<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q
(Mark one)

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the quarterly period ended March 31, 2001 or

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the transition period from       to
                                        -----    -----

         Commission file number 2-20910

                               TRUSERV CORPORATION
             (Exact name of registrant as specified in its charter)

          DELAWARE                                               36-2099896
-------------------------------                               ----------------
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              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, former address and former fiscal year,
                         if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ ] No [X]

The number of shares outstanding of each of the issuer's classes of common
stock, as of July 28, 2001.

Class A Common Stock, $100 Par Value.........................     450,420 Shares
Class B Common Stock, $100 Par Value.........................   1,731,490 Shares



<PAGE>   2
                          ITEM 1. FINANCIAL STATEMENTS

                               TRUSERV CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEET

                                     ASSETS

<TABLE>
<CAPTION>
                                                                                        MARCH 31,         DECEMBER 31,
                                                                                          2001                2000
                                                                                     ---------------     ---------------
                                                                                       (UNAUDITED)
                                                                                               (000'S OMITTED)
<S>                                                                                  <C>                 <C>
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 6)........................................................              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
                                                                                     ===============     ===============
</TABLE>


            See Notes to Condensed Consolidated Financial Statements




<PAGE>   3
                               TRUSERV CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEET

                    LIABILITIES AND MEMBERS' CAPITALIZATION

<TABLE>
<CAPTION>
                                                                                        MARCH 31,         DECEMBER 31,
                                                                                           2001               2000
                                                                                     ---------------     ---------------
                                                                                        (UNAUDITED)
                                                                                                  (000'S OMITTED)
<S>                                                                                  <C>                 <C>
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  (Note 2)....................................................              340,665             341,188
   Patronage dividend payable in cash..........................................                1,671              10,459
                                                                                     ---------------     ---------------
         Total current liabilities.............................................            1,054,239           1,060,579

Long-term debt, including capital lease obligations,
   less current maturities (Note 2) ...........................................                8,430               9,091
Deferred credits ..............................................................                9,553               9,821
                                                                                     ---------------     ---------------
Total liabilities and deferred credits.........................................            1,072,222           1,079,491
                                                                                     ---------------     ---------------
Minority interest..............................................................                4,622               4,999
Commitments and contingencies..................................................                   --                  --
Members' capitalization:
   Promissory (subordinated) and installment notes ............................               62,820              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; 1,731,482 and 1,731,482 shares
       issued and fully paid...................................................              174,448             174,448
      Loss allocation (Note 5).................................................              (92,460)            (92,460)
      Deferred patronage.......................................................              (27,194)            (27,288)
      Retained deficit.........................................................              (31,163)            (17,134)
      Accumulated other comprehensive loss.....................................                 (899)               (972)
                                                                                     ---------------     ---------------
         Total Members' equity.................................................               71,996              85,678
                                                                                     ---------------     ---------------
              Total Members' capitalization....................................              134,816             151,524
                                                                                     ---------------     ---------------
                   Total liabilities and Members' capitalization...............      $     1,211,660     $     1,236,014
                                                                                     ===============     ===============
</TABLE>



            See Notes to Condensed Consolidated Financial Statements




<PAGE>   4
                               TRUSERV CORPORATION
                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                    FOR THE THIRTEEN
                                                                       WEEKS ENDED
                                                                --------------------------
                                                                 MARCH 31,      APRIL  1,
                                                                   2001           2000
                                                                -----------    -----------
                                                                      (000'S OMITTED)
<S>                                                             <C>            <C>
Revenues ....................................................   $   654,350    $ 1,027,605

Costs and expenses:
   Cost of revenues .........................................       603,700        964,939
   Logistics and manufacturing expenses (Note 3) ............        20,648         23,829
   Selling, general and administrative expenses (Note 3) ....        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)
                                                                ===========    ===========
</TABLE>


            See Notes to Condensed Consolidated Financial Statements.




<PAGE>   5
                               TRUSERV CORPORATION
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                      FOR THE THIRTEEN WEEKS ENDED
                                                                                      ----------------------------
                                                                                        MARCH 31,       APRIL 1,
                                                                                          2001           2000
                                                                                      -----------    -------------
                                                                                            (000'S OMITTED)
<S>                                                                                   <C>            <C>
Operating activities:
   Net loss .....................................................................        $(13,936)      $ (8,924)
   Adjustments to reconcile net loss to cash and
      cash equivalents 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 ..................................          52,690        (44,574)
                                                                                         --------       --------
   Net cash and cash equivalents provided by/(used for) operating activities ....          50,796        (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 ......................................................            (551)          (219)
                                                                                         --------       --------
   Net cash and cash equivalents used for investing activities ..................          (3,738)        (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)
   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 sale of Class A common stock subscription receivable............             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
                                                                                         ========       ========
</TABLE>


            See Notes to Condensed Consolidated Financial Statements.




<PAGE>   6
                               TRUSERV CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                   (UNAUDITED)

NOTE 1 - GENERAL

The condensed consolidated balance sheet at March 31, 2001 and the condensed
consolidated statement of operations and the condensed consolidated 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 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 accounting
principles generally accepted in the United States of America for complete
financial statements. These financial statements should be read in conjunction
with the consolidated financial statements for the year ended December 31, 2000
included in the company's 2000 Annual Report on Form 10-K.

NOTE 2 - DEBT COVENANT VIOLATION

Under the senior notes and the revolving credit facility the company is required
to meet certain restrictive financial ratios and covenants relating to minimum
EBITDA, minimum fixed charge coverage, minimum borrowing base to debt ratio,
maximum capital expenditures and maximum asset sales, as well as other customary
covenants, representations and warranties, funding conditions and events of
default. As of December 31, 2000, the company was in compliance with the
covenant requirements.

However, as of February 24, 2001, the company failed to comply with a covenant
under the revolving credit facility and the senior note agreements which
requires the company to achieve a minimum monthly borrowing base ratio. As a
result, either the senior note holders or the participants in the revolving
credit facility could declare this failure to comply with the covenant as an
"event of default," in which case the senior notes and the amounts outstanding
under the revolving credit facility would become callable as immediately
payable.

On March 30, 2001, the participants in the revolving credit facility issued to
the company "reservation of rights" letters under which the participants
effectively stated their intention to not call as immediately payable the
company's outstanding debt obligations until May 1, 2001, although they were not
precluded from doing so. All other rights of the participants were preserved.
Additional letters were issued on April 30, 2001 and July 3, 2001, which
extended the reservation of rights until July 30, 2001 and September 30, 2001,
respectively. The senior note holders also issued letters reserving their right
to accelerate the maturity of the notes although agreeing not to do so at this
time.

The reservation of rights letters provided by the participants in the revolving
credit facility required that the upper limit of the total amount that may be
borrowed under the Credit Agreement at any time prior to September 30, 2001 be
lowered from $275,000,000 to $225,000,000. The credit limit under this facility
was reduced on May 11, 2001 from $275,000,000 to $250,000,000. Additionally, the
interest rate on the amounts outstanding under the revolving credit facility was
increased by approximately 2%; this increased interest rate also applies to the
outstanding senior notes. As a result of this increased interest rate, the
company will incur additional interest expense in fiscal year 2001. If this
increased interest rate continues through December 31, 2001, the additional
interest expense would aggregate approximately $6.0 million.

The company is in discussions with the current lenders and with potential
lenders regarding refinancing the senior note agreements and the revolving
credit facility and, if successful, will replace the current senior note
agreements and the revolving credit facility with an asset-based lending
agreement with a new lending group in the fourth quarter of 2001. An alternative
may be to amend the existing agreements with the existing lenders. However, no
assurances can be given as to the outcome. The company's failure to successfully
refinance or amend its current borrowing arrangements could cause the current
lending group to call as immediately payable the company's currently outstanding
debt obligations. The company's resulting inability to satisfy its debt
obligations would force the company to pursue other alternatives to improve
liquidity, possibly including, among other things, restructuring actions, sales
of assets and seeking additional sources of funds or liquidity. In particular,
the company has engaged an investment banking firm to assist it in exploring the
sale of the paint




<PAGE>   7
manufacturing business. No assurances can be given that the company will be
successful in pursuing such possible alternatives or, even if successful, that
such undertakings would not have a material adverse impact on the company.

Accordingly, the balances outstanding under the senior note agreements and the
revolving credit facility have been classified as current liabilities as of
December 31, 2000 and March 31, 2001. However, the financial statements do not
include any other adjustments that might result from the outcome of this
uncertainty.

NOTE 3 - RECLASSIFICATIONS

Certain reclassifications have been made to the prior year's condensed
consolidated financial statements to conform with the current year's
presentation. These reclassifications had no effect on net loss for any period
or on Total Members' equity at the balance sheet dates.

NOTE 4 - 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 $34,705,000 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 Class B common stock, which is redeemable by the company and
has no voting rights (the "Redeemable Class B 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 common stock issued
as part of the December 31, 2000 patronage dividend has been designated as
qualified notices of allocation. Over ninety-five percent of the Redeemable
Class B common stock issued with the fiscal year 2000 patronage dividend was
applied to the loss allocation account. 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 5 - 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 consolidated balance sheet
with the offsetting credit recorded to retained 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
common stock, at par value, and applying such amount as a reduction in the loss
allocation account until fully satisfied. The current levels of members' stock
investments in the company will not be affected. 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.

NOTE 6 - INVENTORIES

INVENTORIES CONSISTED OF:

<TABLE>
<CAPTION>
                                                                                         MARCH 31,          DECEMBER 31,
                                                                                           2001                 2000
                                                                                       --------------     --------------
                                                                                               (000's omitted)
<S>                                                                                    <C>                <C>
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
                                                                                       ==============     ==============
</TABLE>




<PAGE>   8
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
incurred 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 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:


                      THIRTEEN WEEKS ENDED MARCH 31, 2001
                                 (000'S OMITTED)

<TABLE>
<CAPTION>
                                                                                             ELIMINATION
                                                                                           OF INTERSEGMENT        CONSOLIDATED
                                             HARDWARE             PAINT          OTHER          ITEMS                TOTALS
                                             --------             -----          -----     ---------------        ------------
<S>                                        <C>                   <C>            <C>        <C>                    <C>
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 and 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
</Table>


                       THIRTEEN WEEKS ENDED APRIL 1, 2000
                                 (000'S OMITTED)


<TABLE>
<CAPTION>
                                                                                             ELIMINATION
                                                                                           OF INTERSEGMENT        CONSOLIDATED
                                             HARDWARE             PAINT          OTHER          ITEMS                TOTALS
                                             --------             -----          -----     ---------------        ------------
<S>                                        <C>                   <C>            <C>        <C>                    <C>
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 and amortization                  10,679               442            193             --                   11,314
Segment net margin/(loss)                     (11,146)            2,205             17             --                   (8,924)
Identifiable segment assets                 1,423,788            74,364         32,180             --                1,530,332
Expenditures for long-lived assets              2,982               334             73             --                    3,389
</TABLE>


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 approximately $1.1 billion
of the company's revenue in fiscal year 2000; however, the sale of the business
will not materially impact net margin.

NOTE 9 - NEW ACCOUNTING PRONOUNCEMENTS

Effective January 1, 2000, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended by SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities." These new standards require that
all derivative instruments





<PAGE>   9

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.

In June 2001, the Financial Accounting Standards Board approved SFAS No. 142,
"Goodwill and Other Intangible Assets." SFAS No. 142 addresses the accounting
for goodwill and other intangible assets subsequent to their acquisition. SFAS
No. 142 requires, among other things, that goodwill and other indefinite-lived
intangible assets no longer be amortized and that such assets be tested for
impairment at least annually. SFAS No. 142 is effective for fiscal years
beginning after December 15, 2001. The Company is currently evaluating the
impact this standard will have on its financial statements.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

THIRTEEN WEEKS ENDED MARCH 31, 2001 COMPARED TO THIRTEEN WEEKS ENDED APRIL 1,
2000

RESULTS OF OPERATIONS:

Revenues for the thirteen weeks ended March 31, 2001 totaled $654,350,000. This
represented a decrease of $373,255,000, or 36.3%, compared to the same period
last year. The key contributor to the decrease in revenue is the sale of the
lumber and building materials business to Builder Marts of America, Inc. in
December 2000, which accounts for $306,200,000 of the negative variance in
comparison to the prior year. In addition, a reduction in handled sales (stock
and relay shipments) contributed approximately $39,600,000 to the decrease in
revenue. 67% of this reduction in handled sales was the result of a decrease in
the number of members. The remaining reduction in handled sales occurred in same
store sales.

Gross margins decreased by $12,016,000, or 19.2%, over prior year. The sale of
the lumber and building materials business contributed $4,630,000 to the
reduction in gross margin. The other significant impact to the decrease in gross
margin is due to the reduction in handled sales, which reduced gross margin by
$5,829,000.

Logistics and manufacturing expenses decreased $3,181,000, or 13.3%, as compared
to the same period last year. The company reduced expenses by closing the
Westfield, Massachusetts distribution center in the first quarter of 2000, which
reduced expenses by $1,388,000. The reduction in warehouse labor resulting from
reduced sales and inventory levels also had a downward impact on expenses.

Selling, general and administrative (S,G&A) expenses decreased $4,992,000, or
14.6%, as compared to the same period last year. The company accomplished this
reduction in expenses by reducing headcount in corporate staff. The company
achieved additional decreases in administrative expenses and operational
expenses as a result of the sale of the lumber and building materials business
in December 2000.

Interest paid to members decreased by $862,000, or 30.6%, as compared to the
same period last year, primarily due to a lower average principal balance of
debt outstanding. Other interest expense increased $1,804,000, or 15.6%, as
compared to same period last year, due to higher borrowing rates pursuant to
various financing agreements of the company.

Although the company has reduced logistics, manufacturing and S,G&A expenses by
consolidating the distribution network and reducing corporate overhead staff,
the expenses that were eliminated did not fully offset the gross margin impact
from the decreased revenue, resulting in a net loss of $13,936,000 for the first
quarter of 2001 as compared to a net loss of $8,924,000 for the first quarter of
2000.

LIQUIDITY AND CAPITAL RESOURCES:

Cash provided by operating activities for the thirteen weeks ended March 31,
2001, was $50,796,000, compared to cash used of $40,087,000 for the thirteen
weeks ended April 1, 2000. Accounts receivable decreased $22,929,000 from
December 31, 2000 due to the decline in sales and the collection of the
remaining accounts receivable relating to the lumber and building materials
business that was sold in December, 2000. Inventories increased by $8,505,000
from December 31, 2000 to support orders for seasonal merchandise for the spring
market. Accounts payable increased by $38,960,000 since December 31, 2000 as a
result of the seasonal terms obtained from vendors. The company used the cash
generated from operating activities in the first quarter of fiscal 2001 to
reduce its debt and pay patronage dividends.

Investing activities used cash of $3,738,000 for the thirteen weeks ended March
31, 2001, compared to cash used of $2,465,000 for the same period last year. The
Company used $3,212,000 in cash for additions to properties, which is comparable
to the same period last year of $3,389,000. These capital expenditures are
comprised of various building improvements and purchases of additional equipment
and technology at the company's regional distribution centers and at its
corporate headquarters.



<PAGE>   10
 At March 31, 2001, the company's working capital deficit was ($194,994,000), as
compared to ($188,739,000) at December 31, 2000. The current ratio was 0.815 at
March 31, 2001, as compared to 0.822 at December 31, 2000.

At July 1, 1997, the company established a $300,000,000 five-year revolving
credit facility with a group of banks. These agreements were amended and
restated in April 2000 after a default was triggered as a result of the loss in
1999. The amendments include increased interest rates, new financial ratios and
covenants, and the collateralization of the company's assets. The company had
borrowed under the agreement $165,000,000 and $127,000,000 at March 31, 2001 and
December 31, 2000, respectively. The company also pays a commitment fees of .05%
per annum on the unused portion of the commitments.

Under the senior notes and the revolving credit facility the company is required
to meet certain restrictive financial ratios and covenants relating to minimum
EBITDA, minimum fixed charge coverage, minimum borrowing base to debt ratio,
maximum capital expenditures and maximum asset sales, as well as other customary
covenants, representations and warranties, funding conditions and events of
default. As of December 31, 2000, the company was in compliance with the
covenant requirements.

However, as of February 24, 2001, the company failed to comply with a covenant
under the revolving credit facility and the senior note agreements which
requires the company to achieve a minimum monthly borrowing base ratio. As a
result, either the senior note holders or the participants in the revolving
credit facility could declare this failure to comply with the covenant as an
"event of default," in which case the senior notes and the amounts outstanding
under the revolving credit facility would become callable as immediately
payable.

On March 30, 2001, the participants in the revolving credit facility issued to
the company "reservation of rights" letters under which the participants
effectively stated their intention to not call as immediately payable the
company's outstanding debt obligations until May 1, 2001, although they were not
precluded from doing so. All other rights of the participants were preserved.
Additional letters were issued on April 30, 2001 and July 3, 2001, which
extended the reservation of rights until July 30, 2001 and September 30, 2001,
respectively. The senior note holders also issued letters reserving their right
to accelerate the maturity of the notes although agreeing not to do so at this
time.

The reservation of rights letters provided by the participants in the revolving
credit facility required that the upper limit of the total amount that may be
borrowed under the Credit Agreement at any time prior to September 30, 2001 be
lowered from $275,000,000 to $225,000,000. The credit limit under this facility
was reduced on May 11, 2001 from $275,000,000 to $250,000,000. Additionally, the
interest rate on the amounts outstanding under the revolving credit facility was
increased by approximately 2%; this increased interest rate also applies to the
outstanding senior notes. As a result of this increased interest rate, the
company will incur additional interest expense in fiscal year 2001. If this
increased interest rate continues through December 31, 2001, the additional
interest expense would aggregate approximately $6.0 million.

The company is in discussions with the current lenders and with potential
lenders regarding refinancing the senior note agreements and the revolving
credit facility and, if successful, will replace the current senior note
agreements and the revolving credit facility with an asset-based lending
agreement with a new lending group in the fourth quarter of 2001. An alternative
may be to amend the existing agreements with the existing lenders. However, no
assurances can be given as to the outcome. The company's failure to successfully
refinance or amend its current borrowing arrangements could cause the current
lending group to call as immediately payable the company's currently outstanding
debt obligations. The company's resulting inability to satisfy its debt
obligations would force the company to pursue other alternatives to improve
liquidity, possibly including, among other things, restructuring actions, sales
of assets and seeking additional sources of funds or liquidity. In particular,
the company has engaged an investment banking firm to assist it in exploring the
sale of the paint manufacturing business. No assurances can be given that the
company will be successful in pursuing such possible alternatives or, even if
successful, that such undertakings would not have a material adverse impact on
the company.

Accordingly, the balances outstanding under the senior note agreements and the
revolving credit facility have been classified as current liabilities as of
December 31, 2000 and March 31, 2001. However, the financial statements do not
include any other adjustments that might result from the outcome of this
uncertainty.




<PAGE>   11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The company's operations are subject to certain market risks, primarily interest
rate risk and credit risk. Interest rate risk pertains to the company's variable
rate debt, which totals approximately $175,000,000 at March 31, 2001. A 50 basis
point movement in the interest rates would result in an approximate $875,000
annualized change in interest expense and cash flows. For the most part,
interest rate risk is managed through a combination of variable and fixed-rate
debt instruments with varying maturities. Credit risk pertains mostly to the
company's trade receivables. The company extends credit to its members as part
of its day-to-day operations. The company believes that as no specific
receivable or group of receivables comprises a significant percentage of total
trade receivables, its risk with respect to trade receivables is limited.
Additionally, the company believes that its allowance for doubtful accounts is
adequate with respect to member credit risks.




<PAGE>   12
                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In June, 2000, an action was filed against TruServ by 19 former members of the
company in the Circuit Court of the 19th Judicial Circuit (McHenry County,
Illinois). (Certain other former TruServ members have filed similar claims.) The
plaintiffs in the action each allege that, based upon representations made to
them by the company and its predecessors that the Coast to Coast brand name
would be maintained, they voted for the merger of Servistar Coast to Coast and
Cotter & Company. The plaintiffs allege, however, that after the merger the
Coast to Coast brand name was eliminated and that each plaintiff thereafter
terminated or had its membership in TruServ terminated. The plaintiffs further
claim that TruServ breached its obligations by failing to redeem their stock and
by creating loss allocation accounts for the plaintiffs. Based upon this alleged
conduct, the plaintiffs have each asserted claims for fraud/misrepresentation,
negligent misrepresentation, claims under the state securities laws applicable
to each plaintiff, claims under the state franchise/dealership laws applicable
to each plaintiff, breach of fiduciary duty, unjust enrichment, estoppel and
recoupment. The complaint states that each plaintiff is entitled to in excess of
$50,000 in damages; however, the damages being sought are not specified.
Discovery has recently commenced in this action and it is too early to determine
the extent of the damages being claimed. In March, 2001, a similar action was
brought on behalf of former SCC members in the same court, by the same law firm.
The complaint alleges substantially similar cases as those made by the former
TruServ members. The lawsuit is in an early stage and the extent of damages
being claimed has not yet been determined.

In August, 2000, an action was brought in Delaware Chancery Court (New Castle
County) by an alleged former TruServ member against certain present and former
directors of the company and against the company. The plaintiffs in the lawsuit
seek to proceed on a class-action basis. The complaint alleges that the named
directors breached their fiduciary duties in connection with the accounting
adjustments taken by the company in the fourth quarter of 1999 and that TruServ
breached, and the named directors caused TruServ to breach, agreements with
members by suspending payment of the members' 1999 annual patronage dividend, by
declaring a moratorium on the redemption of members' TruServ stock and by
imposing minimum annual purchase requirements upon members. The plaintiffs seek
monetary and non-monetary relief in connection with the various claims asserted
in the complaint. The lawsuit is in an early stage and the extent of damages
being claimed has not yet been determined.

In October, 1999, Paul Pentz, the former president of the company, filed a claim
in the Circuit Court of the 20th Judicial Circuit (Collier County, Florida)
against the company alleging he is due bonus and retirement compensation
payments in addition to amounts already paid to him. The company has filed a
counterclaim against Mr. Pentz alleging that he breached his fiduciary duties as
president of the company. Mr. Pentz's motion to dismiss the counterclaim was
denied.

The company intends to vigorously defend all of these cases and, accordingly,
has recorded no related reserves at December 31, 2000 or at March 31, 2001.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

In March, 2000, the board of directors of TruServ declared a moratorium on
redemption of the capital stock. In reaching its decision to declare the
moratorium, the board of directors of TruServ reviewed the financial condition
of the company. The board also considered its fiduciary obligations and
corporate law principles under Delaware law. The board of directors concluded
that it should not redeem any of the capital stock while its net asset value was
substantially less than par value, as that would likely violate legal
prohibitions against "impairment of capital." In addition, the board of
directors concluded that it would be a violation of its fiduciary duties to all
members and that it would constitute a fundamental unfairness to members if some
members were allowed to have their shares redeemed before the impact of the 1999
loss were allocated to them. Members did not request redemption would be saddled
with the losses of those members who requested redemption. Moreover, the board
considered the company's debt agreements, and in particular, the financial
covenants thereunder, which prohibit redemptions when the company, among other
things, does not attain certain profit margin.


On August 28, 2000, the board of directors of TruServ decided to allocate a
substantial portion of its 1999 operating losses among the TruServ members, on a
pro rata basis, in proportion to each member's ownership of Class B common stock
as of December 31, 1999. A loss allocation account was established for each
member during the third quarter of 2000, reflecting that member's allocated loss
as of December 31, 1999. The loss account will be satisfied by offsetting future
qualified Class B common stock issued as part of the patronage dividend against
the amount in the account. In the event of the dissolution





<PAGE>   13
of a member or termination of his or its membership and upon release of the
moratorium, the redemption proceeds to which that member would have been
entitled would also be offset against the amount of the loss allocated to the
member that had not yet been satisfied.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Under the senior notes and the revolving credit facility the company is required
to meet certain restrictive financial ratios and covenants relating to minimum
EBITDA, minimum fixed charge coverage, minimum borrowing base to debt ratio,
maximum capital expenditures and maximum asset sales, as well as other customary
covenants, representations and warranties, funding conditions and events of
default. As of February 24, 2001, the company failed to comply with a covenant
under the revolving credit facility and the senior note agreements which
requires the company to achieve a minimum monthly borrowing base ratio. As a
result, either the senior note holders or the participants in the revolving
credit facility could declare this failure to comply with the covenant as an
"event of default," in which case the senior notes and the amounts outstanding
under the revolving credit facility would become callable as immediately
payable.

On March 30, 2001, the participants in the revolving credit facility issued to
the company "reservation of rights" letters under which the participants
effectively stated their intention to not call as immediately payable the
company's outstanding debt obligations until May 1, 2001, although they were not
precluded from doing so. All other rights of the participants were preserved.
Additional letters were issued on April 30, 2001 and July 3, 2001, which
extended the reservation of rights until July 30, 2001 and September 30, 2001,
respectively. The senior note holders also issued letters reserving their right
to accelerate the maturity of the notes although agreeing not to do so at this
time.

The reservation of rights letters provided by the participants in the revolving
credit facility required that the upper limit of the total amount that may be
borrowed under the Credit Agreement at any time prior to September 30, 2001 be
lowered from $275,000,000 to $225,000,000. The credit limit under this facility
was reduced on May 11, 2001 from $275,000,000 to $250,000,000. Additionally, the
interest rate on the amounts outstanding under the revolving credit facility was
increased by approximately 2%; this increased interest rate also applies to the
outstanding senior notes. As a result of this increased interest rate, the
company will incur additional interest expense in fiscal year 2001. If this
increased interest rate continues through December 31, 2001, the additional
interest expense would aggregate approximately $6.0 million.

The company is in discussions with the current lenders and with potential
lenders regarding refinancing the senior note agreements and the revolving
credit facility and, if successful, will replace the current senior note
agreements and the revolving credit facility with an asset-based lending
agreement with a new lending group in the fourth quarter of 2001. An alternative
may be to amend the existing agreements with the existing lenders. However, no
assurances can be given as to the outcome. The company's failure to successfully
refinance or amend its current borrowing arrangements could cause the current
lending group to call as immediately payable the company's currently outstanding
debt obligations. The company's resulting inability to satisfy its debt
obligations would force the company to pursue other alternatives to improve
liquidity, possibly including, among other things, restructuring actions, sales
of assets and seeking additional sources of funds or liquidity. In particular,
the company has engaged an investment banking firm to assist it in exploring the
sale of the paint manufacturing business. No assurances can be given that the
company will be successful in pursuing such possible alternatives or, even if
successful, that such undertakings would not have a material adverse impact on
the company.

Accordingly, the balances outstanding under the senior note agreements and the
revolving credit facility have been classified as current liabilities as of
December 31, 2000 and March 31, 2001. However, the financial statements do not
include any other adjustments that might result from the outcome of this
uncertainty.





<PAGE>   14

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None

ITEM 5. OTHER INFORMATION.

         None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         (a)   Exhibits

               None

         (b)   Reports on Form 8-K

         1)    Current Report on Form 8-K, filed January 26, 2001.



<PAGE>   15


                                    SIGNATURE

         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 thereunto duly authorized.

                                            TRUSERV CORPORATION

Date: August 14, 2001                       By /s/ PAMELA FORBES LIEBERMAN
                                              ----------------------------------
                                            Pamela Forbes Lieberman
                                            Chief Operating Officer,
                                            Chief Financial Officer and
                                            Senior Vice President