-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CJmIfNjoq0Fyw41SbU3RS2l9AedmbKFT+HfxERWI4z8qCUPuNgR4KTFhTigySBxv MZ0es80Eg7waTxrEa9mKGQ== 0000950137-01-501684.txt : 20010518 0000950137-01-501684.hdr.sgml : 20010518 ACCESSION NUMBER: 0000950137-01-501684 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010517 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRUSERV CORP CENTRAL INDEX KEY: 0000025095 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-LUMBER, PLYWOOD, MILLWORK & WOOD PANELS [5031] IRS NUMBER: 362099896 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 333-18397 FILM NUMBER: 1642819 BUSINESS ADDRESS: STREET 1: 8600 WEST BRYN MAWR AVE CITY: CHICAGO STATE: IL ZIP: 60631-3505 BUSINESS PHONE: 7736955000 MAIL ADDRESS: STREET 1: 8600 W. BRYN MAWR AVENUE CITY: CHICAGO STATE: IL ZIP: 60631-3505 FORMER COMPANY: FORMER CONFORMED NAME: COTTER & CO DATE OF NAME CHANGE: 19920703 8-K 1 c62550e8-k.txt CURRENT REPORT 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported) May 17, 2001 TRUSERV CORPORATION (Exact Name of Registrant as Specified in Its Charter) DELAWARE (State or Other Jurisdiction of Incorporation) 2-20910 36-2099896 (Commission File Number) (I.R.S. Employer Identification No.) 8600 WEST BRYN MAWR AVENUE, CHICAGO, ILLINOIS 60631-3505 (Address of Principal Executive Offices) (Zip Code) 773-695-5000 (Registrant's Telephone Number, Including Area Code) Not Applicable (Former Name or Former Address, if Changed Since Last Report) 1 2 Item 5. Unaudited Financial Statements Attached hereto as Exhibit 99.A are the unaudited condensed consolidated financial statements of the company for the first quarter ended March 31, 2001. Item 7. Financial Statements and Exhibits Exhibit Index 99.A Unaudited Condensed Consolidated Financial Statements of TruServ Corporation SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. TRUSERV CORPORATION (Registrant) Date: May 17, 2001 By /s/ PAMELA FORBES LIEBERMAN -------------------------------- Name: Pamela Forbes Lieberman Title: Senior Vice President and Chief Financial Officer 2 EX-99.A 2 c62550ex99-a.txt UNAUDITED COND. CONSOLIDATED FINANCIAL STATEMENTS 1 EXHIBIT 99.A TRUSERV CORPORATION UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET ASSETS
MARCH 31, DECEMBER 31, 2001 2000 ---- ---- (000'S OMITTED) Current assets: Cash and cash equivalents ........................................... $ 14,259 $ 18,316 Restricted cash ..................................................... 1,000 1,000 Accounts and notes receivable, net of allowance for doubtful accounts of $8,338,000 and $7,170,000 ......................... 373,658 396,587 Inventories (Note 5) ................................................ 452,168 443,663 Other current assets ................................................ 18,160 12,274 ---------- ---------- Total current assets .......................................... 859,245 871,840 Properties, net ........................................................ 210,782 216,146 Goodwill, net .......................................................... 93,323 94,051 Other assets ........................................................... 48,310 53,977 ---------- ---------- Total assets .................................................. $1,211,660 $1,236,014 ========== ==========
See Notes to Unaudited Condensed Consolidated Financial Statements 3 2 TRUSERV CORPORATION UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET LIABILITIES AND CAPITALIZATION
MARCH 31, DECEMBER 31, 2001 2000 ---- ---- (000'S OMITTED) Current liabilities: Accounts payable ........................................................... $ 395,156 $ 356,196 Outstanding checks ......................................................... 50,312 129,490 Accrued expenses ........................................................... 87,986 85,161 Short-term borrowings ...................................................... 178,449 138,085 Current maturities of notes, long-term debt and capital lease obligations ............................................................. 61,828 61,350 Patronage dividend payable in cash ......................................... 1,770 10,558 ----------- ----------- Total current liabilities ............................................ 775,501 780,840 Long-term debt, including capital lease obligations, less current maturities .. 287,267 288,929 Deferred credits .............................................................. 9,553 9,821 ----------- ----------- Total liabilities and deferred credits ........................................ 1,072,321 1,079,590 ----------- ----------- Minority interest ............................................................. 4,624 4,999 Commitments and contingencies ................................................. -- -- Members' capitalization: Promissory (subordinated) and installment notes ............................ 62,819 65,846 Members' equity: Redeemable Class A voting common stock, $100 par value; 750,000 shares authorized; 444,240 and 411,180 shares issued and fully paid; 65,820 and 98,880 shares issued (net of subscriptions receivable of $1,748,000 and $1,922,000) ............................................. 49,264 49,084 Redeemable Class B non-voting common stock and paid-in capital, $100 par value; 4,000,000 shares authorized; 1,732,968 and 1,732,962 shares issued and fully paid .................................................. 174,596 174,596 Loss allocation (Note 4) ................................................ (92,460) (92,460) Deferred patronage ...................................................... (27,195) (27,288) Retained deficit ........................................................ (31,410) (17,381) Accumulated other comprehensive loss .................................... (899) (972) ----------- ----------- Total members' equity ................................................ 71,896 85,579 ----------- ----------- Total members' capitalization ................................... 134,715 151,425 ----------- ----------- Total liabilities and members' capitalization .............. $ 1,211,660 $ 1,236,014 =========== ===========
See Notes to Unaudited Condensed Consolidated Financial Statements 4 3 TRUSERV CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THIRTEEN WEEKS ENDED ----------- MARCH 31, APRIL 1, 2001 2000 ---- ---- (000'S OMITTED) Revenues ............................................... $ 654,350 $ 1,027,605 Costs and expenses: Cost of revenues .................................... 603,700 964,939 Logistics and manufacturing expenses (Note 2) ....... 20,648 23,829 Selling, general and administrative expenses (Note 2) 29,167 34,159 Interest paid to members ............................ 1,953 2,815 Other interest expense .............................. 13,404 11,600 Gain on sale of properties .......................... (62) (103) Other income, net ................................... (560) (765) ----------- ----------- 668,250 1,036,474 ----------- ----------- Net loss before income taxes ........................... (13,900) (8,869) Income tax expense ..................................... 36 55 ----------- ----------- Net loss ............................................... $ (13,936) $ (8,924) =========== ===========
See Notes to Unaudited Condensed Consolidated Financial Statements. 5 4 TRUSERV CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THIRTEEN WEEKS ENDED ---------------------------- MARCH 31, APRIL 1, 2001 2000 ---- ---- (000'S OMITTED) Operating activities: Net loss ................................................................ $(13,936) $ (8,924) Adjustments to reconcile net loss to cash and cash equivalents provided by (used for) operating activities: Depreciation and amortization ........................................ 10,702 11,314 Provision for allowance for doubtful accounts ........................ 1,340 2,097 Net change in working capital components ............................. 47,957 (44,574) -------- -------- Net cash and cash equivalents provided by (used for) operating activities: 46,063 (40,087) -------- -------- Investing activities: Additions to properties owned ........................................... (3,212) (3,389) Proceeds from sale of properties owned .................................. 25 1,143 Changes in other assets ................................................. 4,182 (219) -------- -------- Net cash and cash equivalents provided by (used for) investing activities .................................................. 995 (2,465) -------- -------- Financing activities: Payment of patronage dividend ........................................... (8,788) -- Proceeds from long-term borrowings ...................................... -- 791 Payment of notes, long-term debt and lease obligations .................. (3,693) (4,472) Increase (decrease) in outstanding checks ............................... (79,178) (46,355) Proceeds from short-term borrowings, net of repayments .................. 40,364 93,509 Purchase of common stock ................................................ -- (1,505) Proceeds from Class A common stock subscription receivables ............. 180 145 -------- -------- Net cash and cash equivalents provided by (used for) financing activities (51,115) 42,113 -------- -------- Net decrease in cash and cash equivalents .................................. (4,057) (439) Cash and cash equivalents at beginning of period ........................... 18,316 1,815 -------- -------- Cash and cash equivalents at end of period ................................. $ 14,259 $ 1,376 ======== ========
See Notes to Unaudited Condensed Consolidated Financial Statements. 6 5 TRUSERV CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - GENERAL The condensed consolidated balance sheet at March 31, 2001 and December 31, 2000 and the condensed consolidated statement of operations and statement of cash flows for the thirteen weeks ended March 31, 2001 and April 1, 2000 are unaudited and, in the opinion of the management of the company, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of financial position at the balance sheet dates and the results of operations and cash flows for the respective interim periods. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These financial statements should be read in conjunction with the unaudited consolidated financial statements for the year ended December 31, 2000 included in the Company's Current Report on Form 8-K. NOTE 2 - RECLASSIFICATIONS Certain reclassifications have been made to prior period financial statements to conform with the current year's presentation. These reclassifications had no effect on net margin (loss) for any period. NOTE 3 - ESTIMATED PATRONAGE DIVIDENDS If financial and operating conditions permit, patronage dividends are declared and paid by the company after the close of each fiscal year. Patronage dividends in the amount of $34,952,000 were paid on March 31, 2001 relating to the fiscal year ended December 31, 2000, approximately thirty percent of which were paid in cash (TruServ by-laws and the IRS require the payment of at least twenty percent of patronage dividends be in cash). The remainder was paid through the issuance of the company's Redeemable Class B non-voting common stock and, in certain cases, a small portion of the dividend was paid by means of Promissory (Subordinated) Notes of the company. The Redeemable Class B non-voting common stock issued as part of the December 31, 2000 patronage dividend has been designated as qualified notices of allocation. There is no estimated patronage dividend for the period ended March 31, 2001 and there was no patronage dividend estimated for the corresponding period in 2000. NOTE 4 - LOSS ALLOCATION TO MEMBERS During the third quarter of fiscal year 2000, company management developed, and the Board of Directors approved, a plan to equitably allocate to members the loss incurred in 1999. This loss was previously recorded as a reduction of retained earnings. The company has allocated the 1999 loss by establishing a loss allocation account as a contra-equity account in the unaudited condensed consolidated balance sheet with the offsetting credit recorded to retained earnings / (deficit). The loss allocation account reflects the sum of each member's proportionate share of the 1999 loss, after being reduced by certain amounts that are not allocable to members. The loss allocation account is not a receivable from members and does not represent an amount currently due from members. Rather, the loss allocation account will be satisfied, on a member by member basis, by withholding the portion of future patronage dividends that would have been paid in qualified Redeemable Class B non-voting common stock, at par value, and applying such amount as a reduction in the loss allocation account until the individual member's loss allocation account has been fully satisfied. Members' stock ownership will not be reduced to satisfy the loss allocation account. However, in the event a member should terminate as a stockholder of the company, any unsatisfied portion of that member's loss allocation account will be satisfied by reducing the redemption amount paid for the member's stock investment in the company. 7 6 NOTE 5 - INVENTORIES INVENTORIES CONSISTED OF THE FOLLOWING: MARCH 31, DECEMBER 31, 2001 2000 ---- ---- (000'S OMITTED) Manufacturing inventories: Raw materials ............................ $ 4,004 $ 2,242 Work-in-process and finished goods ....... 32,032 30,705 -------- -------- 36,036 32,947 Merchandise inventories ........................ 416,132 410,716 -------- -------- Total .................................... $452,168 $443,663 ======== ======== Inventories are stated at the lower of cost, determined on the "first-in, first-out" basis, or market. The cost of inventory also includes indirect costs to bring inventory to its existing location for resale. The amount of indirect costs included in ending inventory at March 31, 2001 and December 31, 2000 was $28,802,000 and $29,144,000, respectively. NOTE 6 - DEBT The company's senior notes agreement and revolving credit facility require the company to meet certain financial ratios and covenants. The company notified its lenders that it had failed to achieve a required borrowing base ratio test contained in both the senior notes agreement and the revolving credit facility in February 2001. The company is in the course of renegotiating the senior notes agreement and the revolving credit facility with its lending group, and, if successful, will replace the current revolving credit facility, and possibly the senior notes, with an asset-based lending agreement by approximately September 1, 2001. However, in the event the company is not successful in renegotiating such an agreement, the senior notes would remain callable and would therefore be reclassified from a long-term liability to a current liability. 8 7 NOTE 7 - SEGMENT INFORMATION The company is principally engaged as a wholesaler of hardware and related products and is a manufacturer of paint products. The company identifies segments based on management responsibility and the nature of the business activities of each component of the company. The company measures segment earnings as operating earnings including an allocation for interest expense and income taxes. Information regarding the identified segments and the related reconciliation to consolidated information are as follows: QUARTER ENDED MARCH 31, 2001 (000'S OMITTED)
ELIMINATION OF INTERSEGMENT CONSOLIDATED HARDWARE PAINT OTHER ITEMS TOTALS -------- ----- ----- ----- ------ Net sales to external customers $ 600,138 $ 28,449 $ 25,763 $ - $ 654,350 Intersegment sales - 547 - (547) - Interest expense 13,942 1,279 136 - 15,357 Depreciation & amortization 10,092 437 173 - 10,702 Segment net margin/(loss) (16,663) 2,607 120 - (13,936) Identifiable segment assets 1,121,899 61,105 28,656 - 1,211,660 Expenditures for long-lived assets 2,914 265 33 - 3,212
QUARTER ENDED APRIL 1, 2000 (000'S OMITTED)
ELIMINATION OF INTERSEGMENT CONSOLIDATED HARDWARE PAINT OTHER ITEMS TOTALS -------- ----- ----- ----- ------ Net sales to external customers $ 969,483 $ 31,739 $ 26,383 $ - $ 1,027,605 Intersegment sales - 492 - (492) - Interest expense 12,633 1,616 166 - 14,415 Depreciation & amortization 10,679 442 193 - 11,314 Segment net margin/(loss) (11,146) 2,205 17 - (8,924) Expenditures for long-lived assets 2,982 334 73 - 3,389
9 8 NOTE 8 - ASSET SALE Effective December 29, 2000, the company sold the assets, primarily inventory, of the Lumber and Building Material business to Builder Marts of America, Inc. The Lumber and Building Materials business generated over 30% of the company's revenue; however, the sale of the business will not materially impact net margin. NOTE 9 - NEW ACCOUNTING PRONOUNCEMENT Effective January 1, 2000, the Company adopted Financial Accounting Standards Board (FASB) Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by FASB Statement No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities." These new standards require that all derivative instruments be recognized as either assets or liabilities in the balance sheet and measured at their fair value. The new standards also require changes in the fair value of derivatives to be recorded in each period in current earnings or comprehensive income, depending on the intended use of the derivatives. The adoption of these new standards had no impact on the Company's results of operations, its financial position or its cash flows. 10 -----END PRIVACY-ENHANCED MESSAGE-----