S. Blum
(Chairman and Chief Executive
Officer)

Dated: February 6, 1995

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATE INDICATED.

<TABLE>
<S> <C>
By: MICHAEL S. BLUM By: *
---------------------------------------- ----------------------------------------
Michael S. Blum Dennis P. Lockhart
(Director) (Director)

By: * By: *
---------------------------------------- ----------------------------------------
Hajime Maeda Lauralee E. Martin
(Director) (Director)

By: RICHARD J. ALMEIDA By: *
---------------------------------------- ----------------------------------------
Richard J. Almeida Kenji Miyamoto
(Executive Vice President, (Director)
Chief Financial Officer and Director)

By: ANTHONY O'B. BEIRNE By: *
---------------------------------------- ----------------------------------------
Anthony O'B. Beirne Osamu Ogura
(Senior Vice President, Controller (Director)
and Chief Accounting Officer)

By: * By: *
---------------------------------------- ----------------------------------------
Tetsuya Fukabori Atsushi Takano
(Director) (Director)

By: * By: *
---------------------------------------- ----------------------------------------
Hirokazu Ishikawa Mitchell F. Vernick
(Director) (Director)

By: * By: *
---------------------------------------- ----------------------------------------
Minoru Itosaka Kenji Watanabe
(Director) (Director)

By: * By: *
---------------------------------------- ----------------------------------------
Mark Kessel Masashi Yamamoto
(Director) (Director)

By: * *By: JAMES B. CURRIE
---------------------------------------- ----------------------------------------
Michael J. Litwin James B. Currie
(Director) Attorney-in-Fact
</TABLE>

Dated: February 6, 1995

62
<PAGE> 63

SCHEDULE II

HELLER FINANCIAL, INC.
AMOUNTS RECEIVABLE FROM EMPLOYEES OTHER THAN RELATED PARTIES

<TABLE>
<CAPTION>
BALANCE AT FOREIGN BALANCE AT SCHEDULED
BEGINNING AMOUNTS TRANSLATION END OF DUE INTEREST MONTHLY
NAME OF DEBTOR OF PERIOD ADDITIONS COLLECTED EFFECTS PERIOD DATE RATE PAYMENT
- - -------------------------------- ----------- --------- ------- ----------- ----------- ---- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994
Ang Miah Khiang............... $ 247,176 $ 10,334 $36,709 $24,519 $ 245,320(b) 2008 4.0% $ 2,783
Seah Yen Goon................. 95,603 4,002 14,980 ,483 94,108(b) 2003 4.0 1,136
Joyce Teng Jee Hua............ -- 61,731 -- -- 61,731(c) 2004 5.0 514
Charles Baldini............... 185,400 -- 185,400 -- --(a) -- -- --
Chong Mong Ting............... 112,123 -- 112,123 -- --(c) 2001 4.0 553
1993
Ang Miah Khiang............... $ 264,104 -- $23,079 $ 6,151 $ 247,176(b) 2008 4.0 2,783
Charles Baldini............... -- 185,400 -- -- 185,400(a) -- -- --
Chong Mong Ting............... 85,695 89,232 62,804 -- 112,123(c) 2001 4.0 553
Seah Yen Goon................. 102,804 -- 9,596 2,395 95,603(b) 2003 4.0 1,136
1992
Ang Miah Khiang............... $ 290,450 $ 11,169 $37,515 -- $ 264,104(b) 2008 4.0 2,783
Seah Yen Goon................. 111,813 4,309 13,318 -- 102,804(b) 2003 4.0 1,136
</TABLE>

- - ---------------
(a) Bridge loan.

(b) The amounts relate to mortgage receivables which are denominated in
Singapore dollars.

63
<PAGE> 64

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit Sequential
Number Description Page Number
------ ----------- -----------
<S> <C> <C>
(3)(a) Amended and Restated Certificate of Incorporation of the Company as amended on September
2, 1992 [Incorporated by reference to Exhibits 4(a) and 4(b) to the Company's
Registration Statement on Form S-3 filed September 4, 1992 (File No 33-51692)]

(3)(b) By-laws of the Company, as amended on June 2, 1992 [Incorporated by reference to Exhibit
3(b) to the Company's Annual Report on Form 10-K for the Fiscal Year Ended December 31,
1992 (File No 1-6157)]

(4)(a) Certificate of Designation, Preferences and Rights of Cumulative Perpetual Senior
Preferred Stock, Series A, filed September 16, 1992 [Incorporated by reference to Exhibit
4(a) to the Company's Annual Report on Form 10-K for the Fiscal Year Ended December 31,
1992 (File No 1-6157)]

(4)(b) Heller Financial, Inc. Standard Multiple-Series Indenture Provisions dated February 5,
1987 [Incorporated by reference to Exhibit (4)(a) to the Company's Registration Statement
on Form S-3 dated February 5, 1987 (File No. 33-11757)]

(4)(c) Form of Indenture dated as of February 5, 1987 between the Company and The First National
Bank of Chicago, Trustee, with respect to Senior Securities [Incorporated by reference to
Exhibit (4)(b) to the Company's Registration Statement on Form S-3 dated February 5, 1987
(File No. 33-11757)]

(4)(d) Form of Indenture dated as of February 5, 1987 between the Company and Chemical Bank,
Trustee, with respect to Senior Securities [Incorporated by reference to Exhibit (4)(c) to
the Company's Registration Statement on Form S-3 dated February 5, 1987 (File
No. 33-11757)]

*(4)(e) First Supplemental Indenture dated as of December 1, 1989 to the Indenture dated as of 67-74
February 5, 1987 by and between Chemical Bank, as Trustee and the Company

(4)(f) Form of Indenture dated as of September 30, 1991 between the Company and The Bank of New
York, Trustee, with respect to Senior Securities. [Incorporated by reference to Exhibit
(4)(h) to the Company's Registration Statement on Form S-3 dated September 30, 1991 (File
No. 33-43020)]

(4)(g) Form of Indenture dated as of September 30, 1991 between the Company and Chemical Bank,
Trustee, with respect to the Subordinated Securities. [Incorporated by reference to
Exhibit (4)(h) to the Company's Registration Statement on Form S-3 dated September 30,
1991 (File No. 33-43020)]

(4)(h) Form of Indenture dated as of February 24, 1993 between the Company and The First National
Bank of Boston, Trustee, with respect to Senior Securities [Incorporated by reference to
Exhibit (4)(h) to the Company's Registration Statement on Form S-3 dated February 24, 1993
(File No. 33-58716)]
</TABLE>
<PAGE> 65
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description Page Number
------ ----------- -----------
<S> <C> <C>
(4) (i) Form of Indenture dated as of February 24, 1993 between the Company and The First National
Bank of Boston, Trustee with respect to the Junior Subordinated Securities [Incorporated
by reference to Exhibit (4)(e) to the Company's Registration Statement on Form S-3 dated
February 24, 1993 (File No. 33-58716)]

(10)(a) Amended and Restated Keep Well Agreement between Fuji Bank and the Company dated as of
August 28, 1992 (including, as Appendix A, the Keep Well Agreement dated as of April 23,
1983 between Fuji Bank and the Company) [Incorporated by reference to Exhibit to the
Company's Registration Statement on Form S-3 filed September 4, 1992 (File No. 33-51692)]

(10)(b) Nonrecourse Participation Agreement dated September 30, 1985 between the Company and
Interstate [Incorporated by reference to Exhibit 10(b) to the Company's Annual Report on
Form 10-K for the Fiscal Year Ended December 31, 1992 (File No 1-6157)]

(10)(c) Amendment to Interest Rate Swap Agreement dated July 24, 1992 between the Company and the
Parent [Incorporated by reference to Exhibit 10(c) to the Company's Annual Report on Form
10-K for the Fiscal Year Ended December 31, 1992 (File No 1-6157)]

(10)(d) Employment Agreement dated November 27, 1990, as amended and restated as of February 3,
1994 between the Parent and Michael S. Blum [Incorporated by reference to Exhibit (10)(d)
to the Company's Annual Report on Form 10-K for the year ended December 31, 1993 (File No.
1-6157)]

(10)(e) Service Agreement dated January 1, 1985 between the Parent and Fuji Bank [Incorporated by
reference to Exhibit (10)(e) to the Company's Annual Report on Form 10-K for the Fiscal Year
Ended December 31, 1992 (File No. 1-6157)]

(10)(f) Revised Long-Term Incentive Plan of Heller International Corporation, effective January 1,
1992 [Incorporated by reference to Exhibit (10)(f) to the Company's Annual Report on Form
10-K for the Fiscal Year Ended December 31, 1993 (File No. 1-6157)]

(10)(g) Management Incentive Plan (the Parent) [Incorporated by reference to Exhibit (10)(p) to
the Company's Annual Report on Form 10-K for the year ended December 31, 1989 filed with
the SEC on March 15, 1990 (File No. 1-6157)]

(10)(h) Supplemental Retirement Benefit Plan, effective October 28, 1987 [Incorporated by
reference to Exhibit (10)(h) to the Company's Annual Report on Form 10-K for the Fiscal Year
Ended December 31, 1992 (File No 1-6157)]

(10)(i) Management Agreement dated as of January 1, 1991 between Heller International Corporation
and Heller Financial, Inc. [Incorporated by reference to Exhibit (10)(m) to the Company's
Quarterly Report on Form 10-Q for the period ending March 31, 1991 (File No. 1-6157)]

(10)(j) Agreement for the Allocation of Federal, State and Foreign Tax Liability and Benefits
Among the Members of the Heller International Corporation Affiliated Group, effective as
of January 1, 1993 [Incorporated by reference to Exhibit (10)(j) to the Company's Annual
Report on Form 10-K for the Fiscal Year Ended December 31, 1993 (File No. 1-6157)]

(10)(k) Heller Financial Inc., Capital Markets Group/Merchant Banking Division Equity Investment
Compensation Plan effective August 1, 1988 and letter amendment dated April 18, 1989
[Incorporated by reference to Exhibit 10(k) to the Company's Annual Report on Form 10-K
for the Fiscal Year Ended December 31, 1992 (File No 1-6157)]
</TABLE>

<PAGE> 66
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description Page Number
------ ----------- -----------
<S> <C> <C>
(10)(l) Summary of Special Long Term Incentive Plan [Incorporated by reference to Exhibit (10)(l)
to the Company's Annual Report on Form 10-K for the Fiscal Year Ended December 31, 1993
(File No. 1-6157)]

(10)(m) January, 1994 Amendment to Interest Rate Swap Agreement, dated July 29, 1985 between the
Company and the Parent. [Incorporated by reference to Exhibit (10)(m) to the Company's
Annual Report on Form 10-K for the Fiscal Year Ended December 31, 1993 (File No. 1-6157)]

*(10)(n) Long Term Incentive Plan of Heller International Corporation, effective January 1, 1994. 75-77

*(10)(o) Deferred Compensation Plan, dated January 1, 1994 as amended on October 1, 1994. 78-90

*(10)(p) Cross Guaranty for the Deferred Compensation Plan 91-93

*(12) Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends 94

*(21) Subsidiaries of the Registrant 95

*(23) Consent of independent public accountants 96

*(24) Powers of Attorney 97-110

*(27) Financial Data Schedule 111
- - ---------------------
</TABLE>
* Filed herewith.

<PAGE> 1

EXHIBIT (4)(E)

HELLER FINANCIAL, INC.

AND

CHEMICAL BANK,

Trustee

---------------------------------------------------------------------

FIRST SUPPLEMENTAL INDENTURE

Dated as of December 1, 1989

Supplementing the Indenture
Dated as of February 5, 1987

---------------------------------------------------------------------
<PAGE> 2
THIS FIRST SUPPLEMENTAL INDENTURE, dated as of December 1, 1989, is between
Heller Financial, Inc., a Delaware corporation (the "Company"), having its
principal office at 200 N. LaSalle Street, Chicago, Illinois 60601, and
Chemical Bank, as Trustee, a New York banking corporation having its principal
corporate trust office at 55 Water Street, New York, New York 10041 (the
"Trustee").

RECITALS

The Company and the Trustee are parties to an Indenture dated as of February
5, 1987 (the "Indenture"), relating to the issuance from time to time by the
Company of its Securities on terms to be specified at the time of issuance.
Capitalized terms herein not otherwise defined shall have the same meanings
given them in the Indenture.

The Company has requested the Trustee to join with it in the execution and
delivery of this First Supplemental Indenture in order to supplement and amend
the Indenture, by amending and restating certain provisions thereof, to permit
the company to require, if it shall so elect, that the Securities of any series
be issued, in whole or in part, in the form of one or more Global Securities
and to permit, in the case of securities not to be issued at one time, certain
assumptions as to compliance with applicable laws and agreements.

Section 11.01 of the Indenture provides that a supplemental indenture may be
entered into by the Company and the Trustee, without the consent of any Holders
of the Securities, to make any other provisions with respect to matters or
questions arising under the Indenture which shall not adversely affect the
interests of the Holders.

The Company has determined that this First Supplemental Indenture complies
with said Section 11.01 and does not require the consent of any Holders of
Securities.

The company has furnished the Trustee with an Opinion of Counsel complying
with the requirements of Section 11.03 of the Indenture, stating, among other
things, that any and all conditions precedent to the execution of this First
Supplemental Indenture have been met and an Officer's Certificate complying
with the requirements of Section 1.03 of the Indenture, and has delivered to
the Trustee a Board Resolution authorizing the execution and delivery of this
First Supplemental Indenture, together with such other documents as may have
been required by Section 1.03 of the Indenture.

All things necessary to make this First Supplemental Indenture a valid
agreement of the Company and the Trustee and a valid amendment of and
supplement to the Indenture have been done.

NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:

For and in consideration of the premises, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders of Securities,
as follows:

I. AMENDMENTS TO THE INDENTURE

A. Section 1.01 of the Indenture is amended to add new defined terms
thereto or to amend existing defined terms, and all definitions set forth
below, to the extent they are inconsistent with the meanings ascribed to them
in the Indenture, control, as though they were fully set forth in the
Indenture, in the appropriate alphabetical sequence, as follows:

"Conversion Event" means the cessation of (i) a Foreign
Currency to be used both by the government of the country
which issued such currency and for the settlement of
transactions by public institutions of or within the
international banking community, (ii) the ECU to be used both
within the European Monetary System and for the settlement of
transactions by public institutions of or within the European
Communities, (iii) any currency unit other than the ECU to be
used for the purposes for which it was established, or (iv)
the availability of a currency due to the imposition of
exchange controls or other circumstances beyond the Company's
control.

"Depositary" means, unless otherwise specified by the Company
pursuant to either Section 2.03 or 3.01, with respect to
Securities of any series issuable or issued as a Global
Security, The Depositary Trust Company, New York, New York, or
any successor thereto registered under the Securities and
Exchange Act of 1934, as amended, or other applicable statute
or regulation.

<PAGE> 3
"Exchange Rate Agent" means the New York banking corporation,
if any, from time to time selected by the Company for purposes
of Section 3.12, which, initially, shall be The Fuji Bank and
Trust Company.

"Global Security" means with respect to any series of
Securities issued hereunder, a Security which is executed by
the Company and authenticated and delivered by the Trustee to
the Depositary or pursuant to the Depositary's instruction,
all in accordance with this Indenture and an indenture
supplemental hereto, if any, or Board Resolution and pursuant
to a Company Order, which shall be registered in the name of
the Depositary or its nominee and which shall represent, and
shall be denominated in an amount equal to the aggregate
principal amount of, all of the Outstanding Securities of such
series or any portion thereof, in either case having the same
terms, including, without limitation, the same issue date,
date or dates on which principal is due, and interest rate or
method of determining interest.

"Market Exchange Rate" means (i) for any conversion involving
a currency unit on the one hand and Dollars or any Foreign
Currency on the other, the exchange rate between the relevant
currency unit and Dollars or such Foreign Currency calculated
by the method specified pursuant to Section 3.01 for the
Securities of the relevant series, (ii) for any conversion of
Dollars into any Foreign Currency, the noon (New York City
time) buying rate for such Foreign Currency for cable
transfers quoted in New York City as certified for customs
purposes by the Federal Reserve Bank of New York and (iii) for
any conversion of one Foreign Currency into Dollars or another
Foreign Currency, the highest firm bid quotation for Dollars
received by the Exchange Rate Agent at approximately 11:00
a.m. New York City time, on the second Business Day preceding
the applicable payment date (or if no such rate is quoted on
such date, the last date on which such rate was quoted), from
three recognized foreign exchange dealers in The City of New
York selected by the Exchange Rate Agent and approved by the
Company (one of which may be the Exchange Rate Agent) In the
event of the unavailability of any of the exchange rates
provided for in the foregoing clauses (i), (ii), and (iii),
payments shall be made in the Foreign Currency which is to be
coverted, unless such Foreign Currency is unavailable due to
the imposition of exchange controls or to other circumstances
beyond the Company's control, in which case payment shall be
made in Dollars on the basis of the most recently available
Market Exchange Rate or as otherwise indicated in a pricing
supplement to a prospectus describing the Securities. Unless
otherwise specified by the Exchange Rate Agent, if any, or if
there shall not be an Exchange Rate Agent, then by the
Trustee, if there is more than one market for dealing in any
currency or currency unit by reason of foreign exchange
regulations or otherwise, the market to be used in respect of
such currency or currency unit shall be that upon which a
nonresident issuer of securities designated in such currency
or currency unit would purchase such currency or currency unit
in order to make payments in respect of such securities.

B. Section 1.01 of the Indenture is amended to delete the term "Currency
Determination Agent" and all references to currency Determination Agent in the
Indenture shall be replaced with references to the Exchange Rate Agent, and all
sections with such references are hereby amended and restated as though fully
set forth herein.

C. Section 2.01 of the Indenture is amended to add the words "or forms"
after the word "form" in the first sentence of such Section.

D. Article Two of the Indenture is amended to add a new Section 2.03,
which reads in its entirety as follows:

Section 2.03 Securities Issuable in the Form of Global
Security. (a) If the Company shall establish pursuant to
Section 3.01 that the Securities of a particular series are to
issued in whole or in part in the form of one or more Global
Securities, then the Company shall execute and the Trustee
shall, in accordance with Section 3.03 and the Company Order
delivered to the Trustee thereunder, authenticate and deliver,
such Global Security or Securities, which (i) shall represent,
and shall be denominated in an amount equal to the aggregate
principal amount of, the Outstanding Securities of such series
to be represented by such Global Security or Securities, (ii)
shall be registered in the name of the Depositary for such
Global Security or Securities or its nominee, (iii) shall be
delivered by the Trustee to the Depositary or pursuant to the
Depositary's instruction and (iv) shall bear a legend
substantially to the following effect: "Unless and until it
is exchanged in whole or in part for the individual Securities
represented hereby, this Global

<PAGE> 4
Security may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of
the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor
Depositary.

(b) Notwithstanding any other provision of this Section
2.03 or of Section 3.05, subject to the provisions of
paragraph (c) below, unless the terms of a Global Security
expressly permit such Global Security to be exchanged in whole
or in part for individual Securities, a Global Security may be
transferred, in whole but not in part and in the manner
provided in Section 3.05, only to a nominee of the Depositary
for such Global Security, or to the Depositary, or a successor
Depositary for such Global Security selected or approved by
the Company, or to a nominee of such successor Depositary.

(c) (i) If at any time the Depositary for a Global
Security notifies the Company that it is unwilling or unable
to continue as Depositary for such Global Security or if at
any time the Depositary for the Securities for such series
shall no longer be eligible or in good standing under the
Securities Exchange Act of 1934, as amended, or other
applicable statute or regulation, the Company shall appoint a
successor Depositary with respect to such Global Security. If
a successor Depositary for such Global Security is not
appointed by the Company within 90 days after the Company
receives such notice or becomes aware of such ineligibility,
the Company will execute, and the Trustee, upon receipt of a
Company Order for the authentication and delivery of
individual Securities of such series in exchange for such
Global Security, will authenticate and deliver individual
Securities of such series of like tenor and terms in
definitive form in an aggregate principal amount equal to the
principal amount of the Global Security in exchange for such
Global Security.

(ii) The Company may at any time and in its dole
discretion determine that the Securities of any series issued
or issuable in the form of one or more Global Securities shall
no longer be represented by such Global Security or
Securities. In such event the Company will execute, and the
Trustee, upon receipt of a Company Order for the
authentication and delivery of individual Securities of such
series in exchange in whole or in part for such Global
Security, will authenticate and deliver individual Securities
of such series of like tenor and terms in definitive form in
an aggregate principal amount equal to the principal amount of
such Global Security or Securities representing such series in
exchange for such Global Security or Securities.

(iii) If specified by the Company pursuant to Section 3.01
with respect to Securities issued or issuable in the form of a
Global Security, the Depositary for such Global Security may
surrender such Global Security in exchange in whole or in part
for individual Securities or such series of like tenor and
terms in definitive form on such terms as are acceptable to
the Company and such Depositary. Thereupon the Company shall
execute, and the Trustee shall authenticate and deliver,
without service charge, (1) to each Person specified by such
Depositary a new Security or Securities of the same series of
like tenor and terms and of any authorized denomination as
requested by such Person in aggregate principal amount equal
to and in exchange for such Person's beneficial interest in
the Global Security; and (2) to such Depositary a new Global
Security of like tenor and terms and in an authorized
denomination equal to the difference, if any, between the
principal amount of the surrendered Global Security and the
aggregate principal amount of Securities delivered to Holders
thereof.

(iv) In any exchange provided for in any of the preceding
three paragraphs, the Company will execute and the Trustee
will authenticate and deliver individual Securities in
definitive registered form in authorized denominations. Upon
the exchange of a Global Security for individual Securities,
such Global Security shall be canceled by the Trustee.
Securities issued in exchange for a Global Security pursuant
to this Section shall be registered in such names and in such
authorized denominations as the Depositary for such Global
Security, pursuant to instructions form its direct or indirect
participants or otherwise, shall instruct the Trustee. The
Trustee shall deliver such Securities to the persons in whose
names such Securities are so registered.

<PAGE> 5
E. Section 3.01 of the Indenture is amended to (i) add Section 2.03 to
the sections referred to in the parenthetical exception to paragraph (b) of
Section 3.01, (ii) redesignate paragraphs (q), (r), (s), (t), (u) and (v) as
paragraphs (r), (s), (t), (u), (v) and (w), respectively, and (iii) add new
paragraph (q) as follows:

"(q) whether the Securities of the series shall be issued
in whole or in part in the form of a Global Security or
Securities; the terms and conditions, if any, upon which such
Global Security or Securities may be exchanged in whole or in
part for other individual Securities; and the Depositary for
such Global Security or Securities; and"

F. The second paragraph following paragraph (d) (vi) of Section 3.03 of
the Indenture is amended and restated to read as follows:

"If all the Securities of any one series are not to be
issued at one time (i) the Trustee shall be entitled to assume
that, at the time of the issuance of such Securities, the
terms of such Securities do not violate any applicable law or
agreement then binding on the he Company, and (ii) it shall
not be necessary to deliver a Board Resolution, an executed
supplemental indenture, if any, an Officer's Certificate or an
Opinion of Counsel at the time of issuance of each Security,
but such Board Resolution, supplemental Indenture, if any,
Officer's Certificate and Opinion of Counsel shall be
delivered at or prior to the time of issuance of the first
Security of such series and the Trustee may conclusively rely
on such documents as to the matters covered thereby until
revoked by superseding comparable documents delivered to it."

G. The first sentence of Section 3.05 of the Indenture is amended and
restated to read as follows:

"Subject to Section 2.03, Securities of any series may be
exchanged for a like aggregate principal amount of Securities
of the same series of other authorized denominations of a like
Stated Maturity and with like terms and provisions."

H. The following paragraph is added at the end of Section 3.05 of the
Indenture:

"None of the Company, the Trustee, any Paying Agent or the
Securities Registrar will have any responsibility or liability
for any aspect of the records relating to or payments made on
account of beneficial ownership interests of a Global Security
or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests."

J. Paragraphs (a) and (b) of Section 3.12 are amended and restated to
read as follows:

(a) With respect to Registered Securities of any series not
permitting the election provided for in paragraph (b) below or the
Holders of which have not made the election provided for in paragraph
(b) below, the following payment provisions will apply:

(1) Except as provided in paragraph (e) below, payment of
the principal of (and premium, if any) on any Registered
Security will be made at the Place of Payment by delivery of a
check of checks in Dollars, unless any Holder has elected to
receive payment in any Foreign Currency, in which case,
payment of the principal of (and premium, if any) on any
Registered Security will be made at the Place of Payment by
delivery of a check or checks in the currency or currency unit
in which the Security is payable on the payment date against
surrender of such Registered Security, and any interest on any
Fully Registered Security will be paid at the Place of Payment
by mailing a check or checks in the currency or currency unit
in which such interest is payable to the Person entitled
thereto at the address of such Person appearing on the
Securities Register.

(2) Payment of the principal of (and premium, if any) and
(with respect to Fully Registered Securities only) interest on
such Security may also, subject to applicable laws and
regulations, be made at such other place or places as may be
designated by the Company by any appropriate method and in
such other manner as may be agreed by the Company and any
Holder.

(b) It may be provided pursuant to Section 3.01 with respect to
the Registered Securities of any series that Holders shall have the
option, subject to paragraphs (e) and (f) below, to receive payments
of principal of (and premium, if any) and (with respect to Fully
Registered Securities only) interest, if any, on such Security in any
of the currencies or currency units which may be designated for such
election by delivering

<PAGE> 6
to the Paying Agent a written election, to be in form and substance
satisfactory to the Paying Agent on or prior to the applicable record
date or at least 15 calendar days prior to maturity, as the case may
be. If a Holder so elects to receive such payments in any such
currency or currency unit, such election will remain in effect for
such Holder until changed by such Holder by delivery of a written
notice to the Paying Agent buy the Paying Agent must receive written
notice of any such change on or prior to the applicable record date or
at least 15 calendar days prior to maturity, as the case may be, to be
effective for the payment to be made on such payment date and no such
change or election may be made with respect to payments to be made on
any Security of such series with respect to which notice of redemption
has been given by the Company pursuant to Article IV). Any Holder of
any such Security who shall not have delivered any such election to
the Paying Agent not later than the close of business on the
applicable Election Date will be paid the amount due on the applicable
payment date in the relevant currency or currency unit as provided in
paragraph (a) of this Section 3.12. Payment of principal of (and
premium, if any) and (with respect to Fully Registered Securities
only) interest, if any, on such Security shall be made at the Place of
Payment by mailing at such location a check, in the applicable
currency or currency unit to the Person entitled thereto at the
address of such Person appearing on the Securities Register. Payment
of the principal of, premium, if any, and (with respect to Fully
Registered Securities only) interest, if any, on such Security may
also, subject to applicable laws and regulations, be made at such
other place or places as may be designated by the Company by any
appropriate method.

K. Paragraph (d) of Section 3.12 is amended and restated to read as
follows:
(d) Not later than the fourth Business Day after the Election Date
for each payment date, the Paying Agent will deliver to the company a
written notice specifying, in the currency or currency unit in which
each series of the Securities are payable, the respective aggregate
amount so principal of (and premium, if any) and interest, if any, on
the Securities to be made on such payment date, specifying the amounts
so payable in respect of Fully Registered Securities, Registered
Securities with Coupons and Unregistered Securities and in respect of
the Registered Securities as to which the Holders of Securities
denominated in any currency or currency unit shall have elected to be
paid in another currency or currency unit as provided in paragraph (b)
above. If the election referred to in paragraph (b) above has been
provided for pursuant to Section 3.01 and if at least one Holder has
made such election, then, on the second Business day preceding each
payment date the Company will deliver to the Paying Agent an Exchange
Rate Officer's Certificate in respect of the Dollar, Foreign Currency
or currency unit payments to be made on such payment date. The
Dollar, Foreign Currency or currency unit amount receivable by Holder
of Registered Securities who have elected payment in a currency or
currency unit as provided in paragraph (b) above shall be determined
by the Company on the basis of the applicable Market Exchange Rate in
effect on the send Business Day (the "Valuation Date") immediately
preceding each payment date.

L. Paragraph (g) of Section 3.12 is amended and restated to read as
follows:

(g) The "Dollar Equivalent of the Foreign Currency" shall be
determined by the Exchange Rate Agent, if any, or, if there shall not
be an Exchange Rate Agent, then by the Trustee, on the basis of the
most recently available Market Exchange Rate, or as otherwise
indicated in a pricing supplement to a prospectus describing the
Securities.

M. The first sentence of Section 8.14 is amended and restated to read as
follows:
The Trustee may appoint an Authenticating Agent for each series of
Securities, which shall be acceptable to the Company, to act on behalf
of such Trustee, and subject to its direction in the authentication
and delivery of the Securities of such series issued upon original
issuance, exchange, registration of transfer or partial redemption
thereof or pursuant to section 3.06.

N. Section 3.10 is amended and restated to read as follows:

All Securities surrendered for the purpose of payment, redemption,
repayment, purchase, exchange or registration of transfer or for
credit against any sinking fund shall, if surrendered to the Company
or any Paying Agent or any Securities Registrar, by surrendered to the
Securities Registrar and promptly canceled by it, or, if surrendered
to the Securities Registrar, shall be promptly canceled by it, and no
Securities or coupons shall be issued in lieu thereof except as
expressly permitted by this Indenture. The Securities Registrar shall
destroy canceled Securities and Coupons in accordance with a Company
Order and deliver a

<PAGE> 7
certificate of such destruction to the Company unless, by a Company
Order, the Company directs that such canceled Securities and Coupons
be returned to the Company.

II. GENERAL PROVISIONS

A. The recitals contained herein shall be taken as the statements of the
Company, and the Trustee assumes no responsibility for the correctness of same.
The Trustee makes no representation as to the validity of this First
Supplemental Indenture. The Indenture, as supplemented and amended by this
First Supplemental Indenture, is in all respects hereby adopted, ratified and
confirmed.

B. This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.

C. This First Supplemental Indenture shall be deemed to be a contract
under the laws of the State of New York and for all purposes shall be governed
by and construed in accordance with the laws of said State.

<PAGE> 8
IN WITNESS WHEREOF, HELLER FINANCIAL, INC., has caused this First
Supplemental Indenture to be signed in its corporate name by its Chairman of
the Board, its President, a Vice President or its Treasurer, and its corporate
seal to be affixed hereunto, and the same to be attested by the signature of
its Secretary or assistant Secretary; and CHEMICAL BANK has caused this First
Supplemental Indenture to be signed in its corporate name by one of its Senior
Trust Officers, and its corporate seal to be affixed hereunto, and the same to
be attested by one of its Trust Officers. Executed and delivered in the
Borough of Manhattan, The City of New York, as of the day and year first above
written.

HELLER FINANCIAL, INC.

By: /s/ Anthony O'B. Beirne
-----------------------
Anthony O'B. Beirne
Senior Vice President
and Controller

(SEAL)

Attest:

/s/ Julie B. Selbst
- - -------------------
Assistant Secretary

CHEMICAL BANK,
as Trustee

By: /s/ R. Lorenzen
--------------------
Senior Trust Officer

(SEAL)

Attest:

/s/
Trust Officer

<PAGE> 1

EXHIBIT (10)(N)

REVISED LONG-TERM INCENTIVE PLAN
HELLER INTERNATIONAL CORPORATION
EFFECTIVE JANUARY 1, 1994

I. ELIGIBILITY
Participation in the Long-Term Incentive Plan (the "Plan") is limited
to key executives of the Company as approved by the Chairman and the
Compensation Committee of the Board of Directors. In determining
eligibility, consideration will be given only to those executives who
are in positions whose management decisions directly and significantly
impact the long-term performance and strategic direction of the
Company.

II. PLAN TERM
The term of the Plan shall be three years in length beginning January
1, 1994 and ending December 31, 1996 (the "Term").

III. COMPANY PERFORMANCE MEASURES
The criteria for measuring performance of the Company during each year
of the Plan Term shall be Heller Financial, Inc.'s consolidated net
income ("operational") after taxes ("Actual Net Income"), as defined
in Exhibit A. Actual Net Income will be compared against Heller
Financial Inc.'s consolidated target net income ("operational") for
each year of the Term, which shall be the amounts contained in the
Mid-Range Forecast set forth in Exhibit A hereto.

IV. TARGET BONUS AWARDS
Target bonus awards will vary based on the duties and responsibilities
of the position and competitive bonus survey data. Each participant
will be assigned a target bonus level at the commencement of the Plan
(or upon joining the Plan for participants joining after
commencement).

TARGET AS A PERCENT OF ELIGIBLE
BASE SALARY

50% of "Base Salary"
35% of "Base Salary"
30% of "Base Salary"
25% of "Base Salary"

Long-Term Incentive Plan (1994-96)
<PAGE> 2
"Base Salary" shall mean the participant's gross regular salary paid
during any period, exclusive of any bonus payments, sign-on bonus,
relocation expense reimbursement, or any other extraordinary payments.
In the event a participant moves from one target level to another
during the Term, Base Salary will be prorated and calculated for the
periods during the year before and after the change, using the
different Bonus Targets.

V. BONUS TARGET ADJUSTMENTS
The percentage of the Bonus Target earned by each participant each
year will be determined by comparing that year's Actual Net Income to
the Target Net Income as follows:

<TABLE>
<CAPTION>
ACTUAL NET INCOME AS A PERCENTAGE OF BONUS
PERCENTAGE OF NET INCOME TARGET EARNED
<S> <C>
Below 80% 0%
80% -- 120% Equal Percentage
Over 120% 120%
</TABLE>

VI. BONUS CALCULATION AND PAYMENT
Bonus accrual amounts will be calculated annually after the end of the
calendar year, and amounts accrued during each year will not be
affected by the Company's performance in subsequent years. Subject to
the limitations set forth below under the heading "Termination of
Employment", bonuses will be paid as soon as possible after the end of
the Term, but in no event later than four months after the Term.

VII. TERMINATION OF EMPLOYMENT
An individual must be an active employee of the Company and a
participant in the Plan on the last day of the Term in order to
receive any payment under the Plan. Notwithstanding the foregoing,
any participant who dies, becomes disabled, or retires (in accordance
with established Company retirement policies) will be eligible to
receive bonus payments to be paid at the same time as those for active
participants, provided that for calculation purposes the Base Salary
used will be the participant's regular base salary paid through the
date of termination of active employment.

Long-Term Incentive Plan (1994-96)

<PAGE> 3
VIII. NEW PARTICIPANT
Individuals who become participants after the commencement of the Term
will be eligible to receive bonus payments, but the Base Salary used
will be that actually earned from the date the individual becomes a
participant through the end of the Term.

IX. ADMINISTRATION OF THE PLAN POLICIES
The Compensation Committee of the Board of Directors shall have the
authority to approve new participants in the Plan and to establish
financial goals for each plan year.

The Plan shall be administered by employees designated by the Chief
Executive Officer of the Company. These designated employees shall
have the authority to establish the terms and conditions under which
the awards become payable, to adopt rules and regulations, and make
all other determinations deemed necessary or desirable for the
implementation and administration of the Plan.

PLAN CHANGE
Any changes in the design of the Plan herein described must be
approved by the Chief Executive Officer. The Chief Executive Officer
may discontinue the Plan at any time. Actual Net Income and Target
Net Income shall be subject to adjustment at the sole discretion of
the Chief Executive Officer to take into account the effects of
extraordinary events, including, without limitation, acquisitions and
divestitures.

PRIOR PLANS
This Plan amends, supersedes and replaces all prior issued long-term
incentive plans.

Long-Term Incentive Plan (1994-96)

<PAGE> 1

EXHIBIT (10)(O)

HELLER INTERNATIONAL CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN

SECTION 1
INTRODUCTION

1.1 The Plan and Its Effective Date. The Heller International
Corporation Executive Deferred Compensation Plan ("Plan") is established as of
January 1, 1994 (the "Effective Date").

1.2 Purpose. Heller International Corporation (the "Company") has
established the Plan for a select group of management and highly compensated
employees of the Company or any subsidiary or affiliate that adopts the Plan in
accordance with Section 7 to retain and attract highly qualified personnel by
offering the benefits of a non-qualified, unfunded plan of deferred
compensation. The Plan is intended to be a top-hat plan described in Section
201(2) of the Employee Retirement Income Security Act of 1974 ("ERISA").

1.3 Administration. The Plan shall be administered by a committee (the
"Committee") appointed by the Compensation Committee of the Board of Directors
of the Company (the "Compensation Committee"). The Committee shall have the
powers set forth in the Plan and the power to interpret its provisions. Any
decisions of the Committee shall be final and binding on all persons with
regard to the Plan. The Committee may delegate its authority hereunder to one
or more officers or directors of the Company. The members of the Committee
shall serve at the pleasure of the Compensation Committee and may be removed,
with or without cause, by the Compensation Committee.

SECTION 2
PARTICIPATION AND DEFERRAL ELECTIONS

2.1 Eligibility and Participation. Subject to the conditions and
limitations of the Plan, all senior executives and all top mid-level executives
(salary grade 18 or above) of the Company or an Employer (as defined in Section
7.1) and such other executives of the Company or an Employer identified as
eligible by the Committee shall be eligible to participate in the Plan
("Eligible Employees"). Any Eligible Employee who makes a Deferral Election as
described in Section 2.2 below shall become a participant in the Plan
("Participant") and shall remain a Participant until the entire balance of his
Deferral Account (defined in Section 4.1 below) is distributed to him.
<PAGE> 2
2.2 Rules for Deferral Elections. Any Eligible Employee may make an
irrevocable election ("Deferral Election") to defer receipt of his Incentive
Payments, Annual Bonus, and/or Annual Base Salary (as these terms are defined
in Section 2.3) for a calendar year in accordance with the rules set forth
below:

(a) An individual shall be eligible to make a Deferral Election
only if he is an Eligible Employee on the date such election
is made.

(b) All Deferral Elections must be made in writing on such forms
as the Committee may prescribe and must be received by the
Committee no later than the date specified by the Committee.
In no event will the date specified by the Committee be later
than the end of the month that precedes the earliest date that
the amount being deferred is made available to such Eligible
Employee.

(c) Deferred amounts will be deferred to the date specified by the
Eligible Employee at the time of his initial Deferral Election
(the "Distribution Date"). Except as provided in subsection
(f) below, the Distribution Date specified at the time of the
Eligible Employee's initial Deferral Election is irrevocable
and shall apply to all amounts deferred by the Eligible
Employee under the Plan.

(d) The Distribution Date specified by the Participant at the time
of his initial Deferral Election shall be either (i) a
specified date not earlier than January 1 immediately
following the third anniversary of the date on which the
Eligible Employee files his initial Deferral Election (the
"Designated Distribution Date"), (ii) the Eligible Employee's
Termination of Employment (as defined in subsection (e),
below) or a specified date coinciding with or next following
the Eligible Employee's Termination of Employment (e.g.,
January 1 coinciding with or next following the Eligible
Employee's Termination of Employment), or (iii) the earlier of
(i) or (ii) above, as may be elected by the Eligible Employee
at the time of his initial Deferral Election.

(e) For purposes of this Plan, a "Termination of Employment"
occurs when a person leaves the employ of the Company
(including all subsidiaries and affiliates) by reason of a
resignation, discharge, retirement, or death; provided that in
the event a person receives periodic severance payments after
he leaves the employ of the Company (or any subsidiary or
affiliate), then such person's Termination of Employment shall
occur on the date on which the final periodic severance
payment is made.

(f) A Participant may make a one-time election after the
Participant's initial Deferral Election to extend the
Distribution Date; provided that such election shall not be
effective unless the Committee receives the election at least
one year and one day before the Distribution Date elected by
the Participant at the time of his initial Deferral Election.

<PAGE> 3
(g) At the time of the Participant's initial Deferral Election,
the Participant must elect, in writing on such form as the
Committee may prescribe, the form of payment of the
Participant's Deferral Account. The Deferral Account may be
paid in a single lump sum or in substantially equal annual
installments over a five, ten or fifteen year period in
accordance with Section 5.1. Except as provided in Section
5.1, the Participant's election as to the form of payment of
his Deferral Account made at the time of the Participant's
initial Deferral Election shall apply to all amounts deferred
by the Eligible Employee under the Plan.

(h) At the time of the Participant's initial Deferral Election,
the Participant shall specify, in writing on such form as may
be prescribed by the Committee, the manner in which income,
gains, losses and expenses are credited or charged to a
Participant's Deferral Accounts in accordance with Section
4.2.

(i) No Deferral Election shall apply to any amounts which in the
absence of a Deferral Election would be payable to the
Eligible Employee on or after January 1, 1999 or such later
date as may be permitted by the Board of Directors of the
Company.

(j) A Deferral Election shall be irrevocable; provided that if the
Committee determines that a Participant has an Unforeseeable
Financial Emergency (as defined in Section 5.6), then the
Participant's Deferral Election in effect at the time of the
Unforeseeable Financial Emergency shall be revoked with
respect to all amounts not previously deferred at the time the
Committee determines that the Participant has an Unforeseeable
Financial Emergency; and further provided that if a
Participant receives a distribution on account of hardship
under any qualified plan that is described in Section 401(k)
of the Internal Revenue Code (the "Code") and which is
maintained by the Company, an Employer or a commonly
controlled entity (as defined in Code Sections 414(b) and
(c)) of the Company or an Employer (a "401(k) Plan"), then
no amounts may be deferred under the Plan for a period of
12 months following the date the Participant
receives the distribution on account of hardship from the
401(k) Plan.

2.3 Amounts Deferred. An Eligible Employee may make a Deferral
Election to defer receipt of the following amounts:

(a) All or any portion of his incentive payments ("Incentive
Payments") under the Long-term Incentive Plan of Heller
International Corporation with respect to performance in the
calendar year in which the Deferral Election is made in
increments of 25%.

(b) All or any portion of his annual bonus ("Annual Bonus") for a
calendar year under Management Incentive Plan of Heller
International Corporation in increments of 25%.

3
<PAGE> 4
(c) Up to 15% of his annual base salary excluding severance
payments ("Annual Base Salary") in increments of 1%.

(d) Such other bonuses and incentive payments under any plan or
arrangement established by an Employer as the Chairman of the
Board of Directors of the Company (the "Chairman") may
designate as compensation eligible for deferral under this
Plan in such increments and subject to such limitations and
restrictions as the Chairman may establish.

SECTION 4
DEFERRAL ACCOUNTS

4.1 Deferral Accounts. All amounts deferred pursuant to one or
more Deferral Elections under the Plan shall be allocated to a bookkeeping
account in the name of the Participant ("Deferral Account"). Amounts deferred
pursuant to a Deferral Election shall be credited to the Deferral Account as of
the Deferral Crediting Date (as defined below) coinciding with or next
following the date on which, in the absence of a Deferral Election, the
Participant would otherwise have received the deferred amounts. The "Deferral
Crediting Date" shall be the business day coinciding with or next preceding the
15th day of each calendar month (the "Mid-Month Deferral Crediting Date") and
the business day coinciding with or next preceding the last day of each
calendar month (the "End-of-Month Deferral Crediting Date").

4.2 Investment Elections and Income Crediting. As of the last
business day of each calendar month (or such other dates as the Committee, in
its discretion, may designate) ("Valuation Date"), each Participant's Deferral
Account will be credited with income and gains and charged with losses,
expenses and distributions equal to the amount by which the Deferral Account
would have been credited or charged since the prior Valuation Date (in the
manner described below) had the Participant's Deferral Account been invested in
the Investment Funds (as defined below) selected by the Participant in
accordance with the Participant's investment elections.

The "Investment Funds" shall consist of two or more mutual funds
designated by the Committee, in its sole discretion, for Participants'
investment elections. The Committee may, in its sole discretion, designate
additional Investment Funds or terminate existing Investment Funds.

A Participant must make an investment election at the time of his
initial Deferral Election. The investment election shall designate the portion
of the amounts deferred which are to be treated as invested in each available
Investment Fund. A Participant's investment election shall remain in effect
with respect to each subsequent deferral until the Participant files a change
in investment election with the Committee. A Participant may change his
investment election either with respect to amounts deferred following the
change in investment election or with respect to the investment allocation of
the Participant's existing Deferral Account, as the Participant may elect. A
change in investment election must be filed with the

4
<PAGE> 5
Committee on a form prescribed by the Committee. A change in investment
election will become effective on the first business day of the calendar
quarter following the Committee's receipt of the change in investment election;
provided that the Committee receives the change in investment election no later
than the 15th day of the last month of the preceding calendar quarter (or such
earlier or later date as may be permitted or required by the Committee).

Notwithstanding any provisions herein to the contrary, amounts
deferred during any calendar month shall not be treated as invested among the
Investment Funds selected by the Participant in his investment election until
the first business day of the following month. Amounts deferred as of the
Mid-Month Deferral Crediting Date (the "Mid-Month Deferred Amount") shall be
deemed to have been invested in the Transition Fund for the period from the
Mid-Month Deferral Crediting Date through the last day of the month that
includes the Mid-Month Deferral Crediting Date (or, if such last day is not a
business day, the next following business day). The "Transition Fund" is a
money market fund or such other investment fund designated by the Committee in
its sole discretion which is invested primarily in short-term securities. As
of each Valuation Date the Committee (or its delegate) shall determine the net
income, gains or losses of the Transition Fund since the preceding Mid-Month
Deferral Crediting Date determined as if Participants' Mid-Month Deferrals for
the month were actually invested in the Transition Fund. The Committee (or its
delegate) shall proportionately allocate the net income, gains or losses of the
Transition Fund among the Participants' Deferral Accounts by crediting (or
charging) each such Deferral Account by an amount equal to the net income,
gains or losses of the Transition Fund multiplied by a fraction, the numerator
of which is the amount of the Participant's Mid-Month Deferred Amount for such
month and the denominator of which is the total amount of all Participants'
Mid-Month Deferred Amounts for such month. As of the first business day of
each month the amounts deferred during the immediately preceding month
increased by any income or gains and reduced by any losses and expenses
credited or charged with respect to the Participant's Mid-Month Deferred
Amounts for the immediately preceding month shall be treated as if invested
among the Investment Funds selected by the Participant in his investment
election.

As of each Valuation Date the Committee (or its delegate) shall
determine the net income, gains or losses of each Investment Fund since the
preceding Valuation Date determined as if Participants' Deferral Accounts were
actually invested in the Investment Funds in accordance with Participants'
investment elections. The Committee (or its delegate) shall proportionately
allocate the net income, gains or losses of each Investment Fund among the
Participants' Deferral Accounts as valued as of the preceding Valuation Date
(reduced by any distributions therefrom since the preceding Valuation Date) by
crediting (or charging) each such Deferral Account by an amount equal to the
net income, gains or losses of each Investment Fund multiplied by a fraction,
the numerator of which is the balance of such Deferral Account deemed invested
in such Investment Fund as of the preceding Valuation Date (reduced by any
distributions therefrom since the preceding Valuation Date) and the denominator
of which is the total value of all Deferral Accounts deemed invested in such
Investment Fund as of the preceding Valuation Date (reduced by any
distributions therefrom since the preceding Valuation Date); provided however
that for the purpose of allocating such income as of the first Valuation Date,
the numerator and denominator of the preceding fraction shall be determined by
using Deferral Account balances as of the first Valuation Date after all

5
<PAGE> 6
contributions are credited thereto and before income is allocated as provided
in this Section 4.2.

4.3 Vesting. A Participant shall be fully vested at all times in
the balance of his Deferral Account.

SECTION 5
PAYMENT OF BENEFITS

5.1 Time and Method of Payment. Payment of a Participant's
Deferral Account shall be made in the form of a single lump sum or shall
commence in the form of installments as elected by the Participant at the time
of his initial Deferral Election. A Participant may make a one-time election
after the Eligible Employee's initial Deferral Election to change the form of
payment elected by the Participant; provided that such election shall not be
effective unless the election to change the form of payment is received by the
Committee at least one year and one day before the Participant's Distribution
Date.

If a Participant's Deferral Account is payable in a single lump sum,
the payment shall be made as soon as possible following the Valuation Date
coinciding with or next following the Participant's Distribution Date in an
amount equal to the value of the Participant's Deferral Account as of the
Valuation Date coinciding with or immediately preceding the date on which the
balance of the Deferral Account is paid to the Participant.

If a Participant's Deferral Account is payable in the form of
installment payments, then the Participant's Deferral Account shall be paid in
substantially equal annual installments over a five, ten or fifteen year period
(as elected by the Participant in accordance with this Section 5.1) commencing
as soon as practical after the Valuation Date coinciding with or next following
the Participant's Distribution Date.

Each installment payment shall be computed by dividing the balance of
the Participant's Deferral Account as of the Valuation Date coinciding with or
immediately preceding the installment payment date by the number of payments
remaining in the installment period.

5.2 Payment Upon Disability. In the event a Participant becomes
Disabled (as defined below) before his Distribution Date, payment of the
Participant's Deferral Account shall be made or shall commence (in the form of
payment elected by the Participant in accordance with Sections 2.2(g) and 5.1)
as soon as practical after the Valuation Date coinciding with or next following
the date on which the Committee determines that the Participant is Disabled.

For purposes of this Section 5.2, a Participant shall be "Disabled" if
he has a physical or mental condition resulting from a bodily injury, disease,
or mental disorder, which renders the Participant presumably permanently
incapable of performing his normal employment duties. Such determination shall
be made by the Committee on the basis of such medical and other competent
evidence as the Committee shall deem relevant.

6
<PAGE> 7
5.3 Payment Upon Death of a Participant. Notwithstanding any
election by the Participant regarding the timing and manner of payment of his
Deferral Account, a Participant's Deferral Account shall be paid to the
Participant's Beneficiary (designated in accordance with Section 5.4) in a
single lump sum as soon as practical following the Valuation Date coinciding
with or next following the Participant's Death.

5.4 Beneficiary. If a Participant is married on the date of his
death, then his Beneficiary shall be the Participant's spouse, unless the
Participant (with his spouse's written consent) names a Beneficiary or
Beneficiaries (other than the Participant's spouse) to receive the balance of
the Participant's Deferral Account in the event of the Participant's death
prior to the payment of his entire Deferral Account. To be effective, any
Beneficiary designation shall be filed in writing with the Committee. A
Participant may revoke an existing Beneficiary designation by filing another
written Beneficiary designation with the Committee. The latest Beneficiary
designation received by the Committee shall be controlling.

If no Beneficiary is named by a Participant or if he survives all of
his named Beneficiaries, the Deferral Account shall be paid in the following
order of precedence:

(1) the Participant's spouse;

(2) the Participant's children (including adopted
children), per stirpes; or

(3) the Participant's estate.

In order for a married Participant's Beneficiary designation to be
effective, the Participant's spouse must consent to the Beneficiary
designation. A valid spousal consent:

(1) must be in writing acknowledging the effect of the
consent;

(2) must be witnessed by a notary public;

(3) must be effective only for the spouse who executes
the consent; and

(4) must designate a Beneficiary or Beneficiaries who may
not be changed by the Participant without the
spouse's consent, unless the Participant names his
spouse as his sole Beneficiary or the spouse's
consent in the first instance expressly permits
designations by the Participant without any
requirement of further consent by the spouse.

5.5 Form of Payment. All payments shall be made in cash.

5.6 Unforeseeable Financial Emergency. If the Committee
determines that a Participant has incurred an Unforeseeable Financial Emergency
(as defined below), the Participant may withdraw in cash the portion of the
balance of his Deferral Account needed to

7
<PAGE> 8
satisfy the Unforeseeable Financial Emergency, to the extent that the
Unforeseeable Financial Emergency may not be relieved:

(1) Through reimbursement or compensation by insurance
or otherwise; or

(2) By liquidation of the Participant's assets, to the
extent the liquidation of such assets would not
itself cause severe financial hardship.

An "Unforeseeable Financial Emergency" is a severe financial hardship
to the Participant resulting from:

(1) A sudden and unexpected illness or accident of the
Participant or of a dependent of the Participant;

(2) Loss of the Participant's property due to casualty; or

(3) Such other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond
the control of the participant as determined by the
Committee.

A withdrawal on account of an Unforeseeable Financial Emergency shall
be paid as soon as possible after the Valuation Date coinciding with or next
following the date on which the Committee approves the withdrawal.

In the event a Participant is entitled to a withdrawal from the Plan
on account of an Unforeseeable Financial Emergency and at the same time is
entitled to a distribution on account of hardship from a 401(k) Plan (as
defined in Section 2.2(j)), the Participant must withdraw his entire Deferral
Account under the Plan on account of the Unforeseeable Financial Emergency
before he may receive any distribution on account of hardship under the 401(k)
Plan.

5.7 Withholding of Taxes. The Company shall withhold any
applicable Federal, state or local income tax from payments due under the Plan.
The Company shall also withhold Social Security taxes, including the Medicare
portion of such taxes, and any other employment taxes as necessary to comply
with applicable laws.

SECTION 6
MISCELLANEOUS

6.1 Funding. Benefits payable under the Plan to any Participant
shall be paid directly by the Participant's Employer (including the Company if
the Participant is employed by the Company). The Company and the Employers
shall not be required to fund, or otherwise segregate assets to be used for
payment of benefits under the Plan. While the Company and the Employers may,
in the discretion of the Committee, make investments in the mutual funds
designated by the Committee as Investment Funds in amounts equal or unequal to

8
<PAGE> 9
Participants' investment elections hereunder, the Company and the Employers
shall not be under any obligation to make such investments and any such
investment shall remain an asset of the Company or the Employer subject to the
claims of its general creditors. Notwithstanding the foregoing, the Company
and the Employers, in the discretion of the Committee, may maintain one or more
grantor trusts ("Trust") to hold assets to be used for payment of benefits
under the Plan. The assets of the Trust with respect to benefits payable to
the employees of each Employer shall remain the assets of such Employer subject
to the claims of its general creditors. Any payments by a Trust of benefits
provided to a Participant under the Plan shall be considered payment by the
Company or the Employer and shall discharge the Company or the Employer of any
further liability under the Plan for such payments.

6.2 Benefit Statements. As soon as practical after the end of
each calendar year (or after such additional date or dates as the Committee, in
its discretion, may designate), the Committee shall provide each Participant
with a statement of the balance of his Deferral Account hereunder as of the
last day of such calendar year (or as of such other dates as the Committee, in
its discretion may designate).

6.3 Employment Rights. Establishment of the Plan shall not be
construed to give any Eligible Employee the right to be retained in the
Company's service or to any benefits not specifically provided by the Plan.

6.4 Interests Not Transferable. Except as to withholding of any
tax under the laws of the United States or any state or locality and the
provisions of Section 5.4, no benefit payable at any time under the Plan shall
be subject in any manner to alienation, sale, transfer, assignment, pledge,
attachment, or other legal process, or encumbrance of any kind. Any attempt to
alienate, sell, transfer, assign, pledge or otherwise encumber any such
benefits, whether currently or thereafter payable, shall be void. No person
shall, in any manner, be liable for or subject to the debts or liabilities of
any person entitled to such benefits. If any person shall attempt to, or shall
alienate, sell, transfer, assign, pledge or otherwise encumber his benefits
under the Plan, or if by any reason of his bankruptcy or other event happening
at any time, such benefits would devolve upon any other person or would not be
enjoyed by the person entitled thereto under the Plan, then the Committee, in
its discretion, may terminate the interest in any such benefits of the person
entitled thereto under the Plan and hold or apply them for or to the benefit of
such person entitled thereto under the Plan or his spouse, children or other
dependents, or any of them, in such manner as the Committee may deem proper.

6.5 Forfeitures and Unclaimed Amounts. Unclaimed amounts shall
consist of the amounts of the Deferral Account of a Participant that cannot be
distributed because of the Committee's inability, after a reasonable search, to
locate a Participant or his Beneficiary, as applicable, within a period of two
(2) years after the Valuation Date upon which the payment of benefits become
due. Unclaimed amounts shall be forfeited at the end of such two-year period.
These forfeitures will reduce the obligations of the Company under the Plan.
After an unclaimed amount has been forfeited, the Participant or Beneficiary,
as applicable, shall have no further right to his Deferral Account.

9
<PAGE> 10
6.6 Controlling Law. The law of Illinois, except its law with
respect to choice of law, shall be controlling in all matters relating to the
Plan to the extent not preempted by ERISA.

6.7 Gender and Number. Words in the masculine gender shall
include the feminine, and the plural shall include the singular and the
singular shall include the plural.

6.8 Action by the Company. Except as otherwise specifically
provided herein, any action required of or permitted by the Company under the
Plan shall be by resolution of the Board of Directors of the Company or by
action of any member of the Committee or person(s) authorized by resolution of
the Board of Directors of the Company.

SECTION 7
EMPLOYER PARTICIPATION

7.1 Adoption of Plan. Any subsidiary or affiliate of the Company
(including any domestic or foreign entity which is related to the Company by
less than a 50% direct or indirect ownership interest by or in the Company) (an
"Employer") may, with the approval of the Committee and under such terms and
conditions as the Committee may prescribe, adopt the corresponding portions of
the Plan by resolution of its board of directors. The Committee may amend the
Plan as necessary or desirable to reflect the adoption of the Plan by an
Employer, provided however, that an adopting Employer shall not have the
authority to amend or terminate the Plan under Section 8.

7.2 Withdrawal from the Plan by Employer. Any such Employer shall
have the right, at any time, upon the approval of and under such conditions as
may be provided by the Committee, to withdraw from the Plan by delivering to
the Committee written notice of its election so to withdraw. Upon receipt of
such notice by the Committee, the portion of the Deferral Account of
Participants and Beneficiaries attributable to amounts deferred while the
Participants were employees of such withdrawing Employer, plus any net
earnings, gains and losses on such amounts, shall be distributed from the Trust
at the direction of the Committee in cash at such time or times as the
Committee, in its sole discretion, may deem to be in the best interest of such
employees and their Beneficiaries. To the extent the amounts held in the Trust
for the benefit of such Participants and Beneficiaries are not sufficient to
satisfy the Employer's obligation to such Participants and their Beneficiaries
accrued on account of their employment with the Employer, the remaining amount
necessary to satisfy such obligation shall be an obligation of the Employer,
and the Company shall have no further obligation to such Participants and
Beneficiaries with respect to such amounts.

SECTION 8
AMENDMENT AND TERMINATION

The Company intends the Plan to be permanent, but reserves the right
at any time by action of its Board of Directors to modify, amend or terminate
the Plan, provided, however,

10
<PAGE> 11
that any amendment or termination of the Plan shall not reduce or eliminate any
Deferral Account accrued through the date of such amendment or termination,
increased by any income and gain credited to the Participant's Deferral Account
and reduced by any losses, expenses and distributions charged to the
Participant's Deferral Account in accordance with Section 4.2.

The Committee shall have the same authority to adopt amendments to the
Plan as the Board of Directors of the Company in the following circumstances:

(a) to adopt amendments to the Plan which the Committee
determines are necessary or desirable for the Plan to
comply with or to obtain benefits or advantages under
the provisions of applicable law, regulations or
rulings or requirements of the Internal Revenue
Service or other governmental or administrative
agency or changes in such law, regulations, rulings
or requirements; and

(b) to adopt any other procedural or cosmetic amendment
that the Committee determines to be necessary or
desirable that does not materially change benefits to
Participants or their Beneficiaries or materially
increase the Company's or adopting Employers'
obligations under the Plan.

The Committee shall provide notice of amendments adopted by the Committee to
the Board of Directors of the Company on a timely basis.

Executed in multiple originals this 30th day of December, 1993.

HELLER INTERNATIONAL CORPORATION

By: Peggi L. Sturm
----------------------

Title: Vice President
-------------------

11
<PAGE> 12

FIRST AMENDMENT TO THE
HELLER INTERNATIONAL CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN

Heller International Corporation ("HIC") hereby amends its Executive Deferred
Compensation Plan (the "Plan") as of October 1, 1994.

WHEREAS, HIC has established the Plan for a select group of management and
highly compensated employees;

WHEREAS, Heller Financial, Inc. ("HFI"), Heller Financial Leasing, Inc.
("HFLI"), and Heller International Group, Inc. ("HIG") have adopted the Plan
for certain of their respective management and highly compensated employees in
accordance with Section 7 of the Plan; and

WHEREAS, HIC has determined that this amendment is necessary and desirable
and hereby amends the Plan in accordance with Section 8 of the Plan.

NOW, THEREFORE, the Plan shall be amended as follows:

1. Section 2.2(f) of the Plan shall be deleted and the following inserted
in its place:

A Participant may make a one-time election after the
Participant's initial Deferral Election to accelerate or
extend the Distribution Date; provided that such election
shall not be effective unless the Committee receives the
election at least one year and one day before the Distribution
Date elected by the Participant at the time of his initial
Deferral Election and provided that with respect to
acceleration of the Distribution Date, the Participant's
Employer provides prior written consent to such acceleration.

2. A new Section 5.8 shall be added to the Plan as follows:

5.8. Small Amounts. Notwithstanding any election by the
Participant regarding the timing and manner of payment of his
Deferral Account, in the event of a Participant's Termination
of Employment, the Employer may elect to pay the Participant a
lump sum distribution of the entire value of the Participant's
Deferral Account provided that the value is less than ten
thousand dollars ($10,000) determined as of the Valuation Date
coinciding with or immediately following the Participant's
termination of employment.

Executed this 1st day of October, 1994.

<PAGE> 13
HELLER INTERNATIONAL CORPORATION

By: R.J. Almeida
-----------------

Its: EVP
----------------

<PAGE> 1

EXHIBIT (10)(P)

DEFERRED COMPENSATION PLAN
CROSS-GUARANTEE

This Cross-Guarantee is entered into this 1st day of January,
1994 by and among Heller International Corporation ("HIC"), Heller Financial,
Inc. ("HFI"), Heller Financial Leasing, Inc. ("HFLI"), and Heller International
Group, Inc. ("HIG") in connection with the Heller International Corporation
Executive Deferred Compensation Plan established as of January 1, 1994 ("the
Plan").

RECITALS

WHEREAS, HIC has established the Plan for a select group of management and
highly compensated employees;

WHEREAS, HFI, HFLI, and HIG have adopted the Plan for certain of their
respective management and highly compensated employees in accordance with
Section 7 of the Plan; and

WHEREAS, the parties desire to enter into this cross-guarantee of the
payment obligations under the Plan (the "Cross-Guarantee").

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

CROSS-GUARANTEE

1. The parties hereto, jointly and severally guarantee each Employer's payment
obligations to its eligible Employees who are Participants and such
Participants' Beneficiaries, under the Plan. Such payment obligations
shall include payment when due of the amount in each such Participant's
Deferral Account in accordance with the Deferral Election(s) made by the
Participant. In the event the Employer fails to pay any such amount within
thirty (30) days after the same shall become due (the ""Defaulting
Employer"), the undersigned jointly and severally agree to pay such amount
upon demand.

2. Unless terminated in accordance with paragraph 4 below, this
Cross-Guarantee shall constitute a continuing guarantee covering all
amounts in the Deferral Accounts, including any net earnings, gains and
losses owing thereon with respect to each Participant's Deferral Account,
at any time due and unpaid by any Employer that is a party to this
Cross-Guarantee, and shall remain in effect until all amounts in the
Deferral Accounts are paid. Notwithstanding the language in Section 7.2 of
the Plan, the Company shall be obligated to the Participants and
Beneficiaries in accordance with this Cross-Guarantee in the event of a
withdrawal of an Employer from the Plan.
<PAGE> 2
3. The Defaulting Employer shall indemnify and hold harmless the other
Employers from and against all liabilities, claims, suits, expenses,
losses, costs, levies, actions and damages, including reasonable attorney's
fees, arising out of such Employer's failure to meet its obligations under
the Plan. This indemnification shall survive termination of this
Cross-Guarantee.

4. In the event the Defaulting Employer fails to provide indemnification in
accordance with paragraph 3 above, the liability of the undersigned as
among themselves, without limiting their joint and several liability, shall
be in equal proportions. The undersigned shall indemnify and hold each
other harmless to the extent that any of the undersigned shall be required
to pay any amount hereunder that shall be in excess of their proportionate
liability.

5. This Cross-Guarantee shall terminate as to any Employer upon the change of
control of such Employer that is a party to this Cross-Guarantee if the
effect of such change in control is that such Employer is no longer
controlled by HIC, its affiliates or subsidiaries. Additionally, any party
to this Cross-Guarantee shall have the right to withdraw from this
Cross-Guarantee upon withdrawal from the Plan by giving sixty (60) days
prior written notice to each of the other parties to this Cross-Guarantee.
Such withdrawal or termination shall not affect the withdrawing Employer's
obligations under the Plan. However, upon such withdrawal or termination,
the withdrawing or terminating Employer shall have no obligation with
respect to Deferral Elections made by Eligible Employees of any other
Employer, subsequent to the date of withdrawal or termination.

6. To the extent any provision of this Cross-Guarantee conflicts with any
provision of the Plan, the provisions of this Cross-Guarantee shall govern.

7. Unless otherwise defined herein, capitalized terms shall have the meaning
ascribed to them in the Plan.

<PAGE> 3
ACKNOWLEDGMENT

IN WITNESS WHEREOF, this Cross-Guarantee has been duly executed as of the
day and year first written above.

HELLER INTERNATIONAL CORPORATION

By: R.J. Almeida
---------------------------

Its: Executive Vice President and Chief Financial Officer
----------------------------------------------------

HELLER FINANCIAL, INC.

By: Mitchell F. Vernick
---------------------------

Its: Senior Group President
--------------------------

HELLER FINANCIAL LEASING, INC.

By: Lauralee E. Martin
---------------------------

Its: President
--------------------------

HELLER INTERNATIONAL GROUP, INC.

By: Anthony O'Boyle Beirne
-------------------------------------

Its: Senior Vice President and Controller
------------------------------------

<PAGE> 1

EXHIBIT (12)

HELLER FINANCIAL, INC.

COMPUTATION OF RATIO OF EARNINGS
TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS

<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
----- ----- ----- ----- -----
(DOLLAR AMOUNTS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net income before income taxes and minority interest in
income of Heller International Group, Inc. ............ $ 174 $ 133 $ 45 $ 70 $ 104
----- ----- ----- ----- -----
Add-Fixed charges
Interest and debt expense.............................. 336 264 295 406 488
One-third of rentals................................... 6 5 5 4 5
----- ----- ----- ----- -----
Total fixed charges............................... 342 269 300 410 493
----- ----- ----- ----- -----
Net income as adjusted................................... $ 516 $ 402 $ 345 $ 480 $ 597
----- ----- ----- ----- -----
Ratio of earnings to fixed charges....................... 1.51x 1.49x 1.15x 1.17x 1.21x
===== ===== ===== ===== =====
Preferred stock dividends on a pre-tax basis............. 17 12 3 7 26
Total combined fixed charges and preferred stock
dividends...................................... $ 359 $ 281 $ 303 $ 417 $ 519
----- ----- ----- ----- -----
Ratio of earnings to combined fixed charges and preferred
stock dividends........................................ 1.44x 1.43x 1.14x 1.15x 1.15x
===== ===== ===== ===== =====
</TABLE>

For purposes of computing the ratio of earnings to combined fixed charges
and preferred stock dividends, "earnings" includes income before income taxes,
the minority interest in Heller International Group, Inc. income and fixed
charges. "Combined fixed charges and preferred stock dividends" includes
interest on all indebtedness, one third of annual rentals (approximate portion
representing interest) and preferred stock dividends on a pre-tax basis.

<PAGE> 1

EXHIBIT (21)
SUBSIDIARIES OF THE REGISTRANT

<TABLE>
<CAPTION>
JURISDICTION IN
SUBSIDIARY WHICH INCORPORATED
- - --------------------------------------------------------------------------- ------------------
<S> <C>
Heller-ABB1, Inc. ......................................................... Delaware
Heller Air I, Inc. ........................................................ Delaware
Heller Air II, Inc. ....................................................... Delaware
Heller Air III, Inc. ...................................................... Delaware
Heller Air IV, Ltd. ....................................................... Bermuda
Heller Capital Markets Group, Inc. ........................................ Delaware
Heller Equity Capital Corporation.......................................... Delaware
Heller Financial Leasing, Inc. ............................................ Delaware
Heller First Capital Corp. ................................................ Delaware
Heller International Group, Inc. .......................................... Delaware
Heller de Mexico, S.A. de C.V. .......................................... Mexico
Heller International Holdings, Inc. ..................................... Delaware
Heller do Brasil-Participacoes S/C, Ltda.............................. Brazil
Heller Europe Limited................................................. United Kingdom
Heller Factoring (Singapore) Limited.................................. Singapore
Heller Financial Services Limited..................................... Australia
Heller Commercial Services Pty., Limited............................ Australia
Heller Financial Services Superannuation Pty., Limited.............. Australia
Heller Research Pty., Limited....................................... Australia
Heller Holding France S.A. ........................................... France
Heller SGPS, Lda...................................................... Portugal
Heller Investments, Inc. .................................................. Delaware
Heller Latin America Holdings, Inc. ....................................... Delaware
Heller North America Holdings, Inc. ....................................... Delaware
Heller Real Estate Holdings, Inc. ......................................... Delaware
AmerSig Graphics, Inc. .................................................... Delaware
AmerSig Southwest, Inc. ................................................. Delaware
AS Mid-America, Inc. .................................................... Delaware
AS Memphis, Inc. ........................................................ Delaware
AmerSig Southeast, Inc. ................................................. Delaware
AmerSig Technology, Inc. ................................................ Delaware
AmerSig Graphics Sales Corp. ............................................ Delaware
CHB Holdings, Inc. ........................................................ Delaware
Country Harvest Buffet Restaurants, Inc. ................................ Delaware
Globalease, Inc. .......................................................... Delaware
National Acceptance Company of America..................................... Delaware
</TABLE>

The names of all other subsidiaries of the Company are omitted because such
unnamed subsidiaries, considered in the aggregate as a single subsidiary, would
not constitute a significant subsidiary.

<PAGE> 1

EXHIBIT (23)

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Heller Financial, Inc.:

As independent public accountants, we hereby consent to the incorporation
of our report dated January 26, 1995, included in this Form 10-K at page 21,
into the Company's previously filed Registration Statement on Form S-3 No.
33-58716.

ARTHUR ANDERSEN LLP
Chicago, Illinois
February 6, 1995

<PAGE> 1

EXHIBIT (24)

POWER OF ATTORNEY

The undersigned director of HELLER FINANCIAL, INC., a Delaware
corporation (the "Company"), hereby constitutes and appoints JAMES B. CURRIE
and SYLVIA L. BATEMAN, and each or either of them (with full power to act
alone), his true and lawful attorney-in-fact and agent in the name and on
behalf of the undersigned, to sign the name of the undersigned to the Company's
Annual Report on Form 10-K for the year ended December 31, 1994, to be filed
with the Securities and Exchange Commission pursuant to the Securities Exchange
Act of 1934, as amended, and to any and all amendments thereto or to any other
instrument or document filed as a part of or in connection with such Annual
Report on Form 10-K or any amendment thereto.

Dated: February 1, 1995

Hajime Maeda
------------
Hajime Maeda
<PAGE> 2

EXHIBIT (24)

POWER OF ATTORNEY

Dated: January 27, 1995

Tetsuya Fukabori
----------------
Tetsuya Fukabori
<PAGE> 3

EXHIBIT (24)

POWER OF ATTORNEY

Dated: January 30, 1995

Hirokazu Ishikawa
-----------------
Hirokazu Ishikawa
<PAGE> 4

EXHIBIT (24)

POWER OF ATTORNEY

Dated: January 31, 1995

Minoru Itosaka
--------------
Minoru Itosaka
<PAGE> 5

EXHIBIT (24)

POWER OF ATTORNEY

Dated: January 27, 1995

Mark Kessel
-----------
Mark Kessel
<PAGE> 6

EXHIBIT (24)

POWER OF ATTORNEY

Dated: January 27, 1995

Michael J. Litwin
-----------------
Michael J. Litwin
<PAGE> 7

EXHIBIT (24)

POWER OF ATTORNEY

Dated: January 30, 1995

Dennis P. Lockhart
------------------
Dennis P. Lockhart
<PAGE> 8

EXHIBIT (24)

POWER OF ATTORNEY

The undersigned director of HELLER FINANCIAL, INC., a Delaware
corporation (the "Company"), hereby constitutes and appoints JAMES B. CURRIE
and SYLVIA L. BATEMAN, and each or either of them (with full power to act
alone), her true and lawful attorney-in-fact and agent in the name and on
behalf of the undersigned, to sign the name of the undersigned to the Company's
Annual Report on Form 10-K for the year ended December 31, 1994, to be filed
with the Securities and Exchange Commission pursuant to the Securities Exchange
Act of 1934, as amended, and to any and all amendments thereto or to any other
instrument or document filed as a part of or in connection with such Annual
Report on Form 10-K or any amendment thereto.

Dated: January 27, 1995

Lauralee E. Martin
------------------
Lauralee E. Martin
<PAGE> 9

EXHIBIT (24)

POWER OF ATTORNEY

Dated: January 27, 1995

Kenji Miyamoto
--------------
Kenji Miyamoto
<PAGE> 10

EXHIBIT (24)

POWER OF ATTORNEY

Dated: January 30, 1995

Osamu Ogura
-----------
Osamu Ogura
<PAGE> 11

EXHIBIT (24)

POWER OF ATTORNEY

Dated: January 30, 1995

Atsushi Takano
--------------
Atsushi Takano
<PAGE> 12

EXHIBIT (24)

POWER OF ATTORNEY

Dated: January 30, 1995

Mitchell F. Vernick
-------------------
Mitchell F. Vernick
<PAGE> 13

EXHIBIT (24)

POWER OF ATTORNEY

Dated: January 31, 1995

Kenji Watanabe
--------------
Kenji Watanabe
<PAGE> 14

EXHIBIT (24)

POWER OF ATTORNEY

Dated: January 30, 1995

Masashi Yamamoto
----------------
Masashi Yamamoto

<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE HELLER
FINANCIAL, INC. ANNUAL REPORT FORM 10K FOR THE PERIOD ENDING DECEMBER 31, 1994
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000,000
<CURRENCY> U.S. DOLLARS

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<EXCHANGE-RATE> 1
<CASH> 0
<INT-BEARING-DEPOSITS> 99
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 20
<INVESTMENTS-HELD-FOR-SALE> 72
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 7,585
<ALLOWANCE> (227)
<TOTAL-ASSETS> 8,476
<DEPOSITS> 0
<SHORT-TERM> 2,451
<LIABILITIES-OTHER> 726
<LONG-TERM> 3,930
<COMMON> 663
0
150
<OTHER-SE> 517
<TOTAL-LIABILITIES-AND-EQUITY> 8,476
<INTEREST-LOAN> 702
<INTEREST-INVEST> 0
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 702
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 336
<INTEREST-INCOME-NET> 366
<LOAN-LOSSES> 158<F3>
<SECURITIES-GAINS> 0<F1>
<EXPENSE-OTHER> 225
<INCOME-PRETAX> 174<F4>
<INCOME-PRE-EXTRAORDINARY> 118
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 118
<EPS-PRIMARY> 0<F2>
<EPS-DILUTED> 0<F2>
<YIELD-ACTUAL> 5.05
<LOANS-NON> 253
<LOANS-PAST> 81
<LOANS-TROUBLED> 54
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 211
<CHARGE-OFFS> 164
<RECOVERIES> 22
<ALLOWANCE-CLOSE> 227
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 227
<FN>
<F3> Includes provision for losses on receivables of $156 million and transfers
and other of $2 million.
<F1> The Company is a finance company whose normal operations do not include
the trading of investment securities.
<F4> Pretax income is prior to $51 million income tax provision and $5 million
of minority interest in international income.
<F2> Earnings per share information not provided as Heller Financial, Inc. has
only one common shareholder.
</FN>

</TABLE>