<PAGE>1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended July 3, 1999 or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 2-20910
TRUSERV CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 36-2099896
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8600 West Bryn Mawr Avenue
Chicago, Illinois 60631-3505
(Address of principal executive offices) (Zip Code)
(773) 695-5000
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
The number of shares outstanding of each of the issuer's classes of common
stock, as of July 31, 1999.
Class A Common Stock, $100 Par Value. 490,978 Shares.
Class B Common Stock, $100 Par Value. 1,841,470 Shares.
<PAGE>2
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
TRUSERV CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
<TABLE>
<CAPTION>
July 3, December 31,
1999 1998
---------- -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,702 $ 1,650
Accounts and notes receivable, net 693,112 537,811
Inventories 573,961 595,118
Other current assets 24,437 36,047
---------- -------------
Total current assets 1,293,212 1,170,626
Properties less
accumulated depreciation 258,569 255,405
Goodwill, net 116,103 117,468
Other assets 59,134 57,265
---------- ------------
TOTAL ASSETS $ 1,727,018 $ 1,600,764
=========== ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>3
TRUSERV CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share data)
<TABLE>
<CAPTION>
July 3, December 31,
1999 1998
----------- -------------
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND CAPITALIZATION
Current liabilities:
Accounts payable $ 591,404 $ 492,729
Accrued expenses 84,252 73,092
Short-term borrowings 310,986 258,147
Current maturities of notes,long-term
debt and capital lease obligations 87,192 90,618
Patronage dividends payable in cash 560 14,507
----------- -------------
Total current liabilities 1,074,394 929,093
Long-term debt and obligations under
capital leases 313,113 316,959
Capitalization:
Promissory (subordinated) and installment notes 124,608 124,422
Class A common stock, net of subscriptions
receivable; authorized 750,000 shares;
issued and subscribed 537,660 and 557,700
shares (net of stock subscriptions receivable
of $4,349,000 and $5,890,000) 49,417 49,880
Class B nonvoting common stock and paid-in capital;
authorized 4,000,000 shares; issued and fully-paid,
1,853,974 and 1,748,326 shares; issuable as
partial payment of patronage dividends 195,118
shares as of December 31, 1998 186,696 195,643
Deferred patronage (14,438) (14,438)
Retained earnings (deficit) (5,616) 579
Accumulated other comprehensive income (1,156) (1,374)
------------- -------------
Total capitalization 339,511 354,712
------------- -------------
TOTAL LIABILITIES AND CAPITALIZATION $ 1,727,018 $ 1,600,764
============= =============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>4
TRUSERV CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THIRTEEN FOR THE TWENTY-SIX
WEEKS ENDED WEEKS ENDED
----------------------- ------------------------
July 3, July 4, July 3, July 4,
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $1,264,108 $1,155,449 $2,335,000 $2,185,654
Cost and expenses:
Cost of revenues 1,182,417 1,055,302 2,199,077 2,005,028
Warehouse, general
and administrative 50,750 68,231 102,620 132,340
Interest paid to Members 3,282 3,766 6,753 7,656
Other interest expense 11,598 9,492 22,338 17,913
Gain on sale of properties (5,813) -- (5,848) --
Other (income) loss, net 38 (385) (491) (225)
Income tax expense 1,592 439 1,679 320
---------- ---------- ---------- ----------
1,243,864 1,136,845 2,326,128 2,163,032
---------- ---------- ---------- ----------
Net margin before merger
integration costs and
cumulative effect of a
change in accounting
principle 20,244 18,604 8,872 22,622
Merger integration costs 2,059 2,195 8,583 4,042
---------- ---------- ---------- ----------
Net margin before cumulative
effect of a change in
accounting principle 18,185 16,409 289 18,580
Cumulative effect on prior
years of a change in
accounting principle -- -- 6,484 --
---------- ---------- ---------- ----------
Net margin (loss) $ 18,185 $ 16,409 $ (6,195) $ 18,580
========== ========== ========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>5
TRUSERV CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE TWENTY-SIX WEEKS ENDED
------------------------------
July 3, July 4,
1999 1998
------------- ------------
<S> <C> <C>
Operating activities:
Net margin (loss) $ (6,195) $ 18,580
Adjustments to reconcile net margin (loss)
to cash and cash equivalents used for
operating activities:
Statement of operations components not
affecting cash and cash equivalents 20,425 16,510
Net change in working capital components (20,946) (188,411)
------------- -------------
Net cash and cash equivalents used for
operating activities (6,716) (153,321)
------------- -------------
Investing activities:
Additions to properties owned (33,748) (31,090)
Proceeds from sale of properties owned 16,571 --
Changes in other assets (3,331) (6,309)
------------- -------------
Net cash and cash equivalents used for
investing activities (20,508) (37,399)
------------- -------------
Financing activities:
Proceeds from short-term borrowings 52,839 158,310
Proceeds from long-term borrowings 336 52,616
Payment of annual patronage dividend (13,947) (12,142)
Payment of notes, long-term debt, lease
obligations and common stock (11,952) (8,132)
------------- -------------
Net cash and cash equivalents provided by
financing activities 27,276 190,652
------------- -------------
Net increase (decrease) in cash and
cash equivalents 52 (68)
Cash and cash equivalents at beginning of period 1,650 2,224
------------- -------------
Cash and cash equivalents at end of period $ 1,702 $ 2,156
============= =============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>6
TRUSERV CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BUSINESS COMBINATION
On July 1, 1997, pursuant to an Agreement and Plan of Merger dated
December 9, 1996 between Cotter & Company ("Cotter"), a Delaware corporation
and Servistar Coast of Coast ("SCC"), SCC merged with and into Cotter, with
Cotter being the surviving corporation (the "Merger"). Cotter was renamed
TruServ Corporation ("TruServ" or the "Company"), effective with the Merger.
Each outstanding share of SCC common stock and SCC Series A stock (excluding
those shares canceled pursuant to Article III of the Merger Agreement) was
converted into the right to receive one fully-paid and nonassessable share of
TruServ Class A common stock, and each two outstanding shares of SCC
preferred stock were converted into the right to receive one fully paid and
non-assessable share of TruServ Class B common stock. A total of 270,500 and
1,170,670 shares of TruServ Class A common stock and Class B common stock,
respectively, were issued in connection with the Merger. Also 231,000
additional shares of TruServ Class A common stock were issued in exchange for
Class B common stock to pre-Merger stockholders of Cotter to satisfy the
Class A common stock ownership requirement of 60 shares per store (up to a
maximum of 5 stores) applicable to such Members as a result of the Merger.
To refinance the existing debt of SCC and pay related fees and expenses, the
Company entered into a revolving loan agreement of up to $300,000,000 in
short-term credit facilities with a group of banks and an additional
$100,000,000 of long-term debt.
The total purchase price of approximately $141,400,000 was allocated to
assets and liabilities of the Company based on the estimated fair value as of
the date of acquisition. The allocation was based on preliminary estimates
which were revised in 1998. The excess of consideration paid over the
estimated fair value of net assets acquired in the amount of $121,706,000 has
been recorded as goodwill and is being amortized on a straight-line basis
over forty years.
In connection with the purchase business combination, an estimated liability
of $38,200,000 was recognized for costs associated with the Merger plan.
During 1998, an adjustment was recorded reducing this liability and goodwill
by $2,500,000. The Merger plan specifies that certain former SCC employment
positions, approximately 1,500 in total, will be eliminated substantially
within one year. As of July 3, 1999, approximately 88% of these employees
have been terminated with the related cost of benefits of approximately
$11,800,000 charged against the liability. The Merger plan specifies the
closure of four redundant former SCC distribution centers substantially
within a one-year period. Distribution centers closing costs include net
occupancy and costs after facilities are vacated. As of July 3, 1999, two
distribution centers have been closed and $2,100,000 relating to distribution
center closing costs has been charged against the liability. As of
July 3, 1999, additional costs of $17,800,000 related to moving and
relocation and the closure of the former SCC headquarters have been charged
against the liability. The remaining liability balance at July 3, 1999 of
$4,000,000 is for costs expected to be incurred by the fourth quarter of 1999
in connection with elimination of the remaining employment positions and
closing the remaining two distribution centers. Merger integration costs of
$8,583,000 and $4,042,000 for the periods ended July 3, 1999 and
July 4, 1998, respectively, consist of one time non-recurring expenses
directly attributable to the Merger, including distribution center closings,
severance pay, information service costs and general and administrative costs.
NOTE 2 - GENERAL
The condensed consolidated balance sheet, statement of operations and
statement of cash flows at and for the period ended July 3, 1999 and the
condensed consolidated statement of operations and statement of cash flows for
the period ended July 4, 1998 are unaudited and, in the opinion of the
management of the Company, include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of financial position,
results of operations and cash flows for the respective interim periods. The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. This financial information should be read
in conjunction with the consolidated financial statements for the year ended
December 31, 1998 included in the Company's 1998 Annual Report on Form 10-K.
<PAGE>7
NOTE 3 - ESTIMATED PATRONAGE DIVIDENDS
Patronage dividends are declared and paid by the Company after the close of each
fiscal year. The 1998 annual patronage dividend was distributed through a
payment of 30% of the total distribution in cash, with the balance being paid
through the issuance of the Company's Class B nonvoting common stock. Such
patronage dividends, consisting of substantially all of the Company's patronage
source income, have been paid since 1949. There is no estimated patronage
dividend for the period ended July 3, 1999 compared to an estimated patronage
dividend of $18,581,000 for the corresponding period in 1998.
NOTE 4 - INVENTORIES
<TABLE>
<CAPTION>
Inventories consisted of: July 3, December 31,
1999 1998
----------- ------------
(UNAUDITED)
(000's Omitted)
<S> <C> <C>
Manufacturing inventories:
Raw materials $ 4,903 $ 4,331
Work-in-process and finished goods 43,337 46,942
</TABLE>
---------- ----------
48,240 51,273
Merchandise inventories 525,721 543,845
--------- ----------
$ 573,961 $ 595,118
========= ==========
NOTE 5 - COMPREHENSIVE INCOME
As of January 1, 1998, the Company adopted Statement of Financial Accounting
Standards (Statement) No. 130, Reporting Comprehensive Income. Statement 130
establishes new rules for the reporting and display of comprehensive income and
its components; however, the adoption of this Statement had no impact on the
Company's net margin or capitalization. Statement 130 requires unrealized gains
or losses on the Company's foreign currency translation adjustments, which
prior to adoption were reported separately in shareholder's equity to be
included in other comprehensive income. The impact of the foreign currency
translation adjustment had no material effect on the comprehensive income of the
Company.
NOTE 6 - SEGMENT INFORMATION
The Company operates as a single reportable segment as the largest Member-owned
wholesaler cooperative of hardware, lumber/building materials and related
merchandise in the United States. Operations outside the United States were
immaterial for the period ended July 3, 1999. The Company's sales to its
Members are divided into three categories, as follows: (1) warehouse shipment
sales (approximately 37% of total sales); (2) direct shipment sales
(approximately 58% of total sales); and (3) relay sales (approximately 5% of
total sales). Warehouse shipment sales are sales of products purchased,
warehoused and resold by the Company upon orders from the Members. Direct
shipment sales are sales of products purchased by the Company but delivered
directly to Members from manufacturers. Relay sales are sales of products
purchased by the Company in response to the requests of several Members for a
product which is (i) included in future promotions, (ii) not normally held in
inventory and (iii) not susceptible to direct shipment. Generally, the Company
will give notice to all Members of its intention to purchase products for relay
shipment and then purchase only so many of such products as the Members order.
When the product shipment arrives at the Company, it is not warehoused; rather,
the Company breaks up the shipment and "relays" the appropriate quantities to
the Members who placed orders.
<PAGE>8
The Company's product offering, comprised of more than 72,000 stockkeeping units
("SKUs"), may be divided into seven classes of merchandise which are set forth,
with their correspondent percentage of total revenue in the following table.
<TABLE>
<CAPTION>
For the Twenty-six Weeks Ended
-----------------------------------
July 3, 1999 July 4, 1998
------------ ------------
<S> <C> <C>
Lumber and Buildings Materials 31.7% 29.5%
Farm and Garden 19.8% 18.7%
Hardware Goods 15.6% 17.3%
Electrical and Plumbing 12.1% 13.0%
Painting and Cleaning 9.7% 10.3%
Appliance and Housewares 7.7% 7.7%
Sporting Goods and Toys 3.4% 3.5%
NOTE 7 - CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE
In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-5, Reporting the Costs of Start-Up Activities, which
requires that costs related to start-up activities be expensed as incurred.
Prior to 1999, the Company capitalized its costs incurred in connection with
opening new distribution centers. The Company adopted the provisions of the
SOP in its financial statements for the period ended July 3, 1999. The effect
of adoption of SOP 98-5 was to record a charge for the cumulative effect of an
accounting change of $6,484,000, to expense costs that had been previously
capitalized prior to 1999.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
TWENTY-SIX WEEKS ENDED JULY 3, 1999 COMPARED TO TWENTY-SIX WEEKS ENDED
JULY 4, 1998
RESULTS OF OPERATIONS:
Revenues for the twenty-six weeks ended July 3, 1999 totaled $2,335,000,000.
This represented an increase of $149,346,000 or 6.8% compared to the comparable
period last year. The increase was due primarily to increases in direct
shipment sales, which increased 15.1% and lumber/building materials sales which
increased 15.6%.
Gross margins decreased by $44,703,000 or 24.7%, and as a percentage of
revenues, decreased to 5.8% from 8.3% for the comparable period last year. The
decrease in gross margin percentage resulted from an increase in direct
shipment sales, which have lower gross margin percentages. In addition to the
shift in sales mix, the gross margin was negatively impacted by approximately
$48,200,000 additional cost of sales expenses compared with the same period in
1998. The negative impact is primarily due to reclassifications of
inventory-related warehouse, general and administrative expenses to cost of
revenues based on actual inventory balances versus estimates. In 1998, the
majority of this transfer was recorded in the fourth quarter.
Warehouse, general and administrative expenses as a percentage of revenues
decreased to 4.4% from 6.1% compared with the prior year. The improvement is
due the reclassifications of inventory-related warehouse, general and
administrative expenses described above.
Interest paid to Members decreased by $903,000 or 11.8% primarily due to a lower
average interest rate and the lower principal balance. Other interest expense
increased $4,425,000 due to higher borrowings compared to the same period last
year and an increase in the Company's borrowing rate. The higher borrowings
were required in part because of the increased cash requirement resulting from
higher accounts receivable balances during the first half of 1999 compared with
the first half of 1998. The increase in the 1999 balances was due to additional
dating terms passed along to Members as well as the increase in direct ship
sales.
<PAGE>9
The cumulative effect on prior years of a change in accounting principle of
$6,484,000 reflects the start-up costs of converting the systems used by SCC
distribution centers prior to the merger to those systems currently used by the
Company. This reduction in net margins is in compliance with SOP 98-5,
Reporting the Costs of Start-up Activities. Merger integration costs for the
twenty-six weeks ended July 3, 1999 were $8,583,000 compared to $4,042,000 for
the comparable period last year.
The combination of decreased gross margins, as well as increased borrowing
costs, merger integration costs and the cumulative effect of a change in
accounting principle resulted in a net loss of $6,195,000 compared to a net
margin of $18,580,000 for the same period last year.
TWENTY-SIX WEEKS ENDED JULY 3, 1999 COMPARED WITH THE YEAR ENDED
DECEMBER 31, 1998
LIQUIDITY AND CAPITAL RESOURCES:
During the second quarter of 1999, inventories decreased by $21,157,000 in
support of seasonal merchandise orders. Accounts and notes receivable increased
by $155,301,000 due to the seasonal payment terms extended to the Company's
Members and an increase in direct shipment sales. Short-term borrowings
increased by $52,839,000, and accounts payable increased by $98,675,000 as a
result of the favorable seasonal terms obtained from vendors which were passed
on to the Company's Members. Accrued expenses increased by $11,160,000, which
resulted primarily from increased accruals due to the timing of payments in the
second quarter of 1999.
At July 3, 1999, net working capital decreased to $218,818,000 from $241,533,000
at December 31, 1998. The current ratio decreased to 1.20 at July 3, 1999
compared to 1.26 at December 31, 1998.
At July 1, 1997, the Company had established a $300,000,000 five-year revolving
credit facility with a group of banks. In addition, on September 30, 1998 the
Company established a $100,000,000 three-hundred-sixty-four day revolving credit
facility. These agreements were amended during March 1999. The borrowings
under these agreements were $282,000,000 and $227,000,000 at July 3, 1999 and
December 31, 1998, respectively.
The Company's capital is primarily derived from Class A common stock and
retained earnings, together with promissory (subordinated) notes and nonvoting
Class B common stock issued in connection with the Company's annual patronage
dividend. The Company believes the funds derived from these capital resources,
as well as operations and the credit facilities noted above, will be sufficient
to satisfy capital needs.
Total capital expenditures, including those made under capital leases, were
$33,748,000 for the twenty-six weeks ended July 3, 1999 compared to $31,090,000
during the comparable period in 1998. These capital expenditures relate to
additional equipment and technological improvements at the regional distribution
centers and at the corporate headquarters.
THIRTEEN WEEKS ENDED JULY 3, 1999 COMPARED TO THIRTEEN WEEKS ENDED JULY 4, 1998
RESULTS OF OPERATIONS:
Revenues for the three months ended July 3, 1999 totaled $1,264,108,000. This
represented an increase of $108,659,000 or 9.4% compared to the comparable
period last year. The increase was due primarily to increases in direct
shipment sales, which increased 19.8%. Lumber/building materials sales
increased 23.7%.
Gross margins decreased by $18,456,000 or 18.4%, and as a percentage of
revenues, decreased to 6.5% from 8.7% for the comparable period last year. The
decrease in gross margin percentage resulted from an increase in direct shipment
sales, which have lower gross margin percentages. In addition to the shift in
sales mix, the gross margin was negatively impacted by cost of sales expenses
compared with the same period in 1998. The negative impact is primarily due to
reclassifications of inventory-related warehouse, general and administrative
expenses to cost of revenues based on actual inventory balances versus
estimates. In 1998, the majority of this transfer was recorded in the fourth
quarter.
<PAGE>10
Warehouse, general and administrative expenses as a percentage of revenues
decreased to 4.0% from 5.9% compared with the prior year. The improvement is
primarily attributable to reclassifications of inventory related warehouse,
general and administrative expenses as described above.
Interest paid to Members decreased by $484,000 or 12.9% primarily due to a lower
average interest rate and the lower principal balance. Other interest expense
increased $2,106,000 due to higher borrowings compared to the same period last
year and an increase in the Company's borrowing rate. The higher borrowings
were required in part because of the increased cash requirement resulting from
higher accounts receivable balances during the first half of 1999 compared with
the first half of 1998. The increase in the 1999 balances was due to additional
dating terms passed along to Members as well as the increase in direct ship
sales.
Merger integration costs for the thirteen weeks ended July 3, 1999 were
$2,059,000 compared to $2,195,000 for the comparable period last year.
The combination of decreased gross margins, as well as increased borrowing costs
and merger integration costs resulted in a net margin of $18,185,000 for the
thirteen week period ending July 3, 1999 compared to a net margin of $16,409,000
for the same period last year.
Year 2000
General
The Company started its Year 2000 Project in late 1996. Portions of the
information systems are not yet "Year 2000 compliant", however, these are
considered to be non-mission critical for the most part. The Company has
established a corporate-wide program to address any problems arising from the
transition to the Year 2000 in both information systems and other "embedded"
systems in all facilities.
State Of Readiness
The Company has evaluated all mission-critical information systems. The repair
and initial testing of these systems has been completed. Integrated end-to-end
testing for mission critical processes has been started on these systems. The
Company's Desktop assessment and remediation is on schedule for most facilities.
The Data Center capabilities have been assessed and remedied including voice and
data communications. Testing of critical Data Center infrastructure is
currently underway. The Company's real properties and physical plants are being
evaluated for "embedded" systems concerns and potential problems are being
addressed on a local level. Key electronic trading partners have been tested
to ensure proper communications into the Year 2000. The Company is on schedule
to complete its Year 2000 initiative during the fourth quarter of 1999.
Costs
The budget for the Year 2000 project is $16,900,000. Actual costs to date are
$14,379,000. The approximate percentage of the Year 2000 costs to the total
Information Services budget is 14%. Funding has been provided through normal
operating and financing activities. The expense for the Year 2000 program is
as follows:
1996 $ 1.0 million
1997 $ 3.2 million
1998 $ 7.9 million
1999 $ 4.6 million (projected)
2000 $ 0.2 million (projected)
Total $ 16.9 million (projected)
<PAGE>11
Risks
A worst case scenario for the Company would involve a breakdown in the
distribution chain to Members. Such a scenario could be realized either through
the inability of vendors to provide merchandise or the Company's inability to
receive or properly process orders from Members.
Contingency Plans
The Company is establishing an alternate supplier plan in the event that vendors
suffer from Year 2000 related problems. Contingency planning for information
systems and possible "embedded" systems is also in progress.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company's operations are subject to certain market risks, primarily interest
rate risk and credit risk. Interest rate risk pertains to the Company's
variable rate debt which totals approximately $300 million at July 3, 1999. A
50 basis point movement in the interest rates would result in an approximate
$1.5 million annualized increase or decrease in interest expense and cash flows.
For the most part, interest rate risk is managed through a combination of
variable and fixed-rate debt instruments with varying maturities. Credit risk
pertains mostly to the Company's trade receivable. The Company extends credit
to its members as part of its day-to-day operations. The Company believes that
as no specific receivable or group of receivables comprises a significant
percentage of total trade accounts, its risk in respect to trade receivable is
limited. Additionally, the Company believes that its allowance for doubtful
accounts is adequate in respect to member credit risks.
PART II - OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
Item 5. OTHER INFORMATION.
NONE
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
NONE
(b) Reports on Form 8-K
NONE
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the
Registrant has duly caused this Report to be signed on its behalf by
the
undersigned thereunto duly authorized.
TRUSERV CORPORATION
Date: August 13, 1999 By
Daniel T. Burns
Executive Vice President,
Administration
(Mr. Burns is the principal administrative officer and has been duly
authorized
to sign on behalf of the Registrant.)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUL-03-1999
<CASH> $ 1,702
<SECURITIES> 0
<RECEIVABLES> 693,112
<ALLOWANCES> 0
<INVENTORY> 573,961
<CURRENT-ASSETS> 1,293,212
<PP&E> 530,501
<DEPRECIATION> 271,932
<TOTAL-ASSETS> 1,727,018
<CURRENT-LIABILITIES> 1,074,394
<BONDS> 313,113
<COMMON> 236,113
0
0
<OTHER-SE> 103,398
<TOTAL-LIABILITY-AND-EQUITY> 1,727,018
<SALES> 2,335,000
<TOTAL-REVENUES> 2,335,000
<CGS> 2,199,077
<TOTAL-COSTS> 2,199,077
<OTHER-EXPENSES> 104,864
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,091
<INCOME-PRETAX> 1,968
<INCOME-TAX> 1,679
<INCOME-CONTINUING> 289
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (6,484)
<NET-INCOME> (6,195)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
