<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: January 20, 1999
----------------
(Date of earliest event reported)
HELLER FINANCIAL, INC.
----------------------
(Exact name of registrant as specified in its charter)
Delaware
--------
(State or other jurisdiction of incorporation)
1-6157 36-1208070
------ ----------
(Commission File Number) (IRS Employer Identification Number)
500 West Monroe Street, Chicago, Illinois 60661
- ----------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(312) 441-7000
--------------
(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events
- ------- ------------
On January 20, 1999, Heller Financial, Inc. (the "Registrant") issued a press
release announcing (i) its earnings for the year ending December 31, 1998,
(ii) that the Board of Directors has determined that the Annual Meeting of
Shareholders will be held on April 23, 1999, and (iii) that the record date for
purposes of voting at the Annual Meeting of Shareholders will be March 1, 1999.
A copy of the press release is attached.
Item 7. Financial Statements and Exhibits
- ------- ---------------------------------
(c) Exhibits
99 Heller Financial, Inc. - Press Release
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Dated: January 21, 1999
----------------
HELLER FINANCIAL, INC.
By: /s/ Lauralee E. Martin
----------------------
Lauralee E. Martin
Title: Executive Vice President and
Chief Financial Officer
2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Numbered Pages
- ------ --------------
<S> <C> <C>
99 Heller Financial, Inc. - Press Release 4-11
</TABLE>
3
<PAGE>
EXHIBIT 99
Heller Financial Reports Sixth Consecutive Year of Record Earnings;
Continued Strong New Business Volume and Credit Quality
(Chicago, IL, January 20, 1999) -- Heller Financial, Inc. (NYSE: HF)
today reported net income of $47 million for the fourth quarter of 1998, an
increase of 34 percent over the fourth quarter of 1997. For the twelve months
ended December 31, 1998, Heller's net income was a record $193 million, an
increase of 22 percent over the prior year. This marks Heller's sixth
consecutive year of record earnings, which the Company delivered despite a $17
million pre-tax charge from a previously announced restructuring. The earnings
growth for the fourth quarter and year was driven by continued strong new
business volume, strong factoring volume, and the excellent credit quality of
the Company's portfolio.
Net income applicable to common stock was $41 million for the quarter and
$172 million for the year. Pro forma diluted earnings per share, adjusted for
the impact of Heller's May 1, 1998 initial public offering of common stock, were
$.46 for the quarter and $1.91 for the year, 35 percent and 19 percent increases
over the prior year periods.
As noted earlier, Heller's earnings for the quarter and for the year
reflect a $17 million pre-tax charge from the Company's previously announced
restructuring ($0.13 per fully diluted share after tax). The Company believes
that the restructuring, which was designed to increase operating revenues,
optimize operational efficiencies and improve return on shareholders' equity,
will generate over $20 million in savings annually.
As previously announced, on November 30, 1998, Heller completed the
acquisition of approximately $625 million in domestic and international assets
associated with the technology leasing business of Dana Commercial Credit
Corporation. Heller expects the acquisition, which positions the Company to
offer seamless global financing programs to its current and prospective clients,
to be modestly accretive in 1999, with accelerating accretion thereafter.
Heller's U.S. and international originations force continued to generate
strong new business volume totaling $1.5 billion for the fourth quarter and a
record $7.2 billion for the year, a 20 percent increase over 1997. New business
was strongest in Corporate Finance (a market leader in financing middle market
private equity sponsored transactions), Leasing Services, and Small Business
Finance (one of the largest originators of Small Business Administration
guaranteed 7(a) loans and the leading SBA lender in Texas, Illinois, and
Florida). As of December 31, 1998, Heller's total lending assets and investments
had grown 13 percent since the end of 1997 to $13.4 billion. Heller has grown
new business volume at a compound annual growth rate of 25 percent since 1994.
Heller's total factoring volume increased 18 percent for the quarter over
the prior year period and 21 percent year over year. Growth was due to the
exceptional performance of Factofrance, Heller's wholly owned French factoring
subsidiary and the largest factoring company in France, and to strong
performance in Heller's domestic factoring business, which is among the largest
factors in the United States. Factofrance's
4
<PAGE>
factoring volume increased 27 percent compared to the fourth quarter of 1997 and
increased 34 percent year over year. Heller's total factoring volume exceeded
$19 billion in 1998, and the Company remains the largest factoring company in
the world.
Operating revenues for 1998 were $783 million, a four percent increase over
1997. Growth in operating revenues was driven primarily by increases in net
interest income and factoring commissions, both of which reflect Heller's strong
new business volume for the year. Heller's net interest margin was 3.5 percent
of average funds employed (AFE) for the quarter and 3.6 percent of AFE for the
year.
Credit quality in Heller's portfolio remained strong. Net writedowns for
1998 totaled $81 million or 0.7 percent of average lending assets, compared to
$146 million or 1.5 percent for the same period in 1997. Net writedowns for the
quarter totaled $70 million and included a $40 million writedown on
approximately $900 million in real estate CMBS receivables, which were
subsequently sold through a securitization. Exclusive of the CMBS writedown, net
writedowns were $41 million or 0.4 percent of average lending assets for the
year. Heller's 1998 credit quality performance is within its stated writedown
target of 0.75 percent of average lending assets. Heller's nonearning assets
remained low at $211 million or 1.8 percent of total lending assets. The
Company's loan loss reserve was 2.3 percent of receivables and in excess of 100
percent of nonearning receivables.
Operating expenses for the fourth quarter decreased four percent compared
to the prior year period, reflective of Heller's focus on improving operating
efficiency. Operating expenses for the year increased 12 percent over the prior
year period, however excluding the impact of the consolidation of Factofrance,
operating expenses were up six percent over 1997. Expense increases were due to
investment in lower-risk businesses, information technology expenses including
year 2000 compliance, and investment in Heller's national brand building
marketing campaign.
"This was a watershed year for Heller," said Chairman and Chief Executive
Officer Richard J. Almeida. "We completed one of the largest IPOs of 1998, made
a strategic acquisition, and restructured our company to improve operating
efficiency and return on equity. Additionally, we were rewarded for our
conservative financial strategies, as we were able to meet our financial targets
despite widespread volatility in the capital markets. We're delighted with
another year of record results, and we're proud of our consistent ability to
deliver on our commitments to our clients and our shareholders. As we look to
1999, we'll remain focused on building our business franchises, providing value
added financing to our clients, maintaining our disciplined credit standards,
improving margins, controlling expense growth, and delivering strong earnings
growth and improving returns to our shareholders."
The Board of Directors of the Company has determined that the Annual
Meeting of the Shareholders of the Company will be held on April 23, 1999. The
record date for purposes of voting at the meeting will be March 1, 1999.
Heller Financial, Inc. is a worldwide commercial finance company providing
a broad range of financing solutions to middle-market and small business
clients. With more than $13 billion in owned and managed assets, Heller offers
equipment financing and leasing, sales finance programs, factoring and working
capital loans, collateral- and
5
<PAGE>
cash flow-based financing, and financing for commercial real estate. The Company
also offers trade finance, factoring, asset-based lending, leasing and vendor
finance products to clients in Europe, Asia, Australia and Latin America.
Heller's common stock is listed as "HF" on the New York and Chicago Stock
Exchanges.
Certain statements made herein are or may be deemed to be forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. No assurances can be given
that any predicted results will actually be achieved and actual results could
differ materially from those predicted as the result of the factors discussed in
the Company's periodic reports filed with the Securities and Exchange
Commission.
6
<PAGE>
HELLER FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in millions)
ASSETS
<TABLE>
<CAPTION>
December 31, December 31,
1998 1997
------------- -------------
(unaudited) (audited)
<S> <C> <C>
Cash and cash equivalents.................... $ 529 $ 821
Receivables.................................. 11,854 10,722
Less: Allowance for losses of receivables.... 271 261
------- -------
Net receivables......................... 11,583 10,461
Investments.................................. 1,338 994
Investments in international joint ventures.. 235 198
Other assets................................. 681 387
------- -------
Total assets............................ $14,366 $12,861
======= =======
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Senior debt
<S> <C> <C>
Commercial paper and short-term borrowings.. $ 3,681 $ 3,432
Notes and debentures........................ 6,768 6,004
------- -------
Total senior debt....................... 10,449 9,436
Credit balances of factoring clients......... 1,441 1,255
Other payables and accruals.................. 504 405
------- -------
Total liabilities....................... 12,394 11,096
Minority interest............................ 10 87
Stockholders' equity
Preferred stock............................ 400 275
Common stockholders' equity................ 1,562 1,403
------- -------
Total stockholders' equity.............. 1,962 1,678
------- -------
Total liabilities and stockholders'
equity................................ $14,366 $12,861
======= =======
</TABLE>
7
<PAGE>
HELLER FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(in millions, except per share information)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ -------------------
1998 1997 1998 1997
----- ----- ----- -----
(unaudited) (unaudited) (audited)
<S> <C> <C> <C> <C>
Interest income.................................... $ 271 $ 245 $1,047 $ 924
Interest expense................................... 161 140 624 516
----- ----- ------ -----
Net interest income.............................. 110 105 423 408
Fees and other income.............................. 55 74 206 206
Factoring commissions.............................. 34 33 124 104
Income of international joint ventures............. 8 9 30 36
----- ----- ------ -----
Operating revenues............................... 207 221 783 754
Operating expenses................................. 109 114 399 357
Restructuring Charge............................... 17 0 17 0
Provision for losses............................... 18 60 77 164
----- ----- ------ -----
Income before income taxes and minority interest.. 63 47 290 233
Income tax provision............................... 15 9 93 66
Minority interest.................................. 1 3 4 9
----- ----- ------ -----
Net income........................................ $ 47 $ 35 $ 193 $ 158
===== ===== ====== =====
Dividends on preferred stock...................... $ 6 $ 4 $ 21 $ 14
===== ===== ====== =====
Net income applicable to common stock............ $ 41 $ 31 $ 172 $ 144
===== ===== ====== =====
Basic and diluted net income applicable
to common stock per share..................... $ .46 $ .61 $ 2.23 $2.82
===== ===== ====== =====
Pro forma basic net income
applicable to common stock per share (1)...... $ .46 $ .34 $ 1.92 $1.60
===== ===== ====== =====
Pro forma diluted net income
applicable to common stock per share (2)...... $ .46 $ .34 $ 1.91 $1.60
===== ===== ====== =====
</TABLE>
8
<PAGE>
HELLER FINANCIAL, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(unaudited)
<TABLE>
<CAPTION>
SELECTED DATA AND RATIOS For the Three Months For the Twelve Months
(dollars in millions) Ended December 31, Ended December 31,
---------------------------- ---------------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Profitability:
- --------------
Pro forma net income applicable to common
stock per share:
Basic (1) $0.46 $0.34 $1.92 $1.60
Diluted (2) $0.46 $0.34 $1.91 $1.60
Net income applicable to common stock per
share (actual):
Basic $0.46 $0.61 $2.23 $2.82
Diluted $0.46 $0.61 $2.23 $2.82
Return on average common stockholder's
equity (3) 10.6% 8.8% 12.4% 10.5%
Return on AFE (4) 1.5% 1.3% 1.6% 1.6%
Net interest income as a percentage of AFE (4) 3.5% 3.9% 3.6% 4.0%
Non-interest operating revenues as a
percentage of AFE (4) 3.1% 4.3% 3.0% 3.5%
Total operating revenues as a percentage of
AFE (4) 6.6% 8.2% 6.6% 7.5%
Operating expenses as a percentage of
AFE (4) 3.5% 4.2% 3.4% 3.5%
Operating expenses to operating revenues 52.7% 51.6% 51.0% 47.3%
Operating expenses to AMA (5) 3.2% 3.9% 3.1% 3.3%
Gross writedowns $ 75 $ 66 $ 145 $ 169
Gross recoveries 5 10 64 23
9
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
December 31, December 31,
1998 1997
------------ ------------
<S> <C> <C>
Credit Quality:
- ---------------
Ratio of earning loans delinquent 60 days or more
to receivables 1.6% 1.4%
Ratio of total nonearning assets to total lending
assets 1.8% 1.4%
Ratio of net writedowns to average lending assets 0.7% 1.5%
Ratio of allowance for losses of receivables to
receivables 2.3% 2.4%
Ratio of allowance for losses of receivables to
nonearning receivables 130% 185%
</TABLE>
<TABLE>
<CAPTION>
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
---------------------------- ----------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Leverage:
- ---------
Ratio of debt (net of short-term investments)
to total stockholder's equity 5.2x 5.2x 5.2x 5.2x
Ratio of commercial paper and short-term
borrowings to total debt 35% 36% 35% 36%
Other: (dollars in millions)
- ------
Total lending assets and investments 13,430 11,928 13,430 11,928
Total common stockholder's equity 1,562 1,403 1,562 1,403
Average common stockholder's equity 1,539 1,396 1,392 1,373
Funds employed (4) 11,989 10,673 11,989 10,673
Average funds employed (4) 12,379 10,675 11,814 10,081
Managed assets (5) 13,664 11,800 13,664 11,800
Average managed assets (5) 13,598 11,662 13,007 10,687
</TABLE>
(1) Based on 90,080,912 and 89,797,332 weighted average shares of common stock
outstanding for the three and twelve months ended December 31, 1998,
respectively.
(2) Based on 90,085,955 and 90,087,764 weighted average shares of common stock
outstanding for the three and twelve months ended December 31, 1998,
respectively, which includes the effect of 1,291,952 stock options issued to
management of the Company.
(3) Return on average common stockholders' equity is computed as net income less
preferred stock dividends paid, divided by average total common stockholders'
equity.
(4) Funds employed include lending assets and investments, less credit balances
of factoring clients.
(5) Total managed assets include funds employed, plus receivables previously
securitized or sold and currently managed by the Company. At December 31, 1998,
managed assets includes approximately $120 million from the 1997 equipment
securitization in which the Company has not retained any credit risk, $435
million from the 1998 equipment securitization in which the Company has retained
approximately $15 million, $370 million of loans which are fully guaranteed by
the U.S. Government through a Small Business Administration Program, $475
million from the sale of factored accounts receivable and $188 million from a
Factofrance securitization.
10
<PAGE>
LENDING ASSETS AND INVESTMENTS
<TABLE>
<CAPTION>
December 31, September 30, December 31,
BY BUSINESS GROUP 1998 1998 1997
---- ---- ----
(dollars in millions)
<S> <C> <C> <C>
Domestic
Corporate Finance $ 3,784 $ 3,989 $ 3,066
Real Estate Finance 2,230 3,022 2,667
Leasing Services 2,840 2,461 2,314
Small Business Lending 1,013 866 766
Commercial Services 401 807 361
Other 501 442 393
------- ------- -------
Total Domestic $10,769 $11,587 $ 9,567
International 2,661 2,531 2,361
------- ------- -------
Total lending assets and investments $13,430 $14,118 $11,928
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
FEES AND OTHER INCOME
(dollars in millions) For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
------------------------- -------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Factoring commissions $34 $ 33 $124 $104
Income of international
joint ventures 8 9 30 36
Fees and other income:
Fee income and other 32 38 130 111
Net investment gains 21 36 59 69
Securitization income 2 -- 17 26
--- ---- ---- ----
Total fees and other income $55 $ 74 $206 $206
=== ==== ==== ====
Total non-interest income $97 $116 $360 $346
=== ==== ==== ====
</TABLE>
11
