-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Pp2gZSZPOZtVJ/4ZErFPpe7HJ1+H0PJv7AiplbIMQbstkVuf6yafOuf1dYLS/ERm jr17F4pHufq722+ug/4R7A== 0000950131-00-000352.txt : 20000202 0000950131-00-000352.hdr.sgml : 20000202 ACCESSION NUMBER: 0000950131-00-000352 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000120 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000121 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HELLER FINANCIAL INC CENTRAL INDEX KEY: 0000046738 STANDARD INDUSTRIAL CLASSIFICATION: SHORT-TERM BUSINESS CREDIT INSTITUTIONS [6153] IRS NUMBER: 361208070 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-06157 FILM NUMBER: 511276 BUSINESS ADDRESS: STREET 1: 500 W MONROE ST CITY: CHICAGO STATE: IL ZIP: 60661 BUSINESS PHONE: 3124417000 MAIL ADDRESS: STREET 1: 500 W MONROE ST CITY: CHICAGO STATE: IL ZIP: 60661 FORMER COMPANY: FORMER CONFORMED NAME: HELLER WALTER E & CO /NEW/ DATE OF NAME CHANGE: 19850503 8-K 1 FORM 8-K 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 -------- (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) Item 5. Other Events - ------- ------------ 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 EXHIBIT INDEX Exhibit Description Number ----------- - ------ 99 Heller Financial, Inc. - Press Release 3 EX-99 2 PRESS RELEASE Heller Financial Reports Seventh Consecutive Year of Record Earnings, --------------------------------------------------------------------- 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 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 HELLER FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (in millions) ASSETS
December 31, December 31, 1999 1998 ------------- ------------- (unaudited) (audited) Cash and cash equivalents.................... $ 516 $ 529 Receivables.................................. 14,795 11,854 Less: Allowance for losses of receivables.... 316 271 ------- ------- Net receivables......................... 14,479 11,583 Investments.................................. 1,794 1,338 Investments in international joint ventures.. 219 235 Other assets................................. 965 681 ------- ------- 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 ------- ------- Total senior debt........................... 13,832 10,449 Credit balances of factoring clients............. 993 1,441 Other payables and accruals...................... 790 504 ------- ------- Total liabilities........................... 15,615 12,394 Minority interest................................ 11 10 Stockholders' equity Preferred stock................................ 400 400 Common stockholders' equity.................... 1,947 1,562 ------- ------- Total stockholders' equity.................. 2,347 1,962 ------- ------- Total liabilities and stockholders' equity.. $17,973 $14,366 ======= =======
6 HELLER FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (in millions, except per share information)
Three Months Ended Twelve Months Ended December 31, December 31, ------------------------------------ ----------------------------------- 1999 1998 1999 1998 ------------------ ---------------- ---------------- ----------------- (unaudited) (unaudited) (unaudited) (audited) 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 ===== ===== ====== ======
7 HELLER FINANCIAL, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA (unaudited)
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): 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
8
December 31, December 31, 1999 1998 ------------ ------------ 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%
Three Months Ended Twelve Months Ended December 31, December 31, ---------------------- ---------------------- 1999 1998 1999 1998 ---- ---- ----- ----- 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
(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 LENDING ASSETS AND INVESTMENTS
December 31, September 30, December 31, BY BUSINESS SEGMENT 1999 1999 1998 ----------------- ----------------- ----------------- (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 ------- ------- ------- Total Domestic Commercial Finance Segment $13,792 $13,705 $10,769 International Factoring and Asset Based Finance Segment 3,040 2,762 2,661 ------- ------- ------- Total lending assets and investments $16,832 $16,467 $13,430 ======= ======= =======
* On November 30, 1999, we sold the assets of our Commercial Services unit to The CIT Group.
FEES AND OTHER INCOME (dollars in millions) Three Months Ended Twelve Months Ended December 31, December 31, ---------------------------------- ---------------------------------- 1999 1998 1999 1998 ---------------- ---------------- ---------------- ---------------- 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 ===== ===== ===== =====
** Includes gains on securitizations, syndications and loans sales, net investment gains, equipment residual gains and participation income.
SUMMARY OF NET INCOME EXCLUDING COMMERCIAL SERVICES GAIN (dollars in millions) Three Months Ended Twelve Months Ended December 31, 1999 December 31, 1999 ------------------------- ------------------------- 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 ==== ====
10 -----END PRIVACY-ENHANCED MESSAGE-----