<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 7, 1999
REGISTRATION NO. 333-26727
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 2
TO
FORM S-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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TRUSERV CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 36-2099896
(State of Incorporation) (IRS Employer Identification No.)
</TABLE>
8600 West Bryn Mawr Avenue
Chicago, Illinois 60631-3505
(773) 695-5000
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
Kerry J. Kirby, Executive Vice President, Finance and Chief Financial Officer
TruServ Corporation
8600 West Bryn Mawr Avenue
Chicago, Illinois 60631-3505
(773) 695-5000
Fax: (773) 695-6563
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
<TABLE>
<S> <C>
Daniel T. Burns, Senior Vice President and Secretary Geoffrey R. Morgan
TruServ Corporation Michael, Best & Friedrich, LLP
8600 West Bryn Mawr Avenue 100 East Wisconsin Avenue
Chicago, Illinois 60631-3505 Milwaukee, Wisconsin 53202-4108
(773) 695-5000 (414) 271-6560
Fax: (773) 695-5465 Fax: (414) 277-0656
</TABLE>
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Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Post-Effective Amendment
to the
Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If the Registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this Form, check the following box. [X]
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<PAGE> 2
PROSPECTUS
TRUSERV CORPORATION
$40,891,000
Variable Denomination Floating Rate Demand Notes
TRUSERV CORPORATION
8600 WEST BRYN MAWR AVENUE
CHICAGO, ILLINOIS, 60631-3505
THE OFFERING:
<TABLE>
<CAPTION>
TOTAL
-----------
<S> <C> <C>
PUBLIC PRICE............................................. $40,891,000 (1)
UNDERWRITING DISCOUNTS................................... NONE (2)
PROCEEDS TO TRUSERV...................................... $40,891,000 (3)
</TABLE>
(1) THERE ARE NO FIRM COMMITMENTS FOR THE SALE OF THESE SECURITIES. ASSUMING
THAT THE ENTIRE OFFERING IS SOLD, THE PROCEEDS SHOWN ABOVE WILL BE WHAT ARE
RECEIVED PRIOR TO ESTIMATED EXPENSES OF $74,000.
MINIMUM PURCHASE: $250
THESE NOTES ARE DESIGNED TO PROVIDE OUR MEMBERS WITH A CONVENIENT MEANS OF
INVESTING FUNDS DIRECTLY WITH US. IF YOU INVEST IN THE NOTES, YOUR INVESTMENT
WILL BE REPRESENTED BY A PROGRAM ACCOUNT AT OUR AGENT BANK, INSTEAD OF A
CERTIFICATE OR OTHER EVIDENCE OF OWNERSHIP.
THE PRINCIPAL AMOUNT OF EACH NOTE WILL BE EQUAL TO ALL OF YOUR INVESTMENTS
IN THE NOTES, PLUS ACCRUED AND REINVESTED INTEREST, LESS ANY REDEMPTION AND
FEES. THE NOTES HAVE NO STATED MATURITY AND WILL EARN INTEREST AT FLOATING
RATES, TO BE DETERMINED BY THE TRUSERV INVESTMENT PROGRAM COMMITTEE EACH WEEK.
THE WEEKLY INTEREST RATE PAID ON THESE NOTES MAY NOT PROVIDE A BASIS FOR
COMPARISON WITH OTHER INVESTMENTS WHICH USE A DIFFERENT METHOD OF CALCULATING A
VARIABLE YIELD OR WHICH PAY A FIXED YIELD FOR A STATED PERIOD OF TIME.
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 4 IN THIS PROSPECTUS.
THE NOTES ARE UNSECURED OBLIGATION AND ARE SUBORDINATED TO SENIOR NOTES, BANK
DEBT, AMOUNTS DUE TRADE CREDITORS AND OTHER DEBT.
YOUR PROGRAM ACCOUNT IS NOT A DEPOSIT OR OTHER BANK ACCOUNT AND IS NOT INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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These securities are offered through
TRUSERV CORPORATION
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<PAGE> 3
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements, and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file at the SEC's public reference rooms in Washington, D.C.,
New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms.
REPORTS TO SECURITY HOLDERS
Each year, we distribute an annual report containing consolidated financial
statements reported upon by our independent auditors to our stockholder-members.
We may, from time to time, also furnish to our stockholder-members interim
reports, as determined by our management.
DOCUMENTS INCLUDED AND INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" information we file with
them which means that we can disclose important information to you by referring
you to those documents and delivering them to you with this prospectus. We are
incorporating by reference our Annual Report on Form 10-K for the year ended
December 31, 1998, which we filed with the SEC under Section 15(d) of the
Securities Exchange Act of 1934. We also are including the Form 10-K with this
prospectus for your information.
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SUMMARY
TruServ Corporation began as a Delaware corporation in 1953, and was the
successor to the business activities of Cotter & Company, an Illinois
corporation incorporated in 1948. Until July 1, 1997, when we merged with
ServiStar Coast to Coast Corporation, our corporate name was Cotter & Company.
Our corporate headquarters are located at 8600 West Bryn Mawr Avenue, Chicago,
Illinois 60631-3505. Our telephone number is (773) 695-5000.
We are a member-owned wholesaler of hardware, lumber/building materials and
related merchandise. Our company is the largest member-owned wholesaler of these
items in the United States. For financial reporting purposes, we operate in a
single industry as a member-owned wholesaler cooperative.
We are offering the notes exclusively to current company members who own
Class A common stock, to their immediate family members and to current holders
of certain TruServ Corporation Variable Denomination Fixed Rate Redeemable Term
Notes. You may purchase the notes in variable amounts with $250 being the
initial minimum denomination note. Ownership of the notes can be issued in one
of the following four types of accounts:
1. Single tenancy
2. Joint tenancy with right of survivorship
3. Tenancy by custodian (under the Uniform Gifts to Minors Act), and
4. Living trust.
We will issue notes each calendar quarter. You must pay for the notes in
cash. The notes will have no stated maturity. We will determine the rate of
interest, which will be a floating rate that will be adjusted each week. You can
obtain interest rate information by calling toll-free (800) 507-9000. You may
redeem any part of your account at any time. Your accrued interest will be
automatically reinvested in additional notes monthly.
The notes are not the same as a deposit or other bank account. They are not
insured by the Federal Deposit Insurance Corporation or any other government
agency or insurer. The notes are not subject to the requirements of the
Investment Company Act of 1940. All investments in the notes are investments in
TruServ Corporation securities and are not obligations of any other bank or
company.
You may not transfer any of the notes that you purchase, nor can you pledge
them as collateral for any of your debts. Additionally, we may redeem all or
part of the notes at any time. If we elect to redeem the notes, you will be paid
the principal amount plus accrued interest up to the date of redemption.
You may redeem any notes that you purchase at any time.
The notes are unsecured obligations and are subordinated to senior notes,
bank debt, amounts due trade creditors and other debt. Because they are
unsecured, they rank equally with all of our other unsecured and subordinated
debt.
There is no existing secondary market for these notes, and we do not expect
any market will develop.
We plan to use the proceeds from this offering for general working capital,
including the purchase of merchandise for resale to our members.
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<PAGE> 5
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for each of the periods indicated is
as follows:
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS
----------------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
1.33 2.02 2.57 2.78 2.84
</TABLE>
The ratio of earnings to fixed charges has been computed by dividing
earnings before income taxes plus fixed charges by fixed charges. Fixed charges
consist of interest expense and the portion of rental expense deemed to
represent interest expense.
RISK FACTORS
GENERAL
Our business is subject to a number of risks. Foremost amongst those risks
is the uncertain growth of the hardware, lumber/building materials, home center,
do-it-yourself, rental and industrial/commercial supply industries. Widespread
economic trends as well as seasonal and regional factors can affect our
industry.
Our markets are also subject to increasingly intense competition and
changes. We expect continued intense competition from the so-called "Big Box"
stores such as Home Depot, Menards, Builders Square and Lowes, as well as from
additional emphasis on directly competitive lines of business by Home Depot and
diversified retailers such as Sears. These competitors may have greater
resources, larger market shares and more widespread presence than we do. We
believe our cooperative structure best situates our Members to compete with the
Big Boxes and other market competitors, but no assurances can be made that any
Member or Members will be successful.
VOLATILE PRICING OF MERCHANDISE/INVENTORY
The price of merchandise and inventory in the lumber and building materials
industry can change rapidly and such changes may affect our profit margins and
competitive abilities adversely. We believe our cooperative structure creates
the best opportunity for our Members to obtain lower prices and maximize their
purchasing power but such efficiencies cannot be assured.
REGIONAL MARKET VARIATIONS
We transact business nationwide. From time to time, significant variations
in marketing opportunities may confront our Members due to economic conditions
in the Member's specific geographic region. We are unable to predict any adverse
regional economic conditions that may materially affect a Member or Members.
ENVIRONMENTAL
We engage in activities, such as the manufacture of paint and related
products, that could have an environmental impact. These areas are subject to
constant review and scrutiny by governmental authorities at the federal, state
and local level. We are unable to predict whether, or to what extent, such
business activities and governmental scrutiny may result in future costs or
liabilities.
THE NOTES
The notes are unsecured obligations and are subordinated to our senior
notes, bank debt, amounts due trade creditors and other debts. Because they are
unsecured, they rank equally with all of our other unsecured and subordinated
debt. The notes have no secondary market and cannot be transferred or pledged as
collateral. All of your investments in us are subject to our lien rights
ensuring payment of your debts to us. The notes are uninsured.
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<PAGE> 6
YEAR 2000
GENERAL
We started our Year 2000 Project in late 1996. Portions of our information
systems are not yet "Year 2000 compliant". We have established a corporate-wide
program to address any problems arising from the transition to the Year 2000 in
both our information systems and other "embedded" systems in all facilities.
OUR STATE OF READINESS
We have evaluated all of our critical material information systems and have
reviewed agreements and relationships with third parties which are material to
our operations. Also, we have reviewed and evaluated our physical plants and
other systems with potential "embedded concerns and problems." Based upon those
reviews and our efforts to date, we believe that we are on schedule to have
substantially completed Year 2000 compliance issues by July 1, 1999.
COSTS
The budget for our Year 2000 project is $16,900,000. Actual costs through
December 31, 1998 are $12,144,000. The approximate percentage of the Year 2000
costs to our total Information Services budget is 14%. Funding has been provided
through our normal operating and financing activities. The expense for our Year
2000 program is as follows:
<TABLE>
<S> <C>
1996........................................................ $ 1.0 million
1997........................................................ $ 3.2 million
1998........................................................ $ 7.9 million
1999 (projected)............................................ $ 4.6 million
2000 (projected)............................................ $ 0.2 million
Total (projected)........................................... $16.9 million
</TABLE>
RISKS
A worst case scenario for us would involve a breakdown in the distribution
chain to our Members. Such a scenario could be realized either through the
inability of our vendors to provide merchandise or our inability to receive or
properly process orders from our membership.
CONTINGENCY PLANS
We are establishing an alternate supplier plan in the event that our
vendors suffer from Year 2000 related problems. Contingency planning for
information systems and possible "embedded" systems is also in progress.
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<PAGE> 7
THE TRUSERV VARIABLE DENOMINATION FLOATING RATE DEMAND NOTE
INVESTMENT PROGRAM
The program is designed to provide you with a convenient means of investing
funds directly with us. The notes are available in variable amounts with $250
being the initial minimum denomination note.
INTEREST
The principal amount of each note will be equal to all of your investments
in the Notes, plus accrued and reinvested interest, less any redemptions and
fees. The notes will have no stated maturity and will earn interest at floating
rates that will be determined by the TruServ Investment Program Committee on a
weekly basis. These rates will be effective the following week. The rate of
interest on the notes will probably be greater than the most recent seven-day
average yield for taxable money market funds in the United States. These rates
are published in the IBC Money Fund Report published on Thursdays in The Wall
Street Journal. Rates may vary by account balance or other factors. Interest
will accrue daily and will be compounded monthly. The rate of interest paid for
any period is not an indication or representation or future rates. You can get
interest rate information by calling toll-free 1-800-507-9000.
TYPES OF ACCOUNTS
You may hold ownership of the notes in one of the four following types of
accounts:
1. Single tenancy
2. Joint tenancy with right of survivorship
3. Tenancy by custodian (under the Uniform Gifts to Minors Act), and
4. Living trust.
You may not transfer the notes and you may not pledge them as collateral
for any of your debts.
If your legal name changes, you will need to complete a Form W-9 and a
signature guarantee to change the name on your account.
You cannot hold the notes in a retirement savings plan as described in
Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended.
ACCOUNT INFORMATION
You will receive regular quarterly statements showing a summary of all of
your transactions. Redemption checks will not be returned to you but the check
numbers and dollar amounts will appear on your statements.
HOW TO INVEST
You must request an application package by calling us at the toll-free
number, 1-800-507-9000. Upon request of an application, you will receive the
Prospectus, the Program Description, an IRS W-9 Certification Form and an
application, which you will need to complete and return to us. Your initial
investment must be for a minimum of $250. After your account is opened,
additional investments may be made at any time without charge by check or by
wire transfer. By signing and returning the application form and the IRS W-9
Certification Form, together with a check for your investment amount, to our
designated lockbox, you consent to be bound by the terms of the program, as
described in the Program Description, as amended from time to time by us.
BY CHECK MAILED TO AGENT BANK. Your investment will be credited and
interest will begin to accrue on the first business day after the bank receives
your check. Your funds will be available for withdrawal the morning of the sixth
business day following your deposit. Investments made by check cannot be
redeemed for five business days after the check is first credited to your
account or, if later, until the check clears. All checks must be payable to
"TruServ Investment Program". No third-party checks will be accepted.
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<PAGE> 8
All investments must be made in U.S. dollars drawn on a U.S. bank. You must
be a U.S. citizen and provide a valid U.S. Federal Identification number. You
may withdraw your funds at any time.
BY WIRE TRANSFER. You may wire transfer your investment to the bank. Wire
transfers received by 10:00 a.m. CST will be processed the same day. Wire
transfers received after 10:00 a.m. CST will be credited to your account the
following business day. Wire transfers should be addressed to:
ABA071000152
The Northern Trust Company, Chicago, Illinois
TruServ Investment Program
Further Advise -- (your account number)
HOW TO REDEEM
You may redeem any part of your account at any time. The methods of
redemption are as follows:
1) Redemption by Check
2) Written redemption
3) Wire redemption
4) Redemption due to balance below minimum investment
You may close your account only by using the written redemption method.
REDEMPTION BY CHECK. You may make redemption checks payable to anyone in
the amount of $250 or more. If the amount of the redemption check is greater
than the balance in your account or less than $250, the check will not be
honored. Your redemption will be made on the day the agent bank receives your
redemption check for payment. If your account is held jointly, only one
signature will be required on a redemption check unless otherwise specified. The
check redemption feature does not create a deposit or a banking relationship
with either us or with the agent bank.
WRITTEN REDEMPTION. You may redeem all or any part of your account, subject
to a $250 minimum, by written request, including your signature. A check for the
requested amount (or in an amount equal to the balance of your account if the
account is being closed) will be mailed to the registered account address.
WIRE REDEMPTION. You can redeem any part of your account, subject to a
$2,500 minimum, by wire transfer if you have authorized the wire redemption
option. Wire redemption proceeds can only be wired to the U.S. bank account you
have designated on your application. To change this designation, a written
request signed by all registered owners (including joint owners) of the account,
with all signatures guaranteed by a financial institution, must be submitted to
the agent bank. Funds will be wired no later than the next business day after
receipt of your wire redemption request, provided your request is received by
2:00 p.m. Eastern Time on any business day. If your designated bank is not a
member of the Federal Reserve system, there may be a delay in wiring funds. Each
wire transfer will incur a processing charge from the agent bank, and may also
incur an additional charge from other institutions handling the transfer. The
agent bank's records of the wire instructions are binding.
REDEMPTION DUE TO BALANCE BELOW MINIMUM INVESTMENT. If your account balance
falls below the $250 minimum, you will receive notice that the account is below
the minimum and will be closed at the end of the next monthly cycle. If
additional investments increasing the account balance to at least $250 are not
made, the account will then be closed at the end of the next cycle and an
official bank check issued for the balance plus interest.
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<PAGE> 9
FEES
There are no account maintenance fees or charges for checks or check
redemption, no sales loads, and no charges for investing or ongoing management
other then as described below. Fees will be debited directly from your account.
<TABLE>
<S> <C>
Additional fees (subject to change)
Wire transfer fee -- per wire transfer ($2,500 minimum)... $ 15.00
Non-sufficient funds (NSF) deposit -- per check........... $ 10.00
Stop payment.............................................. $ 15.00
Overnight delivery........................................ $ 12.00
</TABLE>
TRUSERV INVESTMENT PROGRAM COMMITTEE
The TruServ Investment Program committee consists of those of our officers
designated by our Board of Directors. The committee has the full power and
authority to amend this program as described under "Termination, Suspension, or
Modification". The committee may also interpret program provisions, adopt
program rules and regulations and make certain determinations. The members of
the committee are our Chief Financial Officer and Assistant Treasurer. Members
of the committee receive no additional compensation for their services.
TERMINATION, SUSPENSION OR MODIFICATION
We expect the program to continue indefinitely but reserve the right to
suspend or terminate the program at any time. We also reserve the right to
modify, suspend or terminate any of the investment options and redemption
options described earlier. Written notice of any material modification,
suspension or termination will be provided to you at least fifteen days prior to
the effective date.
USE OF PROCEEDS
We plan to use the proceeds from the sale of the notes for general working
capital, including the purchase of merchandise for resale to our members.
PLAN OF DISTRIBUTION
We are offering the notes exclusively to current company members who own
Class A common stock, to their immediate family members and to current holders
of certain TruServ Corporation Variable Denomination Fixed Rate Redeemable Term
Notes. You may purchase the notes in variable amounts with $250 being the
initial minimum denomination note.
The availability of the Program will be communicated to you through a
mailing. Upon request of an application package, you will receive the
Prospectus, IRS W-9 Certification Form and application form to be returned to
the address as specified on the application form. The application will include
the Investor's registration form. By signing and returning the application form
and IRS W-9 Certification Form, together with a check made payable to the
"TruServ Investment Program" for the invested amount to the address as specified
on the application form, you will consent to be bound by the terms of the
Program, as described in the Prospectus, as amended from time to time by the
Company.
ARBITRATION
The program will be enforced and interpreted under the laws of the State of
Illinois. Any controversy or claims arising out of or relating to this offer, or
any breach thereof, including without limitation, any claim that this offer or
any portion thereof is invalid, illegal or otherwise voidable, will be submitted
to arbitration before and in accordance with the rules of the American
Arbitration Association, unless another extra judicial
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<PAGE> 10
dispute resolution process has been agreed to in writing by the parties
involved. However, any matters arising under the federal securities laws will
not be subject to or in any way affected, waived or compromised by this
arbitration provision. Judgment upon the award may be entered in any court
having jurisdiction thereof. The location of the arbitration proceedings shall
be at the American Arbitration Association office geographically or physically
located closest to your domicile, unless otherwise agreed upon in writing by the
parties.
CERTAIN TERMS OF THE NOTES
GENERAL
The notes are issued under an indenture between us and our trustee, U.S.
Bank Trust National Association. We have summarized selected provisions of the
indenture below. This summary is not complete. The form of the indenture has
been filed as an exhibit to the Registration Statement, and you should read the
indenture for provisions that may be important to you. In the summary below, we
have included references to section numbers of the indenture, so that you can
easily locate these provisions. Capitalized terms used in the summary have the
meanings specified in the indenture. We will send you at no charge, a copy of
the indenture upon written or oral request directed to Kerry J. Kirby, Executive
Vice President, Finance and Chief Financial Officer, TruServ Corporation, 8600
West Bryn Mawr Avenue, Chicago, Illinois 60631-3505, telephone number (773)
695-5000.
The notes will be our direct unsecured obligations. They will rank equally
with all other unsecured and subordinated debt. The indenture does not limit the
amount of notes that we may issue.
MODIFICATION OF THE INDENTURE
The indenture permits us and the trustee, with the consent of the holders
of not less than 66 2/3% of the aggregate principal amount of the notes
outstanding at that time, to add, change in any manner or eliminate any of the
provisions of the indenture or to modify in any way the rights of the note
holders. However, we may not add or modify any provision that would, among other
things:
1) change the character of the notes from being payable upon demand,
2) reduce the principal amount of any note, or
3) reduce the aggregate principal amount of the notes outstanding, the
holders of which need to consent to our adding, changing or eliminating
any provision of the indenture. (Section 802)
EVENT OF DEFAULT
An event of default is defined in the indenture as non-payment of any
principal or interest amount on any note when due. An administrative error is
not considered an event of default unless the error has continued uncorrected
for sixty days after written notice of the error was sent to the agent bank or
trustee, with a copy to us. The trustee is the sole judge of whether the error
has been corrected. Other events of default include default in the performance
of any other note covenant after sixty days written notice to us of the default
and certain events of bankruptcy, insolvency or reorganization. The indenture
requires us to file an annual written statement with the trustee as to the
presence or absence of certain defaults under the terms thereof. Within ninety
days after a default has occurred, the trustee will notify note holders of all
uncured and unwaived defaults of which it is aware. However, if we default on
the payment of principal or interest on any note, the trustee will be protected
in withholding such notice if it, in good faith, determines that the withholding
of notice is in the interests of the note holders. The indenture provides that,
while an event of default continues, either the trustee or the holders of 50% of
more of the aggregate principal amount of the outstanding notes may declare the
principal of all such notes to be immediately due and payable. However, under
certain conditions, the holders of a majority of the principal amount of the
outstanding notes may annul the declaration. The indenture also provides that
past defaults, except for an uncured default in payment of principal or
interest, may be waived on behalf of the note holders by the holders of a
majority of the principal amount of outstanding notes. (Section 501)
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<PAGE> 11
CONCERNING THE TRUSTEE
The trustee acts as trustee under one other of our indentures. A number of
series of subordinated, unsecured notes are currently outstanding under this
indenture.
LIMITATIONS ON SALES
You may not file a lawsuit with respect to the indenture, unless:
1) you have first given notice to the trustee of a continuing event of
default,
2) note holders of at least 50% of the outstanding principal amount of the
notes have made written request to the trustee to institute the action,
3) note holders requesting the action have offered to indemnify the trustee
against the costs, expenses, and liabilities that will be incurred as
part of the action,
4) the trustee has failed to institute the action for at least sixty days,
and
5) no direction inconsistent with such written request has been given to
the trustee during that sixty-day period by note holders holding a
majority of the principal amount of the notes. (Section 507)
NOTE SUBORDINATION
The notes will be subordinated in right of payment to senior notes, bank
debt, amounts due trade creditors and other debt. Because they are unsecured,
they rank equally with all of our other unsecured and subordinated debt.
OPTIONAL REDEMPTION BY US
We can redeem the notes in whole or in part at any time. If we choose to
redeem the notes, we will pay you the principal amount of the notes plus accrued
and unpaid interest to the redemption date. Any partial note redemption will be
effected by lot or pro rata or by any other method that the trustee deems fair
and appropriate. Interest on all redeemed notes will cease to accrue on and
after the effective date of redemption. (Sections 303 and 305)
SATISFACTION AND DISCHARGE
Satisfaction and discharge of the indenture will occur when;
1) we terminate the program in accordance with its terms and all the notes
become due and payable,
2) we deposit the entire amount needed to pay all the notes, including
principal and interest due or to become due to the date of payment, and
3) we pay all other sums payable under the terms of the indenture. (Section
401)
AGENT BANK AND ADMINISTRATION
We have engaged The Northern Trust Company as the agent bank to service the
program. The agent bank will send the following information to you:
1) investment confirmation,
2) quarterly statements listing all notes held and all transaction
information on a year-to-date basis,
3) Form 1099INT, and
4) Form 1099B, if applicable.
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<PAGE> 12
Additionally, the agent bank will provide an automated voice-response
system at a toll free number (1-800-504-9000). You may call this number to
obtain aggregate account information. The agent bank will also process
redemption requests, respond to inquiries and provide you with information on
your notes and accounts. Additional or other inquiries from you to the agent
bank will be forwarded to us.
TAXES
The program is not qualified under Section 401(a) of the Internal Revenue
Code. Accordingly, you will have to report all interest credited to your notes
or paid to you as taxable income for federal income tax purposes. No part of the
taxable interest is excludable from taxable income.
Your December statement sent by the agent bank each year will state the
full amount reportable as taxable income. The agent bank will also file tax
information returns as required by law. State and local income taxes and tax
reporting also may apply. You are individually responsible for complying with
applicable federal, state and local tax laws and should consult with your
individual tax advisor regarding the tax consequences that may apply to your
particular situation.
LEGAL MATTERS
The legality of the notes has been passed upon for us by Messrs. Arnstein &
Lehr, Chicago, Illinois.
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================================================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE
IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Where You Can Find More Information........ 2
Reports to Security Holders................ 2
Documents Included and Incorporated by
Reference................................ 2
Summary.................................... 3
Consolidated Ratio of Earnings to Fixed
Charges.................................. 4
Risk Factors............................... 4
The TruServ Variable Denomination Floating
Rate Demand Note Investment Program...... 6
How to Invest.............................. 6
How to Redeem.............................. 7
Use of Proceeds............................ 8
Plan of Distribution....................... 8
Arbitration................................ 8
Certain Terms of the Notes................. 9
Agent Bank and Administration.............. 10
Taxes...................................... 11
Legal Matters.............................. 11
</TABLE>
================================================================================
================================================================================
$40,891,000
TRUSERV CORPORATION
VARIABLE DENOMINATION
FLOATING RATE
DEMAND NOTES
FOR INFORMATION CONCERNING
THE TRUSERV
INVESTMENT PROGRAM,
WRITE TO:
THE TRUSERV INVESTMENT PROGRAM
P.O. BOX 75928
CHICAGO, ILLINOIS 60675-7598
OR CALL:
TOLL FREE NUMBER 1-800-507-9000
PROSPECTUS
------------------------
DATED
================================================================================
<PAGE> 14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following are the actual or estimated expenses in connection with the
issuance and distribution of the Variable Denomination Floating Rate Demand
Notes being registered:
<TABLE>
<S> <C>
Registration Fee............................................ $ -0-
Printing of Registration Statement and Prospectus........... 16,000
Accounting Fees and Expenses................................ 10,000
Legal Fees.................................................. 10,000
Trustee Fee................................................. 3,000
Fees and Expenses for Qualifying Securities under "Blue Sky"
Laws of
Various States............................................ 35,000
-------
Total....................................................... $74,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation, as amended, provides that the
Company shall indemnify, in accordance with and to the full extent permitted by
the Delaware General Corporation Law, any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including, without limitation, an action by or in the right of the Company), by
reason of the fact that such person is or was a director, officer, employee or
agent of the Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another Company, partnership, joint
venture, trust or other enterprise, against any liability or expense actually
and reasonably incurred by such person in respect thereof. Such indemnification
is not exclusive of any other right of such director, officer, or employee to
indemnification provided by law or otherwise.
Additionally, pursuant to Section 145(a)-(g) of the Delaware General
Corporation Law which empowers a corporation to indemnify its directors,
officers, employees and agents, the Board of Directors of the Company on July
23, 1973 adopted a By-Law (Article XIII, Indemnification of Directors, Officers
and Employees--Exhibit 2-A to Registration Statement on Form S-4 (No. 333-18397)
and incorporated herein by reference) providing for such indemnification. The
following is a summary of the most significant provisions of said By-Law:
As against third parties, the Company shall indemnify any director,
officer, employee or agent for any expenses (including attorneys' fees,
judgments, fines and amounts paid in settlement) actually and reasonably
incurred in defending any threatened, pending or completed suit or proceeding,
whether civil, criminal, administrative or investigative brought against such
person by reason of the fact that he was or is a director, officer, employee or
agent, if such person acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interest of the Company, and with respect to
any criminal action or proceeding if he had no reasonable cause to believe his
conduct unlawful.
In any action or suit by or in the right of the Company, the Company shall
indemnify any director, officer, employee or agent who is or was a party or
threatened to be made a party to such threatened, pending or completed action or
suit, for expenses (including attorney's fees and amounts paid in settlement)
reasonably and actually incurred in connection with the defense or settlement of
such suit or action, if such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the Company,
except that no indemnification shall be made if such person has been adjudged to
be liable for negligence or misconduct in the performance of his duty to the
Company unless and only to the extent that the Court of Chancery of Delaware or
the court where the suit was brought finds that in view of all the circumstances
of the case, such person is entitled to indemnification.
II-1
<PAGE> 15
Any indemnification, unless ordered by a court, shall be made by the
Company only as authorized in the specific case upon a determination that
indemnification is proper in the circumstances because the party to be
indemnified has met the applicable standard of conduct. Such determination shall
be made by the Board of Directors by a majority vote of a quorum, consisting of
directors who were not parties of such action, suit or proceeding, or if such a
quorum is not obtainable, or even if obtainable, if a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or by
the stockholders.
Additionally, the Company's Certificate of Incorporation eliminates
personal liability of directors to the Company or its stockholders for monetary
damages for breach of fiduciary duty of care. The amendment provides that a
director of the Company shall not be liable to the Company or its stockholders
for monetary damages for breach of fiduciary duty as a director, except to the
extent such exemption from liability or limitation thereof is not permitted
under the Delaware General Corporation Law as the same exists or may hereafter
be amended.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 is concerned, see Item 17 "Undertakings" below.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
4-A Trust Indenture between TruServ Corporation and First Trust
of Illinois (formerly Bank of America). Incorporated by
reference--Exhibit T3C to TruServ Corporation Form T-3 (No.
22-26210).
4-B Instalment note form. Incorporated by reference--Exhibit 4-F
to Registration Statement on Form S-2 (No. 2-82836).
5 Opinion of Messrs. Arnstein & Lehr, previously filed.
10-A Current Form of "Retail Member Agreement with TruServ
Corporation" between the Company and its Members that offer
primarily hardware and related items. Incorporated by
reference--Exhibit 10-A to the Company's Registration
Statement on Form S-4 (No. 333-18397).
10-B Current form of "Subscription to Shares of TruServ
Corporation". Incorporated by reference--Exhibit 10-B to
Post Effective Amendment No. 5 to Registration Statement on
Form S-2 to Form S-4 (No. 333-18397).
10-C Cotter & Company Defined Lump Sum Pension Plan (As Amended
and Restated Effective As Of January 1, 1996). Incorporated
by reference--Exhibit 10-C to Post-Effective Amendment No. 5
to Registration Statement on Form S-2 (No. 33-39477).
10-D Cotter & Company Employees' Savings and Compensation
Deferral Plan (As Amended and Restated Effective April 1,
1994). Incorporated by reference--Exhibit 10-D to
Post-Effective Amendment No. 4 to Registration Statement on
Form S-2 (No. 33-39477).
10-E Cotter & Company Supplemental Retirement Plan between
TruServ Corporation and selected executives of the Company
(As Amended and Restated January 2, 1996 Effective As Of
January 1, 1996). Incorporated by reference--Exhibit 10-E to
Post-Effective Amendment No. 5 to Registration Statement on
Form S-2 (No. 33-39477).
10-F Annual Incentive Compensation Program and Long-Term
Incentive Compensation Program between Cotter & Company and
selected executives of the Company. Incorporated by
reference--filed as Exhibits A and B to Exhibit 10-N to
Registration Statement on Form S-2 (No. 33-39477).
10-G Cotter & Company Long-Term Incentive Compensation Program
for Executive Management (Amended) dated November 7, 1994.
Incorporated by reference--Exhibit 10-I to Post-Effective
Amendment No. 4 to Registration Statement on Form S-2 (No.
33-39477).
10-H Employment Agreement between Cotter & Company and Daniel A.
Cotter dated October 15, 1984. Incorporated by
reference--Exhibit 10-N to Post-Effective Amendment No. 2 to
Registration Statement on Form S-2 (No. 2-82836).
</TABLE>
II-2
<PAGE> 16
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
10-I Amendment No. 1 to Employment Agreement between Cotter &
Company and Daniel A. Cotter dated October 15, 1984
effective January 1, 1991. Incorporated by reference--
Exhibit 10-N to Registration Statement on Form S-2 (No.
33-39477).
10-J Contract between Daniel T. Burns and the Company.
Incorporated by reference--Exhibit 10-J to Post-Effective
No. 5 to Registration Statement in Form S-2 (No. 33-39477).
10-K Contract between Kerry J. Kirby and the Company.
Incorporated by reference--Exhibit 10-K to Post-Effective
No. 5 to Registration Statement on Form S-2 (No. 33-39477).
10-L Retail Conversion Funds Agreement dated as of December 9,
1996 between the Company and SCC. Incorporated by
reference--Exhibit 10-L to Registration Statement on Form
S-4 (No. 333-18397).
10-M Employment Agreement between SCC and Eugene J. O'Donnell
dated September 1, 1996--Incorporated by reference to
Exhibit 10-O to Amendment No. 2 to Registration Statement on
Form S-4 (No. 333-18397)
10-N Employment Agreement between SCC and Donald J. Hoye dated
September 1, 1996--Incorporated by reference to Exhibit 10-P
to Amendment No. 2 to Registration Statement on Form S-4
(No. 333-18397)
10-O Amended and Restated Trust Indenture between TruServ
Corporation and First Trust National Association for
$50,000,000 principal amount of Variable Denomination
Floating Rate Demand Notes. Incorporated by reference --
Exhibit 4-K to Registration Statement on Form S-2 (No.
333-26727)
10-P Credit Agreement dated July 1, 1997 for $300,000,000
Revolving credit between TruServ Corporation, various
financial institutions, and Bank of America. Incorporated by
reference -- Exhibit 4-J to Post Effective Amendment No. 5
to Registration Statement on Form S-2 to Form S-4 (No.
333-18397).
10-Q Amended and Restated Private Shelf Agreement between TruServ
Corporation and Prudential Insurance Company of America
dated November 13, 1997 for $150,000,000. Incorporated by
reference -- Exhibit 4-k to Post Effective Amendment No. 5
to Registration Statement on Form S-2 to Form S-4 (No.
333-18397).
10-R Credit Agreement dated September 10, 1998 for $150,000,000
Note Purchase Agreement between TruServ Corporation and
various Purchasers. Incorporated by reference--Exhibit 4-L
to Post-Effective Amendment No. 6 to Registration Statement
on Form S-4 (No. 333-183997)
10-S Participation Agreement dated April 30, 1998 for $40,000,000
between TruServ Corporation, various financial institutions
and Bank of Montreal. Incorporated by reference--Exhibit 4-M
to Post-Effective Amendment No. 6 to Registration Statement
on Form S-4 (No. 333-18397)
10-T Credit Agreement dated September 30, 1998 for $100,000,000
Revolving Credit between TruServ Corporation, various
financial institutions and Bank of America. Incorporated by
reference--Exhibit 4-N to Post-Effective Amendment No. 6 to
Registration Statement on Form S-4 (No. 333-18397)
12 Statement of Computation of Consolidated Ratio of Earnings
to Fixed Charges for the Fiscal Years Ended 1998, 1997,
1996, 1995, and 1994.
23-A Consent of Arnstein & Lehr--Incorporated by reference to
Exhibit 23-A to Amendment No. 1 to Registration Statement on
Form S-2 (No. 333-26727).
*23-B Consent of Ernst & Young LLP (included on page II-7).
99-A Application Form and Related Materials for TruServ Variable
Denomination Floating Rate Demand Note Investment Program.
Incorporated by reference to Exhibit 23-A to Amendment No. 4
to Registration Statement on Form S-2 (No. 333-26727).
</TABLE>
* Filed herewith.
II-3
<PAGE> 17
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any Prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions described in Item 15, or otherwise,
the Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-4
<PAGE> 18
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-2 AND HAS DULY CAUSED THIS AMENDMENT TO
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF CHICAGO, STATE OF ILLINOIS, ON THE 7TH DAY OF
MAY, 1999.
TRUSERV CORPORATION
By: /s/ DANIEL A. COTTER
-----------------------------------
Daniel A. Cotter
Chairman of the Board, Chief
Executive Officer and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW, CONSTITUTES AND APPOINTS DANIEL A. COTTER, KERRY J. KIRBY AND DANIEL T.
BURNS, JOINTLY AND SEVERALLY, ATTORNEYS-IN-FACT AND AGENTS, EACH WITH FULL POWER
OF SUBSTITUTION, FOR HIM OR HER IN ANY AND ALL CAPACITIES TO SIGN ANY AND ALL
AMENDMENTS (INCLUDING POST-EFFECTIVE AMENDMENTS) TO THIS REGISTRATION STATEMENT,
AND TO FILE THE SAME, AND ALL EXHIBITS THERETO, AND OTHER DOCUMENTS IN
CONNECTION THEREWITH, WITH THE SECURITIES AND EXCHANGE COMMISSION, HEREBY
SATISFYING AND CONFIRMING ALL THAT EACH OF SAID ATTORNEYS-IN FACT AND AGENTS, OR
HIS OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO BE DONE BY
VIRTUE HEREOF.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
TO REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ DANIEL A. COTTER Chairman, Chief Executive Officer May 7, 1999
- ----------------------------------------------------- and Director
Daniel A. Cotter
/s/ DONALD J. HOYE President, Chief Operating May 7, 1999
- ----------------------------------------------------- Officer and Director
Donald J. Hoye
/s/ KERRY J. KIRBY Executive Vice President, Finance May 7, 1999
- ----------------------------------------------------- and Chief Financial Officer
Kerry J. Kirby
/s/ JOE W. BLAGG Director May 7, 1999
- -----------------------------------------------------
Joe W. Blagg
/s/ JAMES D. BURNETT Director May 7, 1999
- -----------------------------------------------------
James D. Burnett
/s/ WILLIAM M. CLAYPOOL, III Director May 7, 1999
- -----------------------------------------------------
William M. Claypool, III
/s/ JAY B. FEINSOD Director May 7, 1999
- -----------------------------------------------------
Jay B. Feinsod
</TABLE>
II-5
<PAGE> 19
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ WILLIAM M. HALTERMAN Director May 7, 1999
- -----------------------------------------------------
William M. Halterman
/s/ WILLIAM H. HOOD Director May 7, 1999
- -----------------------------------------------------
William H. Hood
/s/ JAMES HOWENSTINE Director May 7, 1999
- -----------------------------------------------------
James Howenstine
/s/ JERRALD T. KABELIN Director May 7, 1999
- -----------------------------------------------------
Jerrald T. Kabelin
/s/ PETER G. KELLY Director May 7, 1999
- -----------------------------------------------------
Peter G. Kelly
/s/ ROBERT J. LADNER Director May 7, 1999
- -----------------------------------------------------
Robert J. Ladner
/s/ GEORGE V. SHEFFER Director May 7, 1999
- -----------------------------------------------------
George V. Sheffer
/s/ DENNIS A. SWANSON Director May 7, 1999
- -----------------------------------------------------
Dennis A. Swanson
/s/ JOHN B. WAKE, JR. Director May 7, 1999
- -----------------------------------------------------
John B. Wake, Jr.
/s/ JOHN M. WEST, JR. Director May 7, 1999
- -----------------------------------------------------
John M. West, Jr.
/s/ BARBARA B. WILKERSON Director May 7, 1999
- -----------------------------------------------------
Barbara B. Wilkerson
</TABLE>
II-6
<PAGE> 1
EXHIBIT 12
TRUSERV CORPORATION
SCHEDULE OF COMPUTATION OF THE RATIO OF EARNINGS TO FIXED CHARGES
FOR THE FISCAL YEARS ENDED 1998, 1997, 1996, 1995, 1994
(000'S OMITTED)
<TABLE>
<CAPTION>
YEAR END
-----------------------------------------------------------
1998 1997 1996 1995 1994
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET EARNINGS AFTER TAX $20,480 $42,716 $52,410 $59,037 60,318
ADD: TAX PROVISION 597 1,600 362 176 1,163
------- ------- ------- ------- -------
PRETAX INCOME 21,077 44,316 52,772 59,213 61,481
------- ------- ------- ------- -------
ADD: FIXED CHARGES
INTEREST PAID TO MEMBERS 16,390 17,865 18,460 20,627 22,894
OTHER INTEREST PAID 38,710 19,100 10,175 9,298 7,493
------- ------- ------- ------- -------
TOTAL INTEREST EXPENSE 55,100 36,965 28,635 29,925 30,387
------- ------- ------- ------- -------
RENTAL EXPENSES 28,291 19,890 14,971 10,063 9,098
% OF RENTAL EXPENSES 33.33% 33.33% 33.33% 33.33% 33.33%
------- ------- ------- ------- -------
APPLICABLE RENTAL EXPENSES 9,430 6,629 4,990 3,354 3,032
------- ------- ------- ------- -------
TOTAL FIXED CHARGES 64,530 43,594 33,625 33,279 33,419
------- ------- ------- ------- -------
PRETAX EARNINGS BEFORE FIXED CHARGES $85,607 $87,910 $86,397 $92,492 $94,900
======= ======= ======= ======= =======
PRETAX EARNINGS RATIO TO FIXED CHARGES 1.33 2.02 2.57 2.78 2.84
======= ======= ======= ======= =======
</TABLE>
<PAGE> 1
EXHIBIT 23-B
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Post-Effective Amendment
No. 2 to the Registration Statement (Form S-2 No. 333-26727) and related
Prospectus of TruServ Corporation for the registration of $40,891,000 of
Variable Denomination Floating Rate Demand Notes of our report dated March 25,
1999, with respect to the consolidated financial statements of TruServ
Corporation included in its Annual Report (Form 10-K) for the year ended
December 31, 1998, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Chicago, Illinois
May 7, 1999
II-7
