EXHIBIT 99.1
[TRUSERV LOGO]
EARNINGS RELEASE
TRUSERV REPORTS THIRD QUARTER EARNINGS
CHICAGO, OCT. 31, 2001 - TruServ Corporation reported today revenue for
the month ended September 29, 2001 of $235.3 million, down 12.0 percent from
$267.5 after excluding net sales from the lumber business sold in December of
2000. Revenue compared to the same period a year ago, which includes the lumber
business, was down 35.5 percent.
Net income for the month was $1.8 million, versus income of $10.7
million in the same period a year ago. After excluding the direct earnings of
$1.2 million from the lumber business and $5.0 million from a pension
annuitization gain in September of last year, and after excluding restructuring
charges of $3.5 million and unusual legal and refinancing costs of $0.6 million
incurred in September of this year, on a comparative basis, the net income was
$1.4 million higher than a year ago.
Chief operating officer and chief financial officer Pamela Forbes
Lieberman attributed the improvement in net income, after the exclusion of
extraordinary, one-time gains and expenses, to both an improved mix of warehouse
sales versus manufacturer direct sales to members, and to millions of dollars in
cost reductions from operational efficiencies.
"The effect of higher handled sales, combined with cost reductions,
more than offset the impact from lower sales volumes," said Forbes Lieberman.
"Reductions in both corporate staff and the distribution network, together with
lower advertising expense, all helped in reducing the co-op's ongoing costs."
Revenue for the quarter ended September 29 was $621.9 million, down 9.2
percent from the same period a year ago after excluding net sales from the
lumber business sold in December of 2000. Revenue compared to the same period a
year ago, which includes the lumber business, was down 34.1 percent.
The quarter resulted in a loss of $2.5 million, down from earnings of
$9.4 million from the same period a year ago. Earnings increased quarter over
quarter by $2.7 million, after excluding the direct earnings of $3.6 million
from the lumber business and a one time pension annuitization gain of $5.0
million in the third quarter of last year and excluding restructuring
Sept. Earnings Page 1 11/01/01
charges and unusual legal and refinancing costs of $3.3 million and $2.7
million, respectively, incurred in the third quarter of this year.
Revenue for the nine months ended September 29 was $2.0 billion, down
10.6 percent from the same period a year ago after excluding net sales from the
lumber business sold in December of 2000. Revenue compared to the same period a
year ago, which includes the lumber business, was down 34.9 percent.
The net loss for the first nine months was $13.8 million, down from net
income of $12.4 million from the same period a year ago. Earnings after certain
exclusions increased $2.3 million period over period. These exclusions were the
direct earnings of $11.1 million from the lumber business and a one time pension
annuitization gain of $5.0 million in the first nine months of last year and
lumber business direct earnings, restructuring charges and unusual legal and
refinancing costs of $0.3 million, $8.2 million and $4.5 million, respectively,
incurred in the first nine months of this year.
Senior note and revolver debt, net of available cash on hand, was $403
million at the end of September, down 18 percent compared with $489 million
outstanding at September month end a year ago.
"We continue to pay down our debt as a result of improved operating
cash flow due to aggressive cost reductions and inventory reduction," said
Forbes Lieberman. "It's important to note that in the period of May through
September, TruServ has operated at a profit, even with all our restructuring and
refinancing costs factored in. Our business plan is working."
Forbes Lieberman also assured members that the co-op's refinancing
continues on track for a December close and points to improved fill rates as a
key indicator that TruServ's vendor community supports the co-op.
"Once we complete our refinancing in December, many of the distractions
of the past go away, allowing us to focus entirely on growing our members'
business and improving our operational profitability."
Sept. Earnings Page 2 11/01/01
TRUSERV CORP.
COMPARATIVE CONDENSED STATEMENT OF EARNINGS
($ in millions)
MONTH ENDED QUARTER ENDED NINE MONTHS ENDED
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9/29/01 9/30/00 % Change 9/29/01 9/30/00 % Change 9/29/01 9/30/00 % Change
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Comparative Revenue $235.3 $267.5 (12.0%) $621.9 $684.7 (9.2%) $2,002.8 $2,241.3 (10.6%)
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Lumber Revenue -- $97.5 -- $0.1 $259.6 -- $21.3 $867.8 --
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Net Sales $235.5 $365.0 (35.5%) $622.0 $944.3 (34.1%) $2,024.1 $3,109.1 (34.9%)
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Comparative Net $5.9 $4.5 31.1% $3.5 $0.8 437.5% ($1.4) ($3.7) 62.2%
Income
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Direct Lumber -- $1.2 -- -- $3.6 -- $0.3 $11.1 --
Business Income
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Pension -- $5.0 -- -- $5.0 -- -- $5.0 --
Annuitization Gain
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Restructuring & ($4.1) -- -- ($6.0) -- -- ($12.7) -- --
Refinancing Costs
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Reported Net Income $1.8 $10.7 -- ($2.5) $9.4 -- ($13.8) $12.4 --
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This earnings release may contain forward-looking statements that involve risks
and uncertainties. The following factors could cause results to differ
materially from management expectations as projected in such forward-looking
statements: seasonal variations, competition, risks of new business areas, the
availability and cost of real estate and construction, and changes in federal or
state legislation or regulations. Members are referred to the "Cautionary Note
Regarding Forward-Looking Statements" in the Company's most recent Form 10-K
which Note is incorporated into this news release by reference.
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Sept. Earnings Page 3 11/01/01