<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, 2000
----------------
(Date of earliest event reported)
HELLER FINANCIAL, INC.
----------------------
(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
1-6157 36-1208070
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(Commission File Number) (IRS Employer Identification Number)
500 West Monroe Street, Chicago, Illinois 60661
- ----------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(312) 441-7000
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(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events
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On January 20, 2000, Heller Financial, Inc. (the "Registrant") issued a press
release announcing (i) its earnings for the year ending December 31, 1999, (ii)
that the Board of Directors has determined that the Annual Meeting of
Shareholders will be held on May 4, 2000, and (iii) that the record date for
purposes of voting at the Annual Meeting of Shareholders will be March 10, 2000.
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, 2000
----------------
HELLER FINANCIAL, INC.
By: /s/ Lauralee E. Martin
--------------------------
Lauralee E. Martin
Title: Executive Vice President and
Chief Financial Officer
2
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EXHIBIT INDEX
Exhibit Description
Number -----------
- ------
99 Heller Financial, Inc. - Press Release
3
<PAGE>
Heller Financial Reports Seventh Consecutive Year of Record Earnings,
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Record New Business Volume and Credit Quality Drive Performance
---------------------------------------------------------------
Chicago--(January 20, 2000)--Heller Financial, Inc. (NYSE: HF) today reported
record net income of $110 million for the fourth quarter of 1999, an increase of
134 percent over fourth quarter 1998. For the twelve months ended December 31,
1999, net income was a record $284 million, an increase of 47 percent over the
prior year. Net income applicable to common stock was $103 million for the
quarter and $256 million for the year, increases over the prior year periods of
151 percent and 49 percent, respectively. Pro forma diluted earnings per share
were $1.06 for the fourth quarter and $2.74 for the year, 130 percent and 43
percent increases, respectively.
Net income includes a one-time after-tax gain of $48 million relating to
the fourth quarter sale of the assets of our Commercial Services unit. Excluding
the effect of this transaction, net income was $62 million for the quarter and
$236 million for the year, increases of 32 percent and 22 percent, respectively,
over the prior year periods. Net income applicable to common stock, adjusted to
reflect the impact of the gain, was $55 million for the three months and $208
million for the year, increases of 34 percent and 21 percent, respectively, over
the prior year periods. Excluding the gain from the sale of the assets of the
Commercial Services unit, pro forma diluted earnings per share were $0.56 for
the fourth quarter and $2.23 for the year, 22 percent and 17 percent increases,
respectively. The earnings growth for the fourth quarter and the year was driven
by record new business volume, improvement in operating margins and continued
strong performance in the credit quality of Heller's portfolio.
"We are proud to announce our seventh consecutive year of record earnings,"
said Chairman and Chief Executive Officer Richard J. Almeida. "These results
highlight the power of our business franchise and the tremendous efforts of all
of our employees. Additionally, our leadership positions in growth markets
provide the momentum for our continued success."
Highlights included:
New business volume totaled $2.7 billion for the quarter and a record $8.1
billion for the year. Heller's new business volume grew 80 percent for the
quarter and 12 percent for the year, with particular strength in Heller
Corporate Finance, Heller Real Estate Finance, and Heller Leasing Services. As
of December 31, 1999, Heller's total lending assets and investments grew to
$16.8 billion, a 25 percent increase over December 31, 1998.
Operating revenues for the quarter were $265 million, a 28 percent increase
over fourth quarter 1998. Operating revenues were $952 million for the year, up
22 percent over 1998. The strong growth in operating revenues was driven by
Heller's multiple revenue sources, as both interest and non-interest income
increased. Net interest income increased 35 percent for the quarter and 21
percent for the year compared to the prior year period, due to improvement in
net interest margins and growth in the Company's portfolio of lending assets.
Non-interest income increased 21 percent for the quarter and 22 percent for the
year, driven by recurring fee income and net investment gains.
4
<PAGE>
Heller's operating margin improved to 6.8 percent for the quarter and 7.0
percent for the full year, up from 6.6 percent for the respective prior year
periods. Net interest margin improved to 3.8 percent for the fourth quarter and
for the year, increases over the prior year periods from 3.5 percent and 3.6
percent, respectively.
Credit quality in Heller's portfolio remained strong. Net writedowns
totaled $31 million during the quarter, or 0.8 percent of average lending
assets. Full year net writedowns totaled $98 million, or 0.7 percent of average
lending assets, consistent with Heller's target level. Heller's nonearning
assets were 1.5 percent of total lending assets, down from 1.8 percent at
December 31, 1998, and favorable to Heller's target range of two to four
percent. The Company's loan loss reserve at the end of the year was 2.1 percent
of receivables, and remains in excess of 100 percent of nonearning receivables.
Operating expenses totaled $131 million for the fourth quarter and $456
million for the full year, increases of 20 percent and 14 percent respectively.
Excluding the effect of acquisitions and divestitures, operating expenses
increased 8 percent for the quarter and 1 percent for the year, as compared with
prior year periods. Heller's efficiency ratio was 49 percent for the fourth
quarter and 48 percent for the year, in line with the Company's 1999 goal of 48
percent.
The Board of Directors of the Company has determined that the Annual
Meeting of the Shareholders of the Company will be held on May 4, 2000. The
record date for purposes of voting at the meeting will be March 10, 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 nearly $18 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,
Australia 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.
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.
5
<PAGE>
HELLER FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in millions)
ASSETS
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
------------- -------------
(unaudited) (audited)
<S> <C> <C>
Cash and cash equivalents.................... $ 516 $ 529
Receivables.................................. 14,795 11,854
Less: Allowance for losses of receivables.... 316 271
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Net receivables......................... 14,479 11,583
Investments.................................. 1,794 1,338
Investments in international joint ventures.. 219 235
Other assets................................. 965 681
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Total assets............................ $17,973 $14,366
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Senior debt
Commercial paper and short-term borrowings...... $ 5,202 $ 3,681
Notes and debentures............................ 8,630 6,768
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Total senior debt........................... 13,832 10,449
Credit balances of factoring clients............. 993 1,441
Other payables and accruals...................... 790 504
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Total liabilities........................... 15,615 12,394
Minority interest................................ 11 10
Stockholders' equity
Preferred stock................................ 400 400
Common stockholders' equity.................... 1,947 1,562
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Total stockholders' equity.................. 2,347 1,962
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Total liabilities and stockholders' equity.. $17,973 $14,366
======= =======
</TABLE>
6
<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,
------------------------------------ -----------------------------------
1999 1998 1999 1998
------------------ ---------------- ---------------- -----------------
(unaudited) (unaudited) (unaudited) (audited)
<S> <C> <C> <C> <C>
Interest Income.................................... $ 352 $ 271 $1,197 $1,047
Interest Expense................................... 204 161 685 624
----- ----- ------ ------
Net interest income.............................. 148 110 512 423
Fees and other income.............................. 77 55 286 206
Factoring commissions.............................. 30 34 119 124
Income of international joint ventures............. 10 8 35 30
----- ----- ------ ------
Operating revenues............................... 265 207 952 783
Operating expenses................................. 131 109 456 399
Provision for losses............................... 41 18 136 77
Gain on sale of Commercial Services assets......... 79 - 79 -
Restructuring charge............................... - 17 - 17
----- ----- ------ ------
Income before income taxes and minority interest
interest........................................ 172 63 439 290
Income tax provision............................... 62 15 154 93
Minority interest.................................. - 1 1 4
----- ----- ------ ------
Net income....................................... $ 110 $ 47 $ 284 $ 193
===== ===== ====== ======
Dividends on preferred stock..................... $ 7 $ 6 $ 28 $ 21
===== ===== ====== ======
Net income applicable to common stock.......... $ 103 $ 41 $ 256 $ 172
===== ===== ====== ======
Basic net income applicable to common stock per
share (1)...................................... $1.06 $0.46 $ 2.75 $ 2.23
===== ===== ====== ======
Diluted net income applicable to common stock
per share (1).................................. $1.06 $0.46 $ 2.74 $ 2.23
===== ===== ====== ======
Pro forma basic net income applicable to common
stock per share (1)............................ $1.06 $0.46 $ 2.75 $ 1.92
===== ===== ====== ======
Pro forma diluted net income applicable to
common stock per share (1)..................... $1.06 $0.46 $ 2.74 $ 1.91
===== ===== ====== ======
Pro forma diluted net income applicable to
common stock per share, net of gain on sale of
Commercial Services assets (1) (2)............. $0.56 $0.46 $ 2.23 $ 1.91
===== ===== ====== ======
</TABLE>
7
<PAGE>
HELLER FINANCIAL, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(unaudited)
<TABLE>
<CAPTION>
SELECTED DATA AND RATIOS Three Months Ended Twelve Months Ended
(dollars in millions) December 31, December 31,
---------------------------- ----------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
Profitability:
- --------------
Net income applicable to common stock per
share (actual) (1):
<S> <C> <C> <C> <C>
Basic $1.06 $0.46 $2.75 $2.23
Diluted 1.06 0.46 2.74 2.23
Pro forma net income applicable to common
stock per share (1):
Basic 1.06 0.46 2.75 1.92
Diluted 1.06 0.46 2.74 1.91
Pro forma net income applicable to common
stock per share, net of HCS gain (1) (2):
Basic and Diluted 0.56 0.46 2.23 1.91
Return on average common stockholders'
equity (3) 21.5% 10.6% 14.9% 12.4%
Return on average common stockholders'
equity, net of HCS gain (2) (3) 11.5% 10.6% 12.1% 12.4%
Return on AFE (4) 2.8 1.5 2.1 1.6
Return on AFE, net of HCS gain 1.6 1.5 1.7 1.6
Net interest income as a percentage of AFE
(4) 3.8 3.5 3.8 3.6
Non-interest operating revenues as a
percentage of AFE (4) 3.0 3.1 3.2 3.0
Total operating revenues as a percentage of
AFE (4) 6.8 6.6 7.0 6.6
Operating expenses as a percentage of
AFE (4) 3.4 3.5 3.3 3.4
Operating expenses to operating revenues 49.4 52.7 47.9 51.0
Operating expenses to AMA (5) 3.1 3.2 3.0 3.1
Gross writedowns $ 36 $ 75 $ 116 $ 145
Gross recoveries $ 5 $ 5 $ 18 $ 64
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
------------ ------------
<S> <C> <C>
Credit Quality:
- ---------------
Ratio of earning loans delinquent 60 days or more
to receivables 1.5% 1.6%
Ratio of total nonearning assets to total lending
assets 1.5% 1.8%
Ratio of net writedowns to average lending assets
0.7% 0.7%
Ratio of allowance for losses of receivables to
receivables 2.1% 2.3%
Ratio of allowance for losses of receivables to
nonearning receivables 155% 130%
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------- ----------------------
1999 1998 1999 1998
---- ---- ----- -----
<S> <C> <C> <C> <C>
Leverage:
- ---------
Ratio of debt (net of short-term investments)
to total stockholders' equity 5.8x 5.2x 5.8x 5.2x
Ratio of commercial paper and short-term
borrowings to total debt 38% 35% 38% 35%
Other: (dollars in millions)
- ----------------------------
Total lending assets and investments $16,832 $13,430 $16,832 $13,430
Average lending assets 14,712 12,326 13,235 11,506
Total common stockholders' equity 1,947 1,562 1,947 1,562
Average common stockholders' equity 1,904 1,539 1,715 1,392
Funds employed (4) 15,839 11,989 15,839 11,989
Average funds employed (4) 15,382 12,379 13,636 11,814
Managed assets (5) 17,202 13,664 17,202 13,664
Average managed assets (5) 16,684 13,598 14,963 13,007
</TABLE>
(1) Based on 97,325,000 basic and 97,492,000 diluted weighted average shares of
common stock outstanding for the quarter ended December 31, 1999 and
93,158,000 basic and 93,274,000 diluted weighted average shares of common
stock outstanding for the twelve months ended December 31, 1999. The diluted
weighted average shares as of December 31, 1999, include the effect of 3.2
million stock options issued to management of the Company.
(2) On November 30, 1999, we sold the assets of our Commercial Services unit to
the CIT Group. This transaction resulted in an after-tax gain of $48
million.
(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) Managed assets include funds employed plus receivables previously
securitized or sold and currently managed by the Company.
9
<PAGE>
LENDING ASSETS AND INVESTMENTS
<TABLE>
<CAPTION>
December 31, September 30, December 31,
BY BUSINESS SEGMENT 1999 1999 1998
----------------- ----------------- -----------------
<S> <C> <C> <C>
(dollars in millions)
Domestic Commercial Finance Segment
Corporate Finance $ 4,937 $ 4,748 $ 3,722
Leasing Services 3,428 3,110 2,840
Real Estate Finance 2,626 2,337 1,889
Small Business Finance 1,312 1,165 1,013
Commercial Services* - 977 401
Healthcare Finance 971 852 217
Other 518 516 687
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Total Domestic Commercial Finance Segment $13,792 $13,705 $10,769
International Factoring and Asset Based
Finance Segment 3,040 2,762 2,661
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Total lending assets and investments $16,832 $16,467 $13,430
======= ======= =======
</TABLE>
* On November 30, 1999, we sold the assets of our Commercial Services unit to
The CIT Group.
<TABLE>
<CAPTION>
FEES AND OTHER INCOME
(dollars in millions) Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------------------- ----------------------------------
1999 1998 1999 1998
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Factoring commissions $ 30 $ 34 $ 119 $ 124
Income of international joint ventures 10 8 35 30
Fees and other income:
Fee income and other 39 24 131 95
Investment and asset sale income** 38 31 155 111
----- ----- ----- -----
Total fees and other income $ 77 $ 55 $ 286 $ 206
----- ----- ----- -----
Total non-interest income $ 117 $ 97 $ 440 $ 360
===== ===== ===== =====
</TABLE>
** Includes gains on securitizations, syndications and loans sales, net
investment gains, equipment residual gains and participation income.
<TABLE>
<CAPTION>
SUMMARY OF NET INCOME EXCLUDING COMMERCIAL SERVICES GAIN
(dollars in millions)
Three Months Ended Twelve Months Ended
December 31, 1999 December 31, 1999
------------------------- -------------------------
<S> <C> <C>
Net income $110 $284
Pre-tax gain on sale of Commercial Services assets (79)
Income tax provision on Commercial Services gain 31 31
---- ----
Net income excluding gain on sale of Commercial
Services assets 62 236
Dividends on preferred stock (7) (28)
---- ----
Net income applicable to common stock excluding
gain on sale of Commercial Services assets $ 55 $208
==== ====
</TABLE>
10
