-----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, RKt4bbniIDuAHqoTnv3J455rHZhb1iBeyxIzWvtwMMQZsCK3ReNI6tnP4tvacazm 1Wdf0xBdFhHlka8N22wKUg== 0000950131-98-005616.txt : 19981023 0000950131-98-005616.hdr.sgml : 19981023 ACCESSION NUMBER: 0000950131-98-005616 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981020 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981022 SROS: NYSE 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: 98728869 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: October 20, 1998 ---------------- (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 October 20, 1998, Heller Financial, Inc. (the "Registrant") issued a press release announcing its earnings for the quarter ending September 30, 1998. 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: October 21, 1998 ---------------- HELLER FINANCIAL, INC. By: /s/ Lauralee E. Martin ----------------------------------- Lauralee E. Martin Title: Executive Vice President and Chief Financial Officer 2 EXHIBIT INDEX
Exhibit Sequentially Number Numbered Pages - ------ -------------- 99 Heller Financial, Inc. - Press Release
3 EX-99 2 PRESS RELEASE DATED 10/20/1998 Heller Financial Reports 18 Percent Increase in 1998 Third Quarter Net Income On Continued Strong New Business Volume and Excellent Credit Quality (Chicago, IL, October 20, 1998) -- Heller Financial, Inc. (NYSE: HF) today reported net income of $47 million for the third quarter of 1998, an increase of 18 percent over third quarter 1997. For the nine months ended September 30, 1998, Heller's net income was a record $146 million, an increase of 19 percent over the prior year period. The earnings growth for the third quarter and first nine months of the year was driven by continued strong new business volume and continued excellent performance in the credit quality of the Company's portfolio. Net income applicable to common stock was $42 million for the quarter and $131 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 $.47 for the quarter and $1.45 for the nine months, 18 percent and 16 percent increases over the prior year periods. Heller's new business volume remained strong, totaling $2.0 billion for the third quarter and a record $5.7 billion year to date, increases of 35 percent and 42 percent respectively. New business growth was strongest in Corporate Finance, Real Estate, Small Business Lending, and Heller's vendor leasing business. As of September 30, Heller's total lending assets and investments had grown 18 percent since the end of 1997 to $14.1 billion. Factoring volume increased 20 percent for the quarter over the prior year period, due to the strong performance of Factofrance, whose factoring volume increased 39 percent compared to the third quarter of 1997. Year to date, Heller's U.S. factoring volume increased ten percent over the prior year period. Including the impact of the consolidation of Factofrance for nine months in 1998 vs. six months in 1997, factoring volume was up 47 percent. Operating revenues for the third quarter were $196 million, up two percent from the prior year. Year to date, operating revenues were $576 million, an eight percent increase over the same period in 1997. Growth in operating revenues was driven primarily by increases in net interest income, fees and other income, and factoring commissions. Net interest income for the third quarter increased five percent over the third quarter of 1997, and increased three percent year to date over the prior year period, largely as a result of growth in Heller's lending assets. Credit quality of Heller's portfolio remained excellent across all lines of business. Net writedowns for the first nine months of 1998 totaled only $11 million or 0.1 percent of average lending assets, compared to $90 million or 1.3 percent for the same period in 1997. During the quarter, Heller recognized recoveries totaling $33 million, $20 million of which related to a pre-1990 account, resulting in net recoveries of $5 million for the third quarter, compared to net write-offs of $41 million for the third quarter of 1997. During the quarter, Heller increased its loan loss reserves due to growth in its receivables, and the Company believes that its reserves are adequate to address any impact related to a possible securitization of its Real Estate CMBS portfolio. Heller's nonearning assets remained at 1.3 percent of total lending assets, the lowest level in ten years. The Company's loan loss reserve was 2.4 percent of receivables and 199 percent of nonearning receivables. Operating expenses for the third quarter increased only seven percent over the third quarter of 1997. Year to date, excluding the impact of the Factofrance consolidation, operating expenses were up 11 percent over the prior year period. These increases are primarily due to investment in lower-risk businesses, information technology expenses including year 2000 compliance, and investment in Heller's national brand building marketing campaign. "I'm delighted with Heller's outstanding performance during the third quarter and year to date," said Chairman and Chief Executive Officer Richard J. Almeida. "We remain focused on maintaining our disciplined credit standards while providing high-value financing to our clients, and we are committed to delivering strong earnings growth and improving returns to our shareholders." Heller Financial, Inc., a worldwide commercial financial services organization, is listed as "HF" on the New York and Chicago Stock Exchanges. Heller provides U.S.-based clients with equipment financing and leasing, factoring and working capital loans, asset based financing, cash flow financing, real estate financing, small business lending, and project financing. The Company also operates through joint ventures and subsidiaries located in 20 countries in Europe, Asia/Pacific, and Latin America. These companies specialize in factoring, asset based financing, acquisition financing, leasing, vendor financing, and trade finance. On May 1, 1998, Heller successfully completed an initial public offering of 38.5 million shares of Class A Common Stock, representing approximately 42 percent of the Company's shares. HELLER FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (in millions)
ASSETS September 30, December 31, 1998 1997 ------------- ------------ (unaudited) Cash and cash equivalents ........................... $ 486 $ 821 Receivables ......................................... 12,789 10,722 Less: Allowance for losses of receivables ........... 312 261 ------- ------- Net receivables ............................. 12,477 10,461 Investments ......................................... 1,096 994 Investments in international joint ventures ......... 228 198 Other assets ........................................ 485 387 ------- ------- Total assets ................................ $14,772 $12,861 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Senior debt Commercial paper and short-term borrowings ...... $ 3,847 $ 3,432 Notes and debentures ............................ 7,192 6,004 ------- ------- Total senior debt ........................... 11,039 9,436 Credit balances of factoring clients ................ 1,383 1,255 Other payables and accruals ......................... 551 405 ------- ------- Total liabilities ........................... 12,973 11,096 Minority interest ................................... 8 87 Stockholders' equity Preferred stock ................................. 275 275 Common stockholders' equity ......................... 1,516 1,403 ------- ------- Total stockholders' equity .................. 1,791 1,678 ------- ------- Total liabilities and stockholders' equity .. $14,772 $12,861 ======= =======
HELLER FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (in millions, except per share information)
Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 1998 1997 1998 1997 ---- ---- ---- ---- (unaudited) (unaudited) Interest income..................................... $ 270 $ 233 $ 776 $ 679 Interest expense.................................... 161 129 463 376 ----- ----- ----- ----- Net interest income............................... 109 104 313 303 Fees and other income............................... 48 53 151 132 Factoring commissions............................... 31 28 90 71 Income of international joint ventures.............. 8 8 22 27 ----- ----- ----- ----- Operating revenues................................ 196 193 576 533 Operating expenses.................................. 97 91 290 243 Provision for losses................................ 27 48 59 104 ----- ----- ----- ----- Income before income taxes and minority interest.. 72 54 227 186 Income tax provision................................ 25 12 78 57 Minority interest................................... - 2 3 6 ----- ----- ----- ----- Net income........................................ $ 47 $ 40 $ 146 $ 123 ===== ===== ===== ===== Dividends on preferred stock...................... $ 5 $ 4 $ 15 $ 10 ===== ===== ===== ===== Net income applicable to common stock............. $ 42 $ 36 $ 131 $ 113 ===== ===== ===== ===== Basic and diluted net income applicable to common stock per share...................... $ .47 $ .71 $1.80 $2.21 ===== ===== ===== ===== Pro forma basic net income applicable to common stock per share (1)....... $ .47 $ .40 $1.46 $1.26 ===== ===== ===== ===== Pro forma diluted net income applicable to common stock per share (2)....... $ .47 $ .40 $1.45 $1.25 ===== ===== ===== =====
(1) Based on 89,743,781 and 89,701,766 weighted average shares of common stock outstanding for the three and nine months ended September 30, 1998, respectively. (2) Based on 90,070,775 and 90,088,373 weighted average shares of common stock outstanding for the three and nine months ended September 30, 1998, respectively, which include the effect of 1,235,750 stock options issued to management of the Company. HELLER FINANCIAL, INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA (unaudited)
SELECTED DATA AND RATIOS For the Three Months For the Nine Months (dollars in millions) Ended September 30, Ended September 30, -------------------- ------------------- 1998 1997 1998 1997 Profitability: - -------------- Pro forma net income applicable to common stock per share: Basic (1) $0.47 $0.40 $1.46 $1.26 Diluted (2) $0.47 $0.40 $1.45 $1.25 Net income applicable to common stock per share (actual): Basic $0.47 $0.71 $1.80 $2.21 Diluted $0.47 $0.71 $1.80 $2.21 Return on average common stockholder's equity (3) 10.9% 10.4% 12.9% 11.1% Return on AFE (4) 1.5% 1.5% 1.7% 1.7% Net interest income as a percentage of AFE (4) 3.5% 4.1% 3.6% 4.1% Non-interest operating revenues as a percentage of AFE (4) 2.9% 3.4% 3.0% 3.1% Total operating revenues as a percentage of AFE (4) 6.4% 7.5% 6.6% 7.2% Operating expenses as a percentage of AFE (4) 3.1% 3.5% 3.3% 3.3% Operating expenses to operating revenues 49.5% 47.2% 50.3% 45.6% Operating expenses to AMA (5) 2.9% 3.3% 3.0% 3.1% Gross writedowns $ 28 $ 44 $ 70 $ 103 Gross recoveries 33 3 59 13
September 30, December 31, September 30, 1998 1997 1997 ---- ---- ---- Credit Quality: - --------------- Ratio of earning loans delinquent 60 days or more to receivables 1.5% 1.4% 1.7% Ratio of total nonearning assets to total lending assets 1.3% 1.4% 2.3% Ratio of net writedowns to average lending assets (annualized) 0.1% 1.5% 1.3% Ratio of allowance for losses of receivables to receivables 2.4% 2.4% 2.5% Ratio of allowance for losses of receivables to nonearning receivables 199% 185% 122%
September 30, December 31, September 30, 1998 1997 1997 ---- ---- ---- Leverage: - --------- Ratio of debt (net of short-term investments) to total stockholder's equity 6.0x 5.2x 5.1x Ratio of commercial paper and short-term borrowings to total debt 35% 36% 46% Other: (dollars in millions) - ------ Total lending assets and investments $14,118 $11,928 $11,501 Total common stockholder's equity 1,516 1,403 1,389 Funds employed (4) 12,735 10,673 10,381 Average funds employed (4) 11,623 10,081 9,883 Managed assets (5) 13,594 11,800 11,092 Average managed assets (5) 12,739 10,687 10,457
(1) Based on 89,743,781 and 89,701,766 weighted average shares of common stock outstanding for the three and nine months ended September 30, 1998, respectively. (2) Based on 90,070,775 and 90,088,373 weighted average shares of common stock outstanding for the three and nine months ended September 30, 1998, respectively, which includes the effect of 1,235,750 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 September 30, 1998, managed assets includes approximately $140 million from the 1997 equipment securitization in which the Company has not retained any credit risk, $390 million of loans which are fully guaranteed by the U.S. Government through a Small Business Administration Program and $237 million from the sale of factored accounts receivable. LENDING ASSETS AND INVESTMENTS
September 30, June 30, December 31, September 30, BY BUSINESS GROUP 1998 1998 1997 1997 (dollars in millions) ---- ---- ---- ---- Asset Based Finance Equipment Finance and Leasing $ 1,459 $ 1,453 $ 1,316 $ 1,187 Sales Finance 1,324 1,366 1,228 1,075 Business Credit 1,027 1,063 1,025 1,080 Small Business Lending 866 760 766 677 Current Asset Management 877 510 391 965 ----------- ----------- ----------- ----------- Total Asset Based $ 5,553 $ 5,152 $ 4,726 $ 4,984 ----------- ----------- ----------- ----------- Corporate Finance $ 2,889 $ 2,625 $ 2,010 $ 2,060 Real Estate Finance 2,565 1,893 2,093 1,573 International Group 2,532 2,437 2,361 2,009 Project Finance 128 151 144 150 Pre-1990 Portfolio 295 398 492 663 Other 156 124 102 62 ----------- ----------- ----------- ----------- Total lending assets and investments $14,118 $12,780 $11,928 $11,501 =========== =========== =========== ===========
FEES AND OTHER INCOME (dollars in millions) For the Three Months For the Nine Months Ended September 30, Ended September 30, ------------------- ------------------- 1998 1997 1998 1997 ---- ---- ---- ---- Factoring commissions $ 31 $ 28 $ 90 $ 71 Income of international joint ventures 8 8 22 27 Fees and other income: Fee income and other 33 25 98 73 Net investment gains 15 26 38 33 Securitization income - 2 15 26 ----------- ----------- ----------- ----------- Total fees and other income $ 48 $ 53 $ 151 $ 132 =========== =========== =========== =========== Total non-interest income $ 87 $ 89 $ 263 $ 230 =========== =========== =========== ===========
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