<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 April 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 May 1, 1999.
Class A Common Stock, $100 Par Value. 543,300 Shares.
Class B Common Stock, $100 Par Value. 1,879,158 Shares.
<PAGE 2>
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
--------------------
TRUSERV CORPORATION
-------------------
CONDENSED CONSOLIDATED BALANCE SHEET
------------------------------------
(In thousands)
<TABLE>
<CAPTION>
April 3, December 31,
1999 1998
---------- -----------
(UNAUDITED)
ASSETS
- ------
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 1,609 $ 1,650
Accounts and notes receivable, net 649,674 537,811
Inventories 625,244 595,118
Other current assets 29,470 36,047
---------- ----------
Total current assets 1,305,997 1,170,626
Properties less
accumulated depreciation 266,069 255,405
Goodwill, net 116,961 117,468
Other assets 59,587 57,265
---------- ----------
TOTAL ASSETS $1,748,614 $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>
April 3, December 31,
1999 1998
---------- ------------
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND CAPITALIZATION
- ------------------------------
Current liabilities:
Accounts payable $ 605,094 $ 492,729
Accrued expenses 106,994 73,092
Short-term borrowings 308,784 258,147
Current maturities of notes,
long-term debt and capital lease
obligations 86,843 90,618
Patronage dividends payable in cash 1,903 14,507
----------- -----------
Total current liabilities 1,109,618 929,093
----------- -----------
Long-term debt and obligations under
capital leases 314,785 316,959
Capitalization:
Promissory (subordinated) and
installment notes 123,698 124,422
Class A common stock, net of subscriptions
receivable; authorized 750,000 shares;
issued and subscribed 545,040 and 557,700
shares (net of stock subscriptions
receivable of $4,778,000 and $5,890,000) 49,726 49,880
Class B nonvoting common stock and paid-in
capital; authorized 4,000,000 shares;
issued and fully paid, 1,890,320 and
1,748,326 shares; issuable as partial
payment of patronage dividends 195,118
shares as of December 31, 1998 190,331 195,643
Deferred patronage (14,438) (14,438)
Retained earnings (deficit) (23,801) 579
Accumulated other comprehensive income (1,305) (1,374)
---------- ----------
Total capitalization 324,211 354,712
---------- ----------
TOTAL LIABILITIES AND CAPITALIZATION $1,748,614 $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 WEEKS ENDED
-----------------------------
April 3, April 4,
1999 1998
---------- ----------
<S> <C> <C>
Revenues $1,070,892 $1,030,205
Cost and expenses:
Cost of revenues 1,016,660 949,726
Warehouse, general and
administrative 51,870 64,109
Interest paid to Members 3,471 3,890
Other interest expense 10,740 8,421
Other income, net (564) 160
Income tax expense 87 (119)
----------- ----------
1,082,264 1,026,187
----------- ----------
Net margin (loss) before merger
integration costs and cumulative
effect of a change in accounting
principle (11,372) 4,018
Merger integration costs 6,524 1,847
----------- ----------
Net margin (loss) before cumulative
effect of a change in accounting
principle (17,896) 2,171
Cumulative effect on prior years of
a change in accounting principle 6,484 ---
----------- ----------
Net margin (loss) $ (24,380) $ 2,171
=========== ==========
</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 THIRTEEN WEEKS ENDED
------------------------------
April 3, April 4,
1999 1998
--------- --------
<C> <C> <C>
Operating activities:
Net margin (loss) $ (24,380) $ 2,171
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 9,913 7,960
Net change in working capital
components 6,933 (123,183)
---------- ---------
Net cash and cash equivalents used
for operating activities ( 7,534) (113,052)
---------- ---------
Investing activities:
Additions to properties owned (20,452) (15,497)
Changes in other assets (2,322) 1,112
---------- ---------
Net cash and cash equivalents used
for investing activities (22,774) (14,385)
---------- ---------
Financing activities:
Proceeds from short-term borrowings 50,637 135,978
Proceeds from long-term borrowings 336 1,504
Payment of annual patronage dividend (12,604) (6,700)
Payment of notes, long-term debt,
lease obligations and common stock (8,102) (4,204)
---------- ---------
Net cash and cash equivalents provided
by financing activities 30,267 126,578
---------- ---------
Net decrease in cash and cash equivalents (41) (859)
Cash and cash equivalents at beginning
of the period 1,650 2,224
---------- ---------
Cash and cash equivalents at end of
the period $ 1,609 $ 1,365
========== =========
</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) were 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 April 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 April 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 April 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 April 3, 1999 of $4,000,000 is for costs expected to be incurred by
the third quarter of 1999 in connection with elimination of the remaining
employment positions and closing the remaining two distribution centers. Merger
integration costs of $6,524,000 and $1,847,000 for the periods ended
April 3, 1999 and April 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 April 3, 1999 and the condensed
consolidated statement of operations and statement of cash flows for the period
ended April 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,
<PAGE 7>
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.
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 April 3, 1999 compared to an estimated patronage
dividend of $2,186,000 for the corresponding period in 1998.
NOTE 4 - INVENTORIES
-----------
<TABLE>
<CAPTION>
Inventories consisted of:
April 3, December 31,
1999 1998
---------- ------------
(UNAUDITED)
<S> <C> <C>
(000's Omitted)
Manufacturing inventories:
Raw materials $ 4,213 $ 4,331
Work-in-process and finished goods 51,258 46,942
--------- --------
55,471 51,273
Merchandise inventories 569,773 543,845
--------- --------
$ 625,244 $595,118
========= ========
</TABLE>
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
-------------------
In 1998, the Company adopted the Statement 131, Disclosure about Segments of an
Enterprise and Related Information. Statement 131 requires the Company to
report financial and descriptive information about its reportable operating
segments, including segment profit or loss, certain specific revenue and expense
items, and segment assets, as well as information about the revenues derived
from the Company's products and services, the countries in which the Company
earns revenues and holds assets and major customers. This statement also
requires companies that have a single reportable segment to disclose information
about products and services, information about geographic areas and information
about major customers. This statement requires the use of the management
approach to determine the information to be reported. The management approach
is based on the way management organizes the enterprise to assess performance
and make operating decisions regarding the allocation of resources. It is
management's opinion that, at this time, the Company has several operating
segments, however only one reportable segment. The following discussion sets
forth the required single segment information:
<PAGE 8>
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 April 3, 1999. The Company's sales to its
Members are divided into three categories, as follows: (1) warehouse shipment
sales (approximately 40% of total sales); (2) direct shipment sales
(approximately 54% of total sales); and (3) relay sales (approximately 6% 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.
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 Thirteen Weeks Ended
------------------------------
April 3, 1999 April 4, 1998
------------- -------------
<S> <C> <C>
Lumber and Buildings Materials 31.1% 30.6%
Farm and Garden 20.3% 18.1%
Hardware Goods 15.5% 15.6%
Electrical and Plumbing 12.7% 13.8%
Painting and Cleaning 9.2% 10.4%
Appliance and Housewares 7.8% 7.8%
Sporting Goods and Toys 3.4% 3.7%
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 April 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
---------------------
THIRTEEN WEEKS ENDED APRIL 3,1999 COMPARED TO THIRTEEN WEEKS ENDED
- ------------------------------------------------------------------
APRIL 4, 1998
- -------------
RESULTS OF OPERATIONS:
- ----------------------
Revenues for the three months ended April 3, 1999 totaled $1,070,892,000.
This represented an increase of $40,687,000 or 3.9% compared to the
comparable period last year. The increase was due primarily to increases
in direct shipment sales, which increased 9.9%. Lumber/building materials
sales increased 7.1%.
Gross margins decreased by $26,247,000 or 32.6%, and as a percentage of
revenues, decreased to 5.1% from 7.8% for the comparable period last year.
The decrease in gross margin percentage resulted from an increase in direct
<PAGE 9>
shipment sales, which have lower gross margin percentages. In addition to a
shift in the sales mix, the gross margin was negatively impacted by
approximately $8,300,000 additional freight-in and vendor related program
expenses compared with the same period in 1998.
Warehouse, general and administrative expenses as a percentage of revenues
decreased to 4.8% from 6.2% compared with the prior year. The Company
incurred additional warehousing expenses in association with commonizing
inventory assortments and increased inventory levels but continued to reduce
other expense in its continuing efforts to reduce operating costs.
Interest paid to Members decreased by $419,000 or 10.8% primarily due to a
lower average interest rate and the lower principal balance. Other interest
expense increased $2,319,000 due to higher borrowings compared to the same
period last year. The higher borrowings were required in part because of the
increased cash requirement resulting from higher accounts receivable balances
during the first quarter of 1999 compared with the first quarter of 1998. The
increase in the 1999 balances was due to aditional dating terms passed along
to the Membership.
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
thirteen weeks ended April 3, 1999 were $6,524,000 compared to $1,847,000
for the comparable period last year.
The combination of decreased gross margins, as well as increased expenses,
increased borrowing costs, merger integration costs and the cumulative effect
of a change in accounting principle resulted in a net loss of $24,380,000
compared to a net margin of $2,171,000 for the same period last year.
THIRTEEN WEEKS ENDED APRIL 3, 1999 COMPARED WITH THE YEAR ENDED
- ---------------------------------------------------------------
DECEMBER 31, 1998
- -----------------
LIQUIDITY AND CAPITAL RESOURCES:
- -------------------------------
The Company has a seasonal need for cash. During the first quarter of the
year, as seasonal inventories are purchased for resale or manufacture and
shipment, cash and cash equivalents are used for operating activities. In
subsequent quarterly periods, the Company anticipates that cash and cash
equivalents will be provided by operating activities and financing activities,
if necessary.
During the first quarter of 1999, inventories increased by $30,126,000 to
support orders of seasonal merchandise. Accounts and notes receivable increased
by $111,863,000 due to the seasonal payment terms extended to the Company's
Members. Short-term borrowings increased by $50,637,000, and accounts payable
increased by $112,365,000 as a result of the increased inventories and
favorable seasonal terms obtained from vendors which were passed on to the
Company's Members. Accrued expenses increased by $33,902,000, which resulted
primarily from increased accruals due to the timing of payments in the first
quarter of 1999.
At April 3, 1999, net working capital decreased to $196,379,000 from
$241,533,000 at December 31, 1998. The current ratio decreased to 1.18 at
April 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 $279,000,000 and $227,000,000 at
April 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.
<PAGE 10>
Total capital expenditures, including those made under capital leases, were
$20,452,000 for the thirteen weeks ended April 3, 1999 compared to $15,497,000
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.
Year 2000
- ---------
General
- -------
The Company started its Year 2000 Project in late 1996. Portions of the
information systems are not yet "Year 2000 compliant". 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 have been evaluated for "embedded" systems concerns and
potential problems are being addressed on a local level. Key electronic
trading partners have been engaged in testing to ensure proper communications
into the Year 2000. The Company is on schedule to complete our Year 2000
initiative by July 1, 1999.
Costs
- -----
The budget for the Year 2000 project is $16,900,000. Actual costs to date
are $13,314,000. 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:
</TABLE>
<TABLE>
<CAPTION>
<C> <C>
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)
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
April 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
<PAGE 11>
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
---------------------------------------------------
At the Company's Annual Meeting of Stockholders held on May 11, 1999, the
following individuals were recommended for reelection to the Board of
Directors:
</TABLE>
<TABLE>
<CAPTION>
Votes Votes Withheld
Term Votes for against Abstained
------ --------- -------- ---------------
<S> <C> <C> <C> <C>
William M. Halterman 3 years 279,540 --- 10,080
James D. Howenstine 3 years 279,060 --- 10,560
Donald J. Hoye 3 years 277,560 --- 12,060
Jerrald T. Kabelin 3 years 278,340 --- 11,280
Peter G. Kelly 3 years 278,400 --- 11,220
Robert J. Ladner 3 years 279,300 --- 10,320
In addition to the foregoing, the following persons were, on May 11, 1999,
Directors of the Company whose terms of office continued after the annual
meeting:
</TABLE>
<TABLE>
<CAPTION>
<C> <S> <S>
Joe W. Blagg Jay B. Feinsod John B. Wake, Jr.
James D. Burnett William H. Hood John M. West, Jr.
William M Claypool, III George V. Sheffer Barbara B. Wilkerson
Daniel A. Cotter Dennis A Swanson
The annual meeting also included the following vote:
The proposal to approve the appointment of Ernst & Young LLP, independent
public accountants, as auditor of the company for the fiscal year 1999 was
passed. The number of affirmative votes cast was 280,560, the number of
negative votes cast was 4,380, and the number of abstentions was 4,680.
Item 5. OTHER INFORMATION.
-----------------
NONE
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits
--------
Exhibit 4. Instruments defining the rights of security holders,
including indentures; incorporated herein by reference
those items included as Exhibits 4A through 4N, inclusive,
in the Company's Post-Effective Amendment No. 6 on Form
S-2 to Form S-4 Registration Statement (No. 333-18397)
filed with the Securities and Exchange Commission on
March 31, 1999.
(b) Reports on Form 8-K
-------------------
NONE
<PAGE 12>
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: May 18, 1999 By /s/ KERRY J. KIRBY
---------------------
Kerry J. Kirby
Executive Vice President,
Finance and Chief Financial
Officer
(Mr. Kirby is the principal accounting officer and has been duly authorized
to sign on behalf of the Registrant.)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> APR-03-1999
<CASH> $1,609
<SECURITIES> 0
<RECEIVABLES> 649,674
<ALLOWANCES> 0
<INVENTORY> 625,244
<CURRENT-ASSETS> 1,305,997
<PP&E> 538,799
<DEPRECIATION> 272,730
<TOTAL-ASSETS> 1,748,614
<CURRENT-LIABILITIES> 1,109,618
<BONDS> 318,338
0
0
<COMMON> 240,057
<OTHER-SE> 123,698
<TOTAL-LIABILITY-AND-EQUITY> 1,748,614
<SALES> 1,070,892
<TOTAL-REVENUES> 1,070,892
<CGS> 1,016,660
<TOTAL-COSTS> 1,016,660
<OTHER-EXPENSES> 57,830
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,211
<INCOME-PRETAX> (17,809)
<INCOME-TAX> 87
<INCOME-CONTINUING> (17,896)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (6,484)
<NET-INCOME> (24,380)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
