<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 7, 1999
REGISTRATION NO. 33-64669
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
POST-EFFECTIVE AMENDMENT NO. 5
to
FORM S-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
------------------
TRUSERV CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 36-2099896
(State of Incorporation) (IRS Employer Identification No.)
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>
------------------
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]
================================================================================
<PAGE> 2
PROSPECTUS
TRUSERV CORPORATION
$12,543,000
VARIABLE DENOMINATION FIXED RATE REDEEMABLE TERM NOTES
<TABLE>
<CAPTION>
PER UNIT TOTAL
-------- --------------
<S> <C> <C>
Public Price................................................ $1,000 $12,543,000(1)
Underwriting discounts...................................... none none (2)
Proceeds to TruServ......................................... $1,000 $12,543,000(3)
</TABLE>
(1) The minimum purchase required is $1,000.
(2) There are no underwriters.
(3) There are no firm commitments for the sale of these securities. If the
entire offering is sold, we will receive $12,543,000 before estimated
expenses of $74,000.
The notes are designed to provide TruServ 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 offering will provide notes with various maturity dates ranging from
two- to four-years and will pay fixed rates of interest for each maturity. You
may not be able to compare the interest rates paid to you 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.
The notes have restricted transferability, and they may be called by us. We
also reserve the right to modify, withdraw or cancel this offer.
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 4 IN THIS PROSPECTUS.
THE NOTES ARE UNSECURED OBLIGATIONS 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.
------------------
THESE SECURITIES ARE OFFERED THROUGH
TRUSERV CORPORATION
8600 West Bryn Mawr Avenue
Chicago, Illinois 60631-3505
<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 on 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.
2
<PAGE> 4
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 units of $1,000. 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 in two-, three-, and four-year
terms. You must pay for the notes with cash. You will have the option of
receiving your semi-annual interest payments, or you may have the interest
payments added to your account balance. The notes have a fixed interest rate
that is reset each calendar quarter and is equivalent to the comparable Treasury
Note rate plus one percent.
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 prior to the redemption date. 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, but you will
incur a penalty equal to the loss of 120-days' interest. Early redemption may
reduce your principal balance.
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.
3
<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.
4
<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............................................ $4.6 million (projected)
2000............................................ $0.2 million (projected)
Total........................................... $16.9 million (projected)
</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.
5
<PAGE> 7
THE TRUSERV VARIABLE DENOMINATION FIXED RATE
REDEEMABLE TERM NOTE PROGRAM
The program is designed to provide you with a convenient means of investing
funds directly with us. The notes are available in units of $1,000.
NOTE TERMS
The notes will be issued quarterly and will be offered in two-, three-, and
four-year terms. The notes will not be subject to any sinking fund. When you
invest in the notes, they will be issued in uncertificated form, and you will
not receive a certificate or other instrument evidencing the company's
indebtedness.
INTEREST RATE
We will determine the notes' interest rate. We will set the fixed interest
rate of the notes each quarter at a rate that is equivalent to the comparable
Treasury Note rate plus one percent. You may call a toll free number
(1-800-507-9000), if you would like information concerning the notes' interest
rate.
You will have the option of receiving your semi-annual interest payments,
or you may have the interest payments added to your account balance. Interest is
calculated on a 365-day year and is paid semi-annually. Interest payments and
principal at maturity are paid by check on the next business day.
You may change your option of either receiving interest payments or having
your interest reinvested by notifying our agent bank in writing.
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 may call a toll free number (1-800-507-9000) to obtain current account
information.
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. The application
will include your registration form for two-, three-, or four-year notes. 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. THE COMPLETED APPLICATION, THE
IRS W-9 CERTIFICATION FORM AND THE CHECK FOR YOUR INVESTMENT AMOUNT MUST BE
RECEIVED BY US AT
6
<PAGE> 8
OUR DESIGNATED LOCKBOX BANK ON OR BEFORE THE LAST BUSINESS DAY BEFORE THE START
OF EACH CALENDAR YEAR QUARTER.
HOW TO REDEEM
You may redeem any of your notes prior to maturity subject to a penalty
consisting of 120 days interest as calculated on the most recent quarterly
stated principal balance. This penalty may result in a reduction of your
principal balance.
You may not transfer ownership of your notes. In case of probate or court
decree, the notes will be redeemed and will be subject to a penalty. You will
not be able to break the notes into smaller denominations at any time.
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 our current members who own Class
A common stock, their immediate families and current holders of certain TruServ
Corporation Variable Denomination Fixed Rate Redeemable Term Notes. You may
purchase the notes only in denominations of $1,000. All note sales will be made
by us.
We will communicate the availability of this program through a mailing to
all eligible participants. If you request an application package, you will
receive the Prospectus, the Program Description, an IRS W-9 Certification Form
and an application form that you will need to return to us. The application form
will include your registration form for two-, three- and four-year notes. 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 our program, as described in the Program
Description, as amended from time to time by us.
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 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.
7
<PAGE> 9
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)
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.
8
<PAGE> 10
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 company 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 prior to the redemption date, 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.
If we redeem the notes at our option, you will receive a check for the
principal amount of the notes plus accrued and unpaid interest to the date of
redemption. Interest on all redeemed notes will cease to accrue on and after the
effective date of redemption.
You may redeem any notes that you purchase at any time, but you will incur
a penalty equal to the loss of 120-days' interest. Early redemption may reduce
your principal balance. (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) advance maturity notices with renewal forms,
4) Form 1099INT, and
9
<PAGE> 11
5) Form 1099B, if applicable.
Additionally, the agent bank will provide an automated voice-response
system at a toll free number (1-800-507-9000). You may call this number to
obtain aggregate account and individual note information. The agent bank will
also process early redemption request, 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.
10
<PAGE> 12
================================================================================
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 Fixed
Rate Redeemable Term Note Program....... 6
How to Invest............................. 6
How to Redeem............................. 7
Use of Proceeds........................... 7
Plan of Distribution...................... 7
Arbitration............................... 7
Certain Terms of the Notes................ 8
Agent Bank and Administration............. 9
Taxes..................................... 10
Legal Matters............................. 10
</TABLE>
================================================================================
================================================================================
$12,543,000
TRUSERV CORPORATION
VARIABLE DENOMINATION
FIXED RATE
REDEEMABLE TERM NOTES
FOR INFORMATION CONCERNING
THE TRUSERV CORPORATION
INVESTMENT PROGRAM,
WRITE TO:
THE TRUSERV CORPORATION INVESTMENT PROGRAM
P.O. BOX 75933
CHICAGO, ILLINOIS 60675-5933
OR CALL:
TOLL FREE NUMBER 1-800-507-9000
PROSPECTUS
------------------------
DATED
================================================================================
<PAGE> 13
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 Fixed Rate Redeemable
Term Notes being registered:
<TABLE>
<S> <C>
Registration Fee............................................ $ --
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.
S-1
<PAGE> 14
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
------- -----------
<C> <S>
4-A Trust Indenture between Cotter & Company 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 Installment 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 Registration Statement on Form
S-4 (No. 333-18387).
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. 333-18387).
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).
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).
</TABLE>
S-2
<PAGE> 15
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
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 Cotter &
Company and First Trust National Association. Incorporated
by reference--Exhibit 4-K to Cotter & Company 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-L 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-M 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 $105,000,000
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. 4 to Registration Statement on
Form S-2 (No. 33-64669).
*23-B Consent of Ernst & Young LLP (included on page S-7).
99 Current Application Package for TruServ Variable
Denomination Fixed Rate Redeemable Term Note Investment
Program. Incorporated by reference -- Exhibit 99 to
Amendment No. 4 to Registration Statement on Form S-2 (No.
33-64669).
</TABLE>
- ---------------
* Filed herewith
S-3
<PAGE> 16
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.
S-4
<PAGE> 17
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
--------- ----- ----
<C> <S> <C>
/s/ DANIEL A. COTTER Chairman, Chief Executive May 7, 1999
- ----------------------------------------------------- Officer 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, May 7, 1999
- ----------------------------------------------------- Finance and Chief Financial
Kerry J. Kirby Officer
/s/ JOE W. BLAGG Director May 7, 1999
- -----------------------------------------------------
Joe W. Blagg
/s/ WILLIAM M. CLAYPOOL, III Director May 7, 1999
- -----------------------------------------------------
William M. Claypool, III
/s/ JAY B. FEINSOD Director May 7, 1999
- -----------------------------------------------------
Jay B. Feinsod
/s/ JAMES D. BURNETT Director May 7, 1999
- -----------------------------------------------------
James D. Burnett
/s/ WILLIAM M. HALTERMAN Director May 7, 1999
- -----------------------------------------------------
William M. Halterman
</TABLE>
S-5
<PAGE> 18
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/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>
S-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. 5 to the Registration Statement (Form S-2 No. 33-64669) and related
Prospectus of TruServ Corporation for the registration of $12,543,000 of
Variable Denomination Fixed Rate Redeemable Term 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
