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[LETTERHEAD HELLER FINANCIAL]
Heller Financial Reports Strong Earnings Growth
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Third Quarter Net Income to Common up 25% to $65 million
First Nine Months Net Income to Common up 28% to $197 million
Diluted EPS $0.67, up 22% from $0.55
Chicago--(October 19, 2000)--Heller Financial, Inc. (NYSE: HF) today
reported net income of $72 million for the third quarter of 2000, an increase of
22 percent over third quarter 1999. For the nine months ended September 30,
2000, net income was $218 million, an increase of 25 percent over the prior year
period. Earnings growth for the quarter and first nine months was driven by a
stable net interest margin, increased operating revenues, improved operating
efficiency, strong new business volume and continued strong performance in the
credit quality of Heller's portfolio.
Net income applicable to common stock was $65 million for the quarter and
$197 million for the first nine months, increases of 25 percent and 28 percent
over prior year periods, respectively. Diluted earnings per share were $0.67 for
the third quarter and $2.03 for the first nine months, increases of 22 percent
and 21 percent, respectively, over the prior year.
"We are proud to report another solid quarter of results," said Chairman
and Chief Executive Officer Richard J. Almeida. "2000 is on track. We have
made measurable progress toward our strategic and performance objectives. Our
leadership positions in growth markets, coupled with our continued commitment to
maintain our credit standards and operate more efficiently, make us confident
about the future."
Earnings highlights included:
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Operating revenues were $261 million for the quarter and $785 million year-
to-date. Excluding factoring commissions, which fell due to the impact of the
1999 sale of the domestic factoring business, operating revenues grew 17% for
the quarter and 22% for the nine months. Heller's diverse revenue sources
continued to drive the growth in operating revenues. Net interest income
increased 23 percent for the quarter and 28 percent for the first nine months
compared to prior year periods, due to growth in the Company's portfolio of
lending assets. Fees and other income grew 8 percent for the quarter and 14
percent for the first nine months.
Net interest margin was 3.7 percent for the third quarter, consistent with
both the first and second quarters of 2000. Heller's operating revenue margin
was 6.0 percent for the quarter and 6.3 percent for the first nine months.
Total lending assets and investments at $18.2 billion were down modestly
from the second quarter, as originations were offset by the sale of
approximately $700 million of corporate finance, real estate CMBS and equipment
assets during the third quarter. Excluding these sales, lending assets and
investments would have been up 3% over the second quarter. Heller's new business
volume totaled $1.8 billion for the quarter and $5.8 billion year-to-date. New
business was particularly strong in leasing services and healthcare finance.
Credit quality in Heller's portfolio remained strong. Net writedowns
totaled $29 million during the quarter, or 0.7 percent of average lending assets
on an annualized basis, consistent with Heller's target level of 75 basis
points. Heller's nonearning assets were 1.8 percent of total lending assets,
favorable to Heller's target range of two to four percent. The Company's loan
loss reserve totals 2.2 percent of receivables.
Operating expenses totaled $116 million for the third quarter, consistent
with the second quarter of 2000 and an increase of 5 percent over the third
quarter of 1999. Year-to-date operating expenses totaled $349 million, an
increase of 7 percent over the prior year period. Heller's efficiency ratio was
44 percent for the quarter and for the nine months, down from 46 percent for the
third quarter of 1999 and 47 percent for the first nine months of 1999.
According to Mr. Almeida, "This was a very solid quarter. Heller is well
positioned, and we are optimistic about the prospects for our business and
financial performance as we conclude 2000."
Heller Financial, Inc. is a worldwide commercial finance company providing
a broad range of financing solutions to middle-market and small business
clients. With over $19 billion in total assets, Heller offers equipment
financing and leasing, sales finance programs, collateral and cash flow-based
financing, financing for healthcare companies and financing for commercial real
estate. The company also offers trade finance, factoring, asset-based lending,
leasing and vendor finance products and programs to clients in Europe, Asia and
Latin America. Heller's common stock is listed as "HF" on the New York and
Chicago Stock Exchanges. Heller can be found on the World Wide Web at
http://www.hellerfinancial.com.
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The statements made by the Company in this news release may include certain
forward-looking statements that reflect the Company's current expectations
regarding its future growth, results and performance. These forward-looking
statements are subject to a variety of risks and uncertainties, which could
cause the Company's future growth, results and performance to differ materially
from those expressed in, or implied by, these statements. Information concerning
these risks and uncertainties is contained in the quarterly and annual reports
that the Company files with the Securities and Exchange Commission.
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HELLER FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in millions)
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
---- ----
(unaudited) (audited)
<S> <C> <C>
Cash and cash equivalents................................... $ 498 $ 516
Receivables................................................. 15,564 14,795
Less: Allowance for losses of receivables.................. 341 316
------- -------
Net receivables........................................ 15,223 14,479
Investments................................................. 1,555 1,286
Operating leases............................................ 826 508
Investments in international joint ventures................. 198 219
Other assets................................................ 1,031 965
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Total assets........................................... $19,331 $17,973
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Senior debt
Commercial paper and short-term borrowings................ $ 4,424 $ 5,202
Notes and debentures...................................... 10,481 8,630
------- -------
Total senior debt...................................... 14,905 13,832
Credit balances of factoring clients........................ 836 993
Other payables and accruals................................. 1,055 790
------- -------
Total liabilities...................................... 16,796 15,615
Minority interest........................................... 11 11
Stockholders' equity
Preferred stock........................................... 400 400
Common stockholders' equity............................... 2,124 1,947
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Total stockholders' equity............................. 2,524 2,347
------- -------
Total liabilities and stockholders' equity............. $19,331 $17,973
======= =======
</TABLE>
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HELLER FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(in millions, except per share information)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------ ------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest Income.......................................... $ 429 $ 309 $1,194 $ 846
Interest Expense......................................... 266 176 728 481
----- ----- ------ -----
Net interest income.................................... 163 133 466 365
Fees and other income.................................... 71 66 238 209
Factoring commissions.................................... 17 31 53 89
Income of international joint ventures................... 10 9 28 25
----- ----- ------ -----
Operating revenues..................................... 261 239 785 688
Operating expenses....................................... 116 110 349 326
Provision for losses..................................... 36 37 108 95
Income before income taxes and minority interest....... 109 92 328 267
Income tax provision..................................... 36 33 108 91
Minority interest........................................ 1 - 2 1
----- ----- ------ -----
Net income............................................. $ 72 $ 59 $ 218 $ 175
===== ===== ====== =====
Dividends on preferred stock........................... $ 7 $ 7 $ 21 $ 21
===== ===== ====== =====
Net income applicable to common stock............... $ 65 $ 52 $ 197 $ 154
===== ===== ====== =====
Basic net income applicable to common stock per
share (1)......................................... $0.67 $0.55 $2.04 $1.68
===== ===== ====== =====
Diluted net income applicable to common stock per
share (1)......................................... $0.67 $0.55 $2.03 $1.68
===== ===== ====== =====
</TABLE>
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HELLER FINANCIAL, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(unaudited)
<TABLE>
<CAPTION>
SELECTED DATA AND RATIOS Three Months Ended Nine Months Ended
(dollars in millions) September 30, September 30,
------------ ------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Profitability:
-------------
Net income applicable to common stock
per share (1):
Basic $0.67 $0.55 $2.04 $1.68
Diluted 0.67 0.55 2.03 1.68
Return on average common
stockholders' equity (2) 12.4% 11.6% 13.0% 12.5%
Return on AFE (3) 1.6 1.7 1.7 1.8
Net interest income as a percentage of
AFE (3) 3.7 3.7 3.7 3.8
Non-interest operating revenues as a
percentage of AFE (3) 2.3 3.0 2.6 3.3
Total operating revenues as a
percentage of AFE (3) 6.0 6.7 6.3 7.1
Operating expenses as a percentage of
AFE (3) 2.6 3.1 2.8 3.3
Operating expenses to operating revenues 44% 46% 44% 47%
Operating expenses to AMA (4) 2.5 2.9 2.6 3.0
Net writedowns $ 29 $ 22 $ 78 $ 67
</TABLE>
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<TABLE>
<CAPTION>
September 30, December 31, September 30,
2000 1999 1999
---- ---- ----
<S> <C> <C> <C>
Credit Quality:
--------------
Ratio of earning loans delinquent 60 days or more
to receivables 1.8% 1.5% 1.3%
Ratio of total nonearning assets to total lending
assets 1.8% 1.5% 1.6%
Ratio of year-to-date net writedowns (annualized)
to average lending assets 0.68% 0.74% 0.70%
Ratio of allowance for losses of receivables to
receivables 2.2% 2.1% 2.1%
Ratio of allowance for losses of receivables to
nonearning receivables 130% 155% 143%
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------ ------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Leverage:
---------
Ratio of debt (net of short-term investments) to
total stockholders' equity 5.8x 5.7x 5.8X 5.7x
Ratio of commercial paper and short-term
borrowings to total debt 30% 38% 30% 38%
Other: (dollars in millions)
------
Total lending assets and investments $18,161 $16,467 $18,161 $16,467
Total lending assets 15,582 14,604 15,582 14,604
Average lending assets 15,718 13,706 15,323 12,839
Total common stockholders' equity 2,124 1,861 2,124 1,861
Average common stockholders' equity 2,087 1,775 2,027 1,649
Funds employed (3) 17,325 15,082 17,325 15,082
Average funds employed (3) 17,444 14,100 16,776 13,047
Managed assets (4) 19,031 16,429 19,031 16,429
Average managed assets (4) 18,767 15,285 18,080 14,383
</TABLE>
(1) Based on 96,610,807 basic and 96,979,409 diluted weighted average shares of
common stock outstanding for the quarter ended September 30, 2000 and
96,624,134 basic and 96,806,567 diluted weighted average shares of common
stock outstanding for the nine months ended September 30, 2000. The diluted
weighted average shares as of September 30, 2000, include the effect of 4.0
million stock options issued to management of the Company.
(2) Return on average common stockholders' equity is computed as net income
less preferred stock dividends paid, divided by average total common
stockholders' equity.
(3) Funds employed include lending assets and investments, less credit balances
of factoring clients.
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(4) Managed assets include funds employed plus receivables previously
securitized or sold and currently managed by the Company.
<TABLE>
<CAPTION>
LENDING ASSETS AND INVESTMENTS
September 30, December 31, September 30,
BY BUSINESS SEGMENT 2000 1999 1999
---- ---- ----
(dollars in millions)
<S> <C> <C> <C>
Domestic Commercial Finance Segment
Corporate Finance $ 5,573 $ 4,937 $ 4,871
Leasing Services 4,186 3,428 3,110
Real Estate Finance 2,648 2,626 2,479
Small Business Finance 1,400 1,312 1,165
Healthcare Finance 1,396 971 587
Commercial Services* - - 977
Other 550 518 516
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Total Domestic Commercial Finance Segment $15,753 $13,792 $13,705
International Factoring and Asset Based
Finance Segment 2,408 3,040 2,762
------- ------- -------
Total lending assets and investments $18,161 $16,832 $16,467
======= ======= =======
</TABLE>
* On December 1, 1999, we sold the assets of our Commercial Services unit.
<TABLE>
<CAPTION>
FEES AND OTHER INCOME
(dollars in millions) Three Months Ended Nine Months Ended
September 30, September 30,
------------ ------------
2000 1999 2000 1999
----- ----- ----- -----
<S> <C> <C> <C> <C>
Factoring commissions $ 17 $ 31 $ 53 $ 89
Income of international joint ventures 10 9 28 25
Fees and other income:
Investment and asset sale income** 44 43 167 127
Fee income and other 27 23 71 82
----- ----- ----- -----
Total fees and other income $ 71 $ 66 $ 238 $ 209
----- ----- ----- -----
Total non-interest income $ 98 $ 106 $ 319 $ 323
===== ===== ===== =====
</TABLE>
** Includes gains on securitizations and loans sales, net investment income and
gains, equipment residual gains and participation income.
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