1
EXHIBIT 99.7
CASE NAME: KEVCO MANUFACTURING, LP ACCRUAL BASIS
CASE NUMBER: 401-40784-BJH-11
JUDGE: BARBARA J. HOUSER
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF TEXAS
------------------- ---------------------
FORT WORTH DIVISION
----------------------------------
MONTHLY OPERATING REPORT
MONTH ENDING: FEBRUARY 28, 2001
------------------------------------------
IN ACCORDANCE WITH TITLE 28, SECTION 1746, OF THE UNITED STATES CODE, I DECLARE
UNDER PENALTY OF PERJURY THAT I HAVE EXAMINED THE FOLLOWING MONTHLY OPERATING
REPORT (ACCRUAL BASIS - 1 THROUGH ACCRUAL BASIS - 7) AND THE ACCOMPANYING
ATTACHMENTS AND, TO THE BEST OF MY KNOWLEDGE, THESE DOCUMENTS ARE TRUE, CORRECT
AND COMPLETE. DECLARATION OF THE PREPARER (OTHER THAN RESPONSIBLE PARTY): IS
BASED ON ALL INFORMATION OF WHICH PREPARER HAS ANY KNOWLEDGE.
RESPONSIBLE PARTY:
/s/ JOSEPH P. TOMCZAK TREASURER
- ------------------------------------------- --------------------------
Original Signature of Responsible Party Title
JOSEPH P. TOMCZAK APRIL 13, 2001
- ------------------------------------------- --------------------------
Printed Name of Responsible Party Date
PREPARER:
/s/ DENNIS S. FAULKNER DEBTOR'S ACCOUNTANT
- ------------------------------------------- --------------------------
Original Signature of Preparer Title
DENNIS S. FAULKNER APRIL 13, 2001
- ------------------------------------------- --------------------------
Printed Name of Preparer Date
2
CASE NAME: KEVCO MANUFACTURING, LP ACCRUAL BASIS - 1
CASE NUMBER: 401-40784-BJH-11
COMPARATIVE BALANCE SHEET
SCHEDULED MONTH
ASSETS AMOUNT Feb-01 MONTH MONTH
------ --------- ------ ----- -----
1. Unrestricted Cash (Footnote) 41,683 0
2. Restricted Cash
3. Total Cash 41,683 0 0 0
4. Accounts Receivable (Net) (Footnote) 7,974,696 4,933,430
5. Inventory (Footnote) 14,793,828 7,980,684
6. Notes Receivable 0
7. Prepaid Expenses (Footnote) 196,584 172,282
8. Other (Attach List) 6,598 98 0 0
9. Total Current Assets 23,013,389 13,086,495 0 0
10. Property, Plant & Equip. (Footnote) 32,082,187 28,603,697
11. Less: Accumulated Depreciation (Footnote) (7,696,543) (6,643,000)
12. Net Property, Plant & Equipment 24,385,644 21,960,698 0 0
13. Due From Insiders
14. Other Assets - Net of Amortization (Attach List) 8,369,096 8,347,100
15. Other (Attach List) 13,541,943 20,020,858 0 0
16. Total Assets 69,310,072 63,415,150 0 0
POST PETITION LIABILITIES
17. Accounts Payable 15,192
18. Taxes Payable 105,632
19. Notes Payable
20. Professional Fees
21. Secured Debt
22. Other (Attach List) 1,366,523 0 0
23. Total Post Petition Liabilities 1,487,347 0 0
PRE PETITION LIABILITIES
24. Secured Debt (Footnote) 75,885,064 63,113,388
25. Priority Debt (Footnote) 1,383,756 0
26. Unsecured Debt (Footnote) 5,139,545 3,842,137
27. Other (Attach List) 197,008,999 197,509,594 0 0
28. Total Pre Petition Liabilities 279,417,364 264,465,120 0 0
29. Total Liabilities 279,417,364 265,952,467 0 0
EQUITY
30. Pre Petition Owners' Equity (210,107,292)
31. Post Petition Cumulative Profit Or (Loss) (5,079,240)
32. Direct Charges To Equity (Attach Explanation Footnote) 12,649,215
33. Total Equity (202,537,316) 0 0
34. Total Liabilities and Equity (63,415,150) 0 0
This form x does does not have related footnotes on Footnotes Supplement.
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3
CASE NAME: KEVCO MANUFACTURING, LP SUPPLEMENT TO
CASE NUMBER: 401-40784-BJH-11 ACCRUAL BASIS - 1
COMPARATIVE BALANCE SHEET
SCHEDULED MONTH
ASSETS AMOUNT Feb-01 MONTH MONTH
------ --------- ------ ----- -----
A. Security Deposits 6,598 98
B.
C.
D.
E.
TOTAL OTHER ASSETS - LINE 8 6,598 98 0 0
A. Goodwill: Consolidated Forest Products 8,369,096 8,347,100
B.
C.
D.
E.
TOTAL OTHER ASSETS NET OF AMORTIZATION - LINE 14 8,369,096 8,347,100 0 0
A. Intercompany Receivables (Footnote) 13,541,943 20,020,858
B.
C.
D.
E.
TOTAL OTHER ASSETS - LINE 15 13,541,943 20,020,858 0 0
POST PETITION LIABILITIES
A. Accrued Payroll 847,056
B. Accrued Liabilities (Footnote) 519,467
C.
D.
E.
TOTAL OTHER POST PETITION LIABILITIES - LINE 22 1,366,523 0 0
PRE PETITION LIABILITIES
A. Interco. Payables (Footnote) 68,508,999 69,009,594
B. 10 3/8% Senior Sub. Notes 105,000,000 105,000,000
C. Sr. Sub. Exchangeable Notes 23,500,000 23,500,000
D.
E.
TOTAL OTHER PRE PETITION LIABILITIES - LINE 27 197,008,999 197,509,594 0 0
4
CASE NAME: KEVCO MANUFACTURING, LP ACCRUAL BASIS - 2
CASE NUMBER: 401-40784-BJH-11
INCOME STATEMENT
MONTH QUARTER
REVENUES Feb-01 MONTH MONTH TOTAL
-------- ------ ----- ----- -------
1. Gross Revenues 9,497,654 0 9,497,654
2. Less: Returns & Discounts (236,301) (236,301)
3. Net Revenue 9,261,353 0 0 9,261,353
COST OF GOODS SOLD
4. Material 8,167,587 8,167,587
5. Direct Labor 307,854 307,854
6. Direct Overhead 307,731 307,731
7. Total Cost of Goods Sold 8,783,172 0 0 8,783,172
8. Gross Profit 478,181 0 0 478,181
OPERATING EXPENSES
9. Officer / Insider Compensation 46,386 46,386
10. Selling & Marketing 2,786 2,786
11. General & Administrative 50,247 50,247
12. Rent & Lease 97,786 97,786
13. Other (Attach List) 659,068 0 0 659,068
14. Total Operating Expenses 856,273 0 0 856,273
15. Income Before Non-Operating
Income & Expense (378,092) 0 0 (378,092)
OTHER INCOME & EXPENSES
16. Non-Operating Income (Att List) (2,423) 0 0 (2,423)
17. Non-Operating Expense (Att List) 4,661,402 0 0 4,661,402
18. Interest Expense 1,266 1,266
19. Depreciation / Depletion 40,902 40,902
20. Amortization 0
21. Other (Attach List) 0
22. Net Other Income & Expenses (4,701,147) 0 0 (4,701,147)
REORGANIZATION EXPENSES
23. Professional Fees 0
24. U.S. Trustee Fees 0
25. Other (Attach List) 0 0 0 0
26. Total Reorganization Expenses 0 0 0 0
27. Income Tax 0
28. Net Profit (Loss) (5,079,239) 0 0 (5,079,239)
This form does does not have related footnotes on Footnotes Supplement.
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5
CASE NAME: KEVCO MANUFACTURING, LP SUPPLEMENT TO
CASE NUMBER: 401-40784-BJH-11 ACCRUAL BASIS - 2
INCOME STATEMENT
MONTH QUARTER
OPERATING EXPENSES Feb-01 MONTH MONTH TOTAL
------------------ ------ ----- ----- -------
A. Payroll & Employee Benefits 473,634 473,634
B. Insurance Expense 98,171 98,171
C. Utilities and Telephone 30,707 30,707
D. Taxes 56,556 56,556
E. 0
TOTAL OTHER OPERATING EXPENSES - LINE 13 659,068 0 0 659,068
OTHER INCOME & EXPENSES
A. Miscellaneous Income (2,423) (2,423)
B. 0
C. 0
TOTAL NON-OPERATING INCOME - LINE 16 (2,423) 0 0 (2,423)
A. Interco. working capital charge 163,912 163,912
B. Intercompany management fee 103,823 103,823
C. Intercompany royalty fee 277,234 277,234
D. Intercompany interest charges 620,186 620,186
E. Loss on sale of Design Comp. (Footnote) 3,496,247 3,496,247
F. 0
G.
TOTAL NON-OPERATING EXPENSE - LINE 17 4,661,402 0 0 4,661,402
REORGANIZATION EXPENSES
A. 0
B. 0
C. 0
D. 0
E. 0
TOTAL OTHER REORGANIZATION EXPENSES - LINE 25 0 0 0 0
6
CASE NAME: KEVCO MANUFACTURING, LP ACCRUAL BASIS - 3
CASE NUMBER: 401-40784-BJH-11
CASH RECEIPTS AND MONTH QUARTER
DISBURSEMENTS Feb-01 MONTH MONTH TOTAL
----------------- ------ ----- ----- -------
1. Cash - Beginning Of Month SEE ATTACHED SUPPLEMENT AND FOOTNOTE 0
RECEIPTS FROM OPERATIONS
2. Cash Sales 0 0
COLLECTION OF ACCOUNTS RECEIVABLE
3. Pre Petition 0
4. Post Petition 0
5. Total Operating Receipts 0 0 0 0
NON-OPERATING RECEIPTS
6. Loans & Advances (Attach List) 0 0 0 0
7. Sale of Assets 0
8. Other (Attach List) 0 0 0 0
9. Total Non-Operating Receipts 0 0 0 0
10. Total Receipts 0 0 0 0
11. Total Cash Available 0 0 0
OPERATING DISBURSEMENTS
12. Net Payroll 0
13. Payroll Taxes Paid 0
14. Sales, Use & Other Taxes Paid 0
15. Secured / Rental / Leases 0
16. Utilities 0
17. Insurance 0
18. Inventory Purchases 0
19. Vehicle Expenses 0
20. Travel 0
21. Entertainment 0
22. Repairs & Maintenance 0
23. Supplies 0
24. Advertising 0
25. Other (Attach List) 0 0 0
26. Total Operating Disbursements 0 0 0 0
REORGANIZATION DISBURSEMENTS
27. Professional Fees 0
28. U.S. Trustee Fees 0
29. Other (Attach List) 0 0 0 0
30. Total Reorganization Expenses 0 0 0 0
31. Total Disbursements 0 0 0 0
32. Net Cash Flow 0 0 0 0
33. Cash - End of Month 0 0 0 0
This form x does does not have related footnotes on Footnotes Supplement.
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7
CASE NAME: KEVCO MANUFACTURING, LP SUPPLEMENT TO
ACCRUAL BASIS - 3
CASE NUMBER: 401-40784-BJH-11
KEVCO KEVCO KEVCO KEVCO KEVCO KEVCO
DIST LP MFG.LP MGMT HOLDING COMPONENTS INC TOTAL
----------- ----------- ----------- --------- ---------- --------- -----------
1 CASH-BEGINNING OF MONTH 41,421 41,683 6,557,975 232 134 1,000 6,642,445
RECEIPTS FROM OPERATIONS
2 CASH SALES 253,667 -- 253,667
COLLECTION OF ACCOUNTS RECEIVABLE
3 PRE PETITION 13,527,813 6,073,470 19,601,283
4 POST PETITION 2,122,364 1,535,289 3,657,653
5 TOTAL OPERATING RECEIPTS 15,903,844 7,608,759 -- -- -- -- 23,512,603
NON OPERATING RECEIPTS
6 LOANS & ADVANCES -- --
7 SALE OF ASSETS 11,782,255 11,782,255
8 OTHER -- 1,104,148 1,104,148
SALE EXPENSE REIMBURSEMENT 21,500
ADP ADVANCE 1,020,000
INTEREST INCOME 62,648
9 TOTAL NON OPERATING RECEIPTS -- 11,782,255 1,104,148 -- -- -- 12,886,403
10 TOTAL RECEIPTS 15,903,844 19,391,014 1,104,148 -- -- -- 36,399,006
11 CASH AVAILABLE 15,945,265 19,432,697 7,662,123 232 134 1,000 43,041,451
OPERATING DISBURSEMENTS
12 NET PAYROLL 513,728 859,526 75,595 1,448,849
13 PAYROLL TAXES PAID -- 611,823 611,823
14 SALES, USE & OTHER TAXES PAID 12,074 1,812 595 14,481
15 SECURED/RENTAL/LEASES 191,535 82,579 108,322 382,436
16 UTILITIES 10,705 3,181 25,786 39,672
17 INSURANCE 4,337 -- 236,564 240,901
18 INVENTORY PURCHASES 5,836,642 3,814,900 9,651,542
19 VEHICLE EXPENSE 68,467 1,237 69,704
20 TRAVEL 30,855 21,803 169 52,827
21 ENTERTAINMENT 14,203 1,766 6 15,975
22 REPAIRS & MAINTENANCE 764 3,188 256 4,208
23 SUPPLIES 2,334 52,289 221 54,844
24 ADVERTISING -- -- -- --
25 OTHER 190,513 118,812 629,428 -- -- -- 938,753
FREIGHT 184,578 82,949 267,527
CONTRACT LABOR 1,033 -- 50,000 51,033
401 K PAYMENTS -- 149,278 149,278
PAYROLL TAX ADVANCE ADP 398,126 398,126
WAGE GARNISHMENTS 14,484 14,484
MISC 4,902 35,863 17,540 58,305
26 TOTAL OPERATING DISBURSEMENTS 6,876,157 4,961,093 1,688,765 -- -- -- 13,526,015
REORGANIZATION DISBURSEMENTS
27 PROFESSIONAL FEES -- --
28 US TRUSTEE FEES -- --
29 OTHER 9,027,579 14,527,600 (11,772,924) -- -- -- 11,782,255
LOAN PAYMENTS 11,782,255 11,782,255
INTERCOMPANY TRANSFERS 9,027,579 2,745,345 (11,772,924) --
--
--
30 TOTAL REORGANIZATION EXPENSE 9,027,579 14,527,600 (11,772,924) -- -- -- 11,782,255
31 TOTAL DISBURSEMENTS 15,903,736 19,488,693 (10,084,159) -- -- -- 25,308,270
32 NET CASH FLOW 108 (97,679) 11,188,307 -- -- -- 11,090,736
----------- ----------- ----------- --------- --------- --------- -----------
33 CASH- END OF MONTH 41,529 (55,996) 17,746,282 232 134 1,000 17,733,181
=========== =========== =========== ========= ========= ========= ===========
8
CASE NAME: KEVCO MANUFACTURING, LP ACCRUAL BASIS - 4
CASE NUMBER: 401-40784-BJH-11
SCHEDULED MONTH
ACCOUNTS RECEIVABLE AGING AMOUNT Feb-01 MONTH MONTH
------------------------- --------- ------ ----- -----
1. 0 - 30 4,468,648
2. 31 - 60 464,782
3. 61 - 90
4. 91 +
5. Total Accounts Receivable 7,974,696 4,933,430 0 0
6. (Amount Considered Uncollectible)
7. Accounts Receivable (Net) 7,974,696 4,933,430 0 0
AGING OF POST PETITION MONTH: February-01
TAXES AND PAYABLES
0 - 30 31 - 60 61 - 90 91 +
TAXES PAYABLE DAYS DAYS DAYS DAYS TOTAL
------------- ------ ------- ------- ---- -----
1. Federal 0
2. State 0
3. Local -
4. Other (See Below) 105,632 - - - 105,632
5. Total Taxes Payable 105,632 - - - 105,632
6. Accounts Payable 15,192 15,192
MONTH: February-01
STATUS OF POST PETITION TAXES
BEGINNING TAX AMOUNT WITHHELD ENDING TAX
FEDERAL LIABILITY * AND/OR ACCRUED (AMOUNT PAID) LIABILITY
------- ------------- --------------- ------------- ---------
1. Withholding ** 120,888 (120,888) 0
2. FICA - Employee ** 87,249 (87,249) 0
3. FICA - Employer ** 87,249 (87,249) 0
4. Unemployment 7,590 (7,590) 0
5. Income 0
6. Other (Attach List) 0 0 0 0
7. Total Federal Taxes 0 302,976 (302,976) 0
STATE AND LOCAL
8. Withholding 27,915 (27,915) 0
9. Sales (Footnote) 15,389 15,389
10. Excise 0
11. Unemployment 11,097 (11,097) 0
12. Real Property 0
13. Personal Property (Footnote) 90,243 90,243
14. Other (Attach List) 0 0 0 0
15. Total State And Local 0 144,644 (39,012) 105,632
16. Total Taxes 0 447,620 (341,988) 105,632
* The beginning tax liability should represent the liability from the prior
month or, if this is the first operating report, the amount should be zero.
** Attach photocopies of IRS Form 6123 or your FTD coupon and payment receipt to
verify payment of deposit.
This form x does does not have related footnotes on Footnotes Supplement.
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9
CASE NAME: KEVCO MANUFACTURING, LP ACCRUAL BASIS - 5
CASE NUMBER: 401-40784-BJH-11
The debtor in possession must complete the reconciliation below for each bank
account, including all general, payroll and tax accounts, as well as all savings
and investment accounts, money market accounts, certificates of deposit,
government obligations, etc. Accounts with restricted funds should be identified
by placing an asterisk next to the account number. Attach additional sheets if
necessary.
MONTH: February-01
BANK RECONCILIATIONS Account # 1 Account # 2
-------------------- ----------- -----------
A. BANK:
B. ACCOUNT NUMBER: Other Accounts
C. PURPOSE (TYPE): (Attach List) TOTAL
1. Balance Per Bank Statement SEE FOOTNOTE 0
2. Add: Total Deposits Not Credited 0
3. Subtract: Outstanding Checks 0
4. Other Reconciling Items 0
5. Month End Balance Per Books 0
6. Number of Last Check Written
INVESTMENT ACCOUNTS
BANK, ACCOUNT NAME & NUMBER DATE OF PURCHASE TYPE OF INSTRUMENT PURCHASE PRICE CURRENT VALUE
--------------------------- ---------------- ------------------ -------------- -------------
7.
8.
9.
10. (Attach List) 0 0
11. Total Investments 0 0
CASH
12. Currency On Hand 0
13. Total Cash - End of Month 0
This form x does does not have related footnotes on Footnotes Supplement.
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10
CASE NAME: KEVCO MANUFACTURING, LP ACCRUAL BASIS - 6
CASE NUMBER: 401-40784-BJH-11
MONTH: February-01
--------------
PAYMENTS TO INSIDERS AND PROFESSIONALS
Of the Total Disbursements shown for the month, list the amount paid to Insiders
(as defined in Section 101 (31) (A) - (F) of the U.S. Bankruptcy Code) and to
Professionals. Also, for payments to Insiders, identify the type of compensation
paid (e.g. salary, bonus, commissions, insurance, housing allowance, travel, car
allowance, etc.). Attach additional sheets if necessary.
INSIDERS
TYPE OF AMOUNT TOTAL PAID
NAME PAYMENT PAID TO DATE
--------------------- ------- ------ ----------
1. Lee Denham Payroll 10,386 10,386
2. Lee Denham Expense Reimb. 254 254
3.
4.
5. (Attach List) 0 0
6. Total Payments
To Insiders 10,640 10,640
PROFESSIONALS
DATE OF
COURT ORDER TOTAL
AUTHORIZING AMOUNT AMOUNT TOTAL PAID INCURRED
NAME PAYMENT APPROVED PAID TO DATE & UNPAID *
--------------------------------------- ----------- -------- ------ ---------- ----------
1.
2.
3.
4.
5. (Attach List) - - - -
6. Total Payments To Professionals - - - -
* Include all fees incurred, both approved and unapproved
POST PETITION STATUS OF SECURED NOTES, LEASES PAYABLE AND ADEQUATE
PROTECTION PAYMENTS
SCHEDULED AMOUNTS
MONTHLY PAID TOTAL
PAYMENTS DURING UNPAID POST
NAME OF CREDITOR DUE MONTH PETITION
------------------------------------------- --------- ------- -----------
1. Bank of America (Footnote) N/A $ 11,782,255 $ 63,113,388
2. Status of Leases Payable (Footnote)
3.
4.
5. (Attach List) 0 0 0
6. TOTAL 0 $ 11,782,255 $ 63,113,388
This form x does does not have related footnotes on Footnotes Supplement.
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11
CASE NAME: KEVCO MANUFACTURING, LP ACCRUAL BASIS - 7
CASE NUMBER: 401-40784-BJH-11
MONTH: February-01
QUESTIONNAIRE -----------------
YES NO
--- --
1. Have any Assets been sold or transferred outside the normal course of business this reporting period? x
2. Have any funds been disbursed from any account other than a debtor in possession account? x
3. Are any Post Petition Receivables (accounts, notes, or loans) due from related parties? x
4. Have any payments been made on Pre Petition Liabilities this reporting period? x
5. Have any Post Petition Loans been received by the debtor from any party? x
6. Are any Post Petition Payroll Taxes past due? x
7. Are any Post Petition State or Federal Income Taxes past due? x
8. Are any Post Petition Real Estate Taxes past due? x
9. Are any other Post Petition Taxes past due? x
10. Are any amounts owed to Post Petition creditors delinquent? x
11. Have any Pre Petition Taxes been paid during the reporting period? x
12. Are any wage payments past due? x
If the answer to any of the above questions is "Yes", provide a detailed
explanation of each item. Attach additional sheets if necessary.
SEE FOOTNOTES
INSURANCE
YES NO
--- --
1. Are Worker's Compensation, General Liability and other necessary insurance coverages in effect? x
2. Are all premium payments paid current? x
3. Please itemize policies below.
If the answer to any of the above questions is "No", or if any policies have
been canceled or not renewed during this reporting period, provide an
explanation below. Attach additional sheets if necessary.
INSTALLMENT PAYMENTS
TYPE OF POLICY CARRIER PERIOD COVERED PAYMENT AMOUNT & FREQUENCY
-------------------- ---------------------- ---------------------- --------------------------
Property Lexington, Allianz 5/29/00-5/29/01 Annual $ 171,771
Group Health Blue Cross/Blue Shield Debtor is self-insured Annual 1,709,506
Auto Liberty Mutual 9/1/00-9/1/01 Annual 101,505
General Liability Liberty Mutual 9/1/00-9/1/01 Annual 141,519
Umbrella National Union 6/1/00-9/1/01 Annual 46,651
Workers Compensation Liberty Mutual 9/1/00-9/1/01 Annual 644,601
This form x does does not have related footnotes on Footnotes Supplement.
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12
CASE NAME: KEVCO MANUFACTURING, LP
CASE NUMBER: 401-40784-BJH-11
MONTH: FEBRUARY 28, 2001
------------------
FOOTNOTES SUPPLEMENT ACCRUAL BASIS
ACCRUAL
BASIS
FORM LINE
NUMBER NUMBER FOOTNOTE / EXPLANATION
- ---------------- ------------- ------------------------------------------------------------------------------
1 1 Pursuant to the February 12, 2001 Order (1) Authorizing Continued Use of
3 1 Existing Forms and Records; (2) Authorizing Maintenance of Existing
Corporate Bank Accounts and Cash Management System; and (3) Extending Time
to Comply with 11 U.S.C. Section 345 Investment Guidelines, funds in the
Bank of America and Key Bank deposit accounts are swept daily into Kevco's
lead account number 1295026976. The Bank of America lead account is
administered by, and held in the name of, Kevco Management Co. (co-debtor,
Case No. 401-40788-BJH-11). Accordingly, all cash receipts and
disbursements flow through Kevco Management's Bank of America DIP account.
A schedule allocating receipts and disbursements among Kevco, Inc. and its
subsidiaries is included in this report as a Supplement to Accrual Basis
-3. Debtor does maintain several small petty cash accounts for use by its
operating divisions. These petty cash accounts are included in the cash
supplement schedule.
1 1 Kevco Manufacturing, LP maintains several small petty cash accounts for use
3 1 by its various operating divisions. These amounts are intended to be
5 1 maintained on an imprest basis by way of intercompany transfers from Kevco
Management which maintains the lead account (see footnote for MOR 1, Line
1). The general ledger reflects a negative balance of $55,996. Bank
statements are showing balances of approximately $7,000. Debtor has been
unable to reconcile the bank statements to the general ledger as of the
date of filing. For purposes of this presentation, cash is reflected as $0
at February 28, 2001. The Debtor is in the process of conducting complete
reconciliations of all bank statements and intends to provide such
information on subsequent Monthly Operating Reports.
KEVCO MANUFACTURING INC. 2-1-01 MOR's Pg. 1 of 3
13
ACCRUAL
BASIS
FORM LINE
NUMBER NUMBER FOOTNOTE / EXPLANATION
- ---------------- ------------- ------------------------------------------------------------------------------
1 4 Pursuant to an Asset Purchase Agreement approved by the Court on February
1 5 23, 2001 and effective as of the same date among Kevco, Inc., Kevco
1 10 Manufacturing, LP, Wingate Management Co. II, LP and Adorn, LLC, certain
1 11 assets and liabilities of Design Components, a division of Kevco
1 24 Manufacturing, were transferred to Adorn, LLC. At the effective date of
1 26 purchase, Buyer assumed certain executory contracts, approximately $1.6
2 17E million of debtor's unsecured pre-petition liabilities. $3.5 million of
6 1 accounts receivable, $5 million of inventory and $2.2 million (book value)
7 1 of property and equipment. Payment was made directly to Bank of America,
7 4 the secured lender, thereby reducing pre-petition secured debt. Kevco,
Inc.'s report reflects the transaction detail (see Footnote 1,32).
1 7 Prepaid expenses consist of vendor pre-payments and a Smart Jobs Credit with
the Texas Department of Economic Development.
1 15A Intercompany receivables/payables are from/to co-debtors Kevco Management
1 27A Co. (Case No. 401-40788-BJH-11), Kevco Distribution, LP (Case No.
7 3 401-40789-BJH-11), Kevco Holding, Inc. (Case No. 401-40785-BJH-11), DCM
Delaware, Inc. (Case No. 401-40787-BJH-11), Kevco GP, Inc. (Case No.
401-40786-BJH-11), Kevco Components, Inc. (Case No. 401-40790-BJH-11), and
Kevco, Inc. (Case No. 401-40783-BJH-11). Debtor currently has $20,020,858
of intercompany receivables and $69,009,594 of intercompany payables. The
amounts reflected on Debtor's schedules were $13,541,943 and $68,508,999
respectively. The change in intercompany balances has not been included in
post-petition activity due to the nature of the asset/liability.
1 22B The Debtor records on its books accruals for certain liabilities based on
historical estimates. While the known creditors were listed on the Debtor's
Schedules, the estimated amounts were not. Accordingly, for purposes of
this report, the accrued liabilities are reflected as post-petition "Accrued
Liabilities."
1 25 Pursuant to Order dated February 12, 2001 and Supplemental Order dated March
7 4 14, 2001, debtors were authorized to pay pre-petition taxes, salaries and
wages up to a maximum of $4,300 per employee. Debtors were also (a)
allowed to pay accrued vacation to terminated employees and (b) permitted
to continue allowing employees to use vacation time as scheduled.
4 9 Sales tax owing is an accrual only and not yet due. Some of the property
4 13 taxes payable may be pre-petition. Once they are identified, the monthly
operating report will be adjusted.
KEVCO MANUFACTURING INC. 2-1-01 MOR's Pg. 2 of 3
14
ACCRUAL
BASIS
FORM LINE
NUMBER NUMBER FOOTNOTE / EXPLANATION
- ---------------- ------------- ------------------------------------------------------------------------------
1 32 The direct charge to equity is due to the secured debt reduction pursuant to
the sale of Design Components (see Footnote 1,4). The secured debt owed to
Bank of America by Kevco, Inc. (Case No. 401-40783-BJH-11) has been
guaranteed by all of its co-debtors (see Footnote 1,15A); therefore, the
secured debt is reflected as a liability on all of the Kevco entities. The
charge to equity is simply an adjustment to the balance sheet. See Kevco,
Inc.'s Monthly Operating Report for details of the transaction.
6 2 The Debtor is the lessee on hundreds of real and personal property leases,
the vast majority of which have been or will soon be rejected. The Debtor
does not isolate monthly payments due or paid on account of such leases.
Instead, all lease payments are reflected in the Debtor's accounts payable
system. To separately identify monthly accruals and payments on leases
would require an enormous outlay of the Debtor's accounting personnel and
professionals. The Debtor simply does not have available to it the
resources that would be required to provide the detail requested. If any
party-in-interest desires specific information about any specific lease, the
Debtor will provide such information upon request.
7 4 In addition to the secured debt (see Footnote 1,24), taxes and wages (see
Footnote 1,25), Kevco Manufacturing, LP has also paid approximately $65,000
in cure payments for leases and contracts that were assumed and then
assigned to Adorn (see Footnote 1,24)
KEVCO MANUFACTURING INC. 2-1-01 MOR's Pg. 3 of 3