<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 13, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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)
Leonard G. Kuhr, Senior Vice President
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)
Copy to:
Geoffrey R. Morgan
Michael Best & Friedrich LLP
100 East Wisconsin Avenue
Milwaukee, Wisconsin 53202-4108
(414) 271-6560
Fax: (414) 277-0656
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Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this 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]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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AMOUNT PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES TO BE OFFERING PRICE MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
Variable Denomination Subordinated Fixed Rate
Term Notes.................................... $50,000,000 100% $50,000,000 $13,200
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</TABLE>
(1) Estimated in accordance with Rule 457 solely for purposes of calculating the
registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the offer
or sale is not permitted.
SUBJECT TO COMPLETION, DATED
PROSPECTUS
TRUSERV CORPORATION
$50,000,000
VARIABLE DENOMINATION SUBORDINATED FIXED RATE TERM NOTES
<TABLE>
<CAPTION>
PER UNIT TOTAL
-------- --------------
<S> <C> <C>
Public Price................................................ $1,000 $50,000,000(1)
Underwriting discounts...................................... none none (2)
Proceeds to TruServ......................................... $1,000 $50,000,000(3)
</TABLE>
(1) The minimum purchase required is $1,000.
(2) There are no underwriters. We are offering the notes directly to you.
(3) There are no firm commitments for the sale of these notes. If the entire
offering is sold, we will receive $50,000,000 before estimated expenses of
$87,200.
The notes are designed to provide you 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 The Northern Trust Company, which is our
agent bank, instead of by a certificate or other evidence of ownership.
The notes have various maturity dates ranging from two to four years from
the date of issuance and will pay fixed rates of interest for each maturity.
There is neither a market for these notes nor is a market expected to
develop. The notes have restricted transferability, and they may be redeemed 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.
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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
8600 West Bryn Mawr Avenue
Chicago, Illinois 60631-3505
THE DATE OF THIS PROSPECTUS IS
<PAGE> 3
WHERE YOU CAN FIND MORE INFORMATION
The term "TruServ," "Company," "Cooperative," "We," "Us" and similar words
refer to TruServ Corporation. The terms "member," "retailer," "you," "your," and
similar words refer to someone who purchases our notes.
We file annual, quarterly and special reports, 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 interim reports to our
stockholder-members, 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, 1999, our Quarterly Reports on Form 10-Q for the quarters ended
April 1, 2000, July 1, 2000 and September 30, 2000 and our Current Reports on
Form 8-K, filed June 28, 2000, July 6, 2000, and September 28, 2000, all of
which we filed with the SEC under Section 15(d) of the Securities Exchange Act
of 1934. We also are including the Annual Report on Form 10-K for the year ended
December 31, 1999 and the Quarterly Report on Form 10-Q for the quarter ended
September 30, 2000 with this prospectus for your information.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANY OTHER PERSON TO PROVIDE YOU WITH DIFFERENT INFORMATION.
THIS PROSPECTUS IS NOT AN OFFER TO SELL, NOR IS IT SEEKING AN OFFER TO BUY,
THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
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<PAGE> 4
SUMMARY
The summary highlights information contained elsewhere in this prospectus.
Because this is only a summary, it does not contain all the information that you
should consider before buying notes in this offering. You should read the entire
prospectus carefully, including our consolidated financial statements and the
related notes included elsewhere in this prospectus.
TruServ Corporation is 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. Our corporate headquarters are located at 8600 West Bryn Mawr
Avenue, Chicago, Illinois 60631-3505. Our telephone number is (773) 695-5000.
We are offering the notes exclusively to current company Members who own
Class A common stock 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); or
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 United
States Treasury Note rate plus two percent. The current interest rate is 7.67%
per annum for two year notes, 7.90% per annum for three year notes and 7.89% per
annum for four year notes. That interest rate will change in January, 2001.
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. 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.
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 trading 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
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1999 1998 1997 1996 1995
----- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
(.60) 1.33 2.02 2.57 2.78
</TABLE>
<TABLE>
<CAPTION>
FOR THE THIRTY-NINE
WEEKS ENDED
--------------------------------
SEPTEMBER 30, OCTOBER 2,
2000 1999
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<S> <C>
1.22 1.00
</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. For 1999, earnings were insufficient to cover fixed
charges by $131,143,000.
RISK FACTORS
The following risks should be considered before investing in the Notes:
SOURCES OF PAYMENTS TO HOLDERS OF THE NOTES
No sinking fund will be created to repay the notes upon maturity or earlier
redemption. The principal source of funds for the Company's payments of
principal and interest and to meet expenses will be general revenues. See
"General Business Risks."
LACK OF MARKET FOR NOTES AND RESTRICTIONS ON TRANSFER
There is currently no trading market for the notes and we do not foresee
such a market developing at any time in the future. Additionally, ownership of
the notes may not be transferred and the notes may not be pledged as collateral.
Any probate proceeding or court decree affecting ownership of the notes will
cause such notes to be redeemed and subject to a penalty.
SUBORDINATION OF 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, including the notes, are subject to
our lien rights ensuring payment of your debts to us. The notes are uninsured.
COMPETITION
Our markets are subject to increasingly intense competition and changes. We
expect continued intense competition from the so-called "Big Box" stores such as
Home Depot, Menards 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.
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<PAGE> 6
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.
MEMBER BASE
The success of the company is dependent upon the continued support from its
members and their purchases through the cooperative. The trend in the number of
members participating in the company's programs has recently been unfavorable.
If this trend continues the company's operating results and financial condition
could be adversely effected.
ACCESS TO CAPITAL
The company is financed by debt capital obtained from various external
sources. The majority of the short-term capital is mainly derived from a $300
million revolving credit agreement supported by nine major financial
institutions. This agreement is subject to the company's compliance with certain
financial and non-financial covenants, and any breach of these covenants would
increase the cost of such financing and make it more difficult to access the
necessary working capital requirements.
KEY PERSONNEL
Our success depends to a significant degree upon the continued
contributions of key management, sales, marketing and merchandising personnel,
many of whom would be difficult to replace. If certain of these associates were
to leave, the company would be adversely effected. We also believe our future
success is dependent upon our ability to attract and retain highly skilled
managers, sales, marketing and merchandising associates. Competition for these
types of associates is intense and there can be no assurance that we will be
successful in attracting and retaining the necessary personnel. To the extent we
are not successful, we could be adversely effected.
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<PAGE> 7
THE NOTE PROGRAM
The program is designed to provide you with a convenient means of investing
funds directly with us. The total amount being offered is $50,000,000 and notes
are sold initially in units of $1,000.
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 note. Rather, your
investment will be maintained in book-entry form by The Northern Trust Company,
our agent bank.
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 two percent. The current interest rate is 7.67% per
annum for two year notes, 7.90% per annum for three year notes and 7.89% per
annum for four year notes. That interest rate will change in January, 2001. 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 The Northern Trust Company, 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); or
4. Living trust.
You may not transfer the notes and you may not pledge them as collateral
for any of your debts.
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 us toll-free at 1-800-507-9000 to obtain current information
about your account.
HOW TO INVEST
You must request an application package by calling us toll-free at
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 COMPLETED APPLICATION, THE IRS
W-9 CERTIFICATION FORM AND THE CHECK FOR YOUR INVESTMENT AMOUNT MUST BE RECEIVED
BY US AT OUR DESIGNATED LOCKBOX BANK ON OR BEFORE THE LAST BUSINESS DAY BEFORE
THE START OF EACH CALENDAR-YEAR QUARTER.
6
<PAGE> 8
USE OF PROCEEDS
We intend 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 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. We are offering and selling the notes directly to
you. There are no underwriters.
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. 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 Leonard G. Kuhr, Senior Vice
President and Chief Financial Officer, TruServ Corporation, 8600 West Bryn Mawr
Avenue, Chicago, Illinois 60631-3505 or telephone number (773) 695-5000.
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) reduce the principal amount of any note; or
2) 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).
EVENTS 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. 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.
LIMITATIONS ON SUITS
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;
8
<PAGE> 10
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).
SUBORDINATION
The notes and all claims arising in connection with the notes are
subordinated to the prior payment of all Senior Indebtedness of the Company.
Senior Indebtedness is defined as all indebtedness of the Company, whether
outstanding on the date of execution of the indenture or thereafter created, for
money borrowed from banks, insurance companies and other financial institutions,
to trade creditors, or for other indebtedness of the Company, unless in the
instrument creating or evidencing such indebtedness it is provided that such
indebtedness is not senior in right of payment to the notes (Sections 101 and
1001).
Upon a distribution of assets, dissolution, winding up, total liquidation
or reorganization of the Company, if any event of default has occurred and is
continuing with respect to any Senior Indebtedness, or if the principal of the
notes has been declared due and payable and such declaration has not been
rescinded and annulled, then in any such instance all Senior Indebtedness must
be paid in full before any payment of principal or interest on the notes can be
made (Section 1002). Any subordination will not prevent the occurrence of an
"Events of Default" (as defined above) under the Indenture. See "-- Events of
Default."
By reason of the subordination of the Notes, in the event of liquidation of
the Company, the Holders will not receive payment until the holders of Senior
Indebtedness have been satisfied. Also, by reason of the subordination
provisions, the Holders may receive payments less ratably than other creditors
of the Company. As of the date of this Prospectus, the Company had aggregate
Senior Indebtedness outstanding of $ and the applicable borrowing
under the Company's $300 million revolving credit agreement.
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 (Sections 301-304).
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).
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AGENT BANK AND ADMINISTRATION
We have engaged The Northern Trust Company as our agent bank to administer
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
5) Form 1099B, if applicable.
Additionally, the agent bank will provide an automated voice-response
system at 1-800-507-9000. You may call this number to obtain aggregate account
and individual note information. The agent bank will also 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 indicate 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 Michael Best &
Friedrich LLP, Milwaukee, Wisconsin.
10
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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
Source of Payments to Holders of the
Notes................................ 4
Lack of Market for Notes and
Restrictions on Transfer............. 4
Subordination of Notes.................. 4
Competition............................. 4
Volatile Pricing of
Merchandise/Inventory................ 4
Regional Market Variations.............. 5
Environmental........................... 5
Member Base............................. 5
Access to Capital....................... 5
Key Personnel........................... 5
The Truserv Variable Denomination
Subordinated Fixed Rate Term Note
Program................................. 6
How to Invest............................. 6
Use of Proceeds........................... 7
Plan of Distribution...................... 7
Certain Terms of the Notes................ 8
Agent Bank and Administration............. 10
Taxes..................................... 10
Legal Matters............................. 10
</TABLE>
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$50,000,000
TRUSERV CORPORATION
VARIABLE DENOMINATION
SUBORDINATED FIXED RATE
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 1-800-507-9000
PROSPECTUS
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DATED
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<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 Subordinated Fixed Rate
Term Notes being registered:
<TABLE>
<S> <C>
Registration Fee............................................ $13,200
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....................................................... $87,200
=======
</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.
Under the Company's by-laws, 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.
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.
S-1
<PAGE> 14
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 Form of Trust Indenture between TruServ Corporation and U.S.
Bank Trust National Association dated ------------, 2000.
*5 Opinion of Michael Best & Friedrich LLP.
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 Post-Effective Amendment No. 11
to Registration Statement on Form S-2 to 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 TruServ Corporation Defined Lump Sum Pension Plan (as
amended and restated effective as of January 1, 1998).
Incorporated by reference--Exhibit 10-C to the registrant's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 (File No. 2-20910).
10-D TruServ Corporation Employees' Savings and Compensation
Deferral Plan (as amended and restated effective July 1,
2000). Incorporated by reference--Exhibit 10-D to
Post-Effective Amendment No. 11 to Registration Statement on
Form S-2 to Form S-4 (No. 333-18397).
10-E TruServ Corporation Supplemental Retirement Plan between
TruServ Corporation and selected executives of the Company
(as amended effective July 24, 1998). Incorporated by
reference--Exhibit 10-E to Post-Effective Amendment No. 10
to Registration Statement on Form S-2 to Form S-4 (No.
333-18397).
10-F 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-G 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-H 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-I 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-J Third amendment to 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 on Exhibit 4-K to the registrant's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 (File No. 2-20910).
</TABLE>
S-2
<PAGE> 15
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10-K 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-L Amendment dated May 12, 1999 to the 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 on Exhibit
4-M to the registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1999 (File No. 2-20910).
10-M 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. 333-18397).
10-N Amendment No. 1 to Credit Agreement dated September 10, 1998
for $105,000,000 Note Purchase Agreement between TruServ
Corporation and various Purchasers. Incorporated by
reference on Exhibit 4-O to the registrant's Annual Report
on Form 10-K for the fiscal year ended December 31, 1999
(File No. 2-20910).
10-O 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-S 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).
10-T Cotter & Company Supplemental Retirement Plan between Cotter
& Company 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).
*12 Schedule of Computation of Consolidated Ratio of Earnings to
Fixed Charges for the Thirty-Nine Weeks Ended September 30,
2000 and October 2, 1999 and for the Fiscal Years 1999,
1998, 1997, 1996 and 1995 (included on page S-7).
13-A Annual Report on Form 10-K for the year ended December 31,
1999. Incorporated by reference (File No. 2-20910).
13-B Quarterly Report on Form 10-Q for the quarter ended
September 30, 2000. Incorporated by reference (File No.
2-20910).
*23-A Consent of Michael Best & Friedrich LLP (included as Exhibit
5).
*23-B Consent of Ernst & Young LLP (included on page S-8).
*24 Powers of Attorney (contained on signature page hereof).
*25 Statement of Eligibility of Trustee.
*99 Current Application Package for TruServ Variable
Denomination Subordinated Fixed Rate Term Note Investment
Program.
</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 THIS REGISTRATION STATEMENT ON FORM S-2 AND HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CHICAGO, ILLINOIS, ON NOVEMBER 13,
2000.
TRUSERV CORPORATION
By: /s/ LEONARD G. KUHR
------------------------------------
Leonard G. Kuhr
Senior Vice President and Chief
Financial Officer
KNOW ALL MEN BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW, CONSTITUTES AND APPOINTS, LEONARD G. KUHR, AND DIANE T. NAUER, 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, HER 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
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/ DONALD J. HOYE President, Chief Executive November 13, 2000
----------------------------------------------------- Officer and Director
Donald J. Hoye
/s/ LEONARD G. KUHR Senior Vice President and November 13, 2000
----------------------------------------------------- Chief Financial Officer
Leonard G. Kuhr (principal accounting
officer)
/s/ JOE W. BLAGG Chairman of the Board and November 13, 2000
----------------------------------------------------- Director
Joe W. Blagg
/s/ JAMES D. BURNETT Director November 13, 2000
-----------------------------------------------------
James D. Burnett
/s/ JAY B. FEINSOD Director November 13, 2000
-----------------------------------------------------
Jay B. Feinsod
/s/ WILLIAM H. HOOD Director November 13, 2000
-----------------------------------------------------
William H. Hood
/s/ JAMES D. HOWENSTINE Director November 13, 2000
-----------------------------------------------------
James D. Howenstine
/s/ JERRALD T. KABELIN Director November 13, 2000
-----------------------------------------------------
Jerrald T. Kabelin
/s/ PETER G. KELLY Director November 13, 2000
-----------------------------------------------------
Peter G. Kelly
/s/ ROBERT J. LADNER Director November 13, 2000
-----------------------------------------------------
Robert J. Ladner
</TABLE>
S-5
<PAGE> 18
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ GEORGE V. SHEFFER Director November 13, 2000
-----------------------------------------------------
George V. Sheffer
/s/ DENNIS A. SWANSON Director November 13, 2000
-----------------------------------------------------
Dennis A. Swanson
/s/ JOHN M. WEST, JR. Director November 13, 2000
-----------------------------------------------------
John M. West, Jr.
/s/ BARBARA B. WILKERSON Director November 13, 2000
-----------------------------------------------------
Barbara B. Wilkerson
/s/ BRYAN R. ABLEIDINGER Director November 13, 2000
-----------------------------------------------------
Bryan R. Ableidinger
/s/ BENJAMIN J. ANDRE Director November 13, 2000
-----------------------------------------------------
Benjamin J. Andre
/s/ HAROLD A. DOUTHITT Director November 13, 2000
-----------------------------------------------------
Harold A. Douthitt
</TABLE>
S-6
<PAGE> 19
EXHIBIT 12
TRUSERV CORPORATION
SCHEDULE OF COMPUTATION OF CONSOLIDATED RATIO
OF EARNINGS TO FIXED CHARGES
FOR THE THIRTY-NINE WEEKS ENDED SEPTEMBER 30, 2000 AND OCTOBER 2, 1999 AND
FOR THE FISCAL YEARS 1999, 1998, 1997, 1996 AND 1995
(000'S OMITTED)
<TABLE>
<CAPTION>
THIRTY-NINE WEEKS ENDED FOR THE FISCAL YEARS
-------------------------- ----------------------------------------------------
SEPTEMBER 30, OCTOBER 2,
2000 1999 1999 1998 1997 1996 1995
------------- ---------- --------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net earnings after tax................... $12,446 $ (416) $(131,143) $20,480 $42,716 $52,410 $59,037
Add: Tax provision....................... 288 298 17,020 597 1,600 362 176
------- ------- --------- ------- ------- ------- -------
Pretax income............................ 12,734 (118) (114,123) 21,077 44,316 52,772 59,213
------- ------- --------- ------- ------- ------- -------
Add: Fixed charges
Interest paid to members............. 8,407 10,532 14,498 16,390 17,865 18,460 20,627
Other interest paid.................. 42,906 34,906 46,204 38,710 19,100 10,175 9,298
------- ------- --------- ------- ------- ------- -------
Total interest expense............... 51,313 45,438 60,702 55,100 36,965 28,635 29,925
------- ------- --------- ------- ------- ------- -------
Rental expenses...................... 22,865 23,597 31,702 28,291 19,890 14,971 10,063
% of rental expenses................. 33.33% 33.33% 33.33% 33.33% 33.33% 33.33% 33.33%
------- ------- --------- ------- ------- ------- -------
Applicable rental expenses........... 7,621 7,865 10,566 9,430 6,629 4,990 3,354
------- ------- --------- ------- ------- ------- -------
Total fixed charges.................. 58,934 53,303 71,268 64,530 43,594 33,625 33,279
------- ------- --------- ------- ------- ------- -------
Pretax earnings/(loss) before fixed
charges................................ $71,668 $53,185 $ (42,855) $85,607 $87,910 $86,397 $92,492
======= ======= ========= ======= ======= ======= =======
Ratio of pretax earnings/(loss) to fixed
charges................................ 1.22 1.00 (0.60)(a) 1.33 2.02 2.57 2.78
======= ======= ========= ======= ======= ======= =======
</TABLE>
---------------
(a) For 1999, earnings were insufficient to cover fixed charges by
$131,143,000
S-7
<PAGE> 20
EXHIBIT 23-B
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
and related Prospectus of TruServ Corporation for the registration of
$50,000,000 of Variable Denomination Subordinated Fixed Rate Term Notes of our
report dated April 14, 2000, with respect to the consolidated financial
statements of TruServ Corporation included in its Annual Report (Form 10-K) for
the year ended December 31, 1999, filed with the Securities and Exchange
Commission.
Ernst & Young LLP
Chicago, Illinois
November 9, 2000
S-8
