1
EXHIBIT 99.8
CASE NAME: KEVCO DISTRIBUTION, LP ACCRUAL BASIS
CASE NUMBER: 401-40789-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 DISTRIBUTION, LP ACCRUAL BASIS - 1
CASE NUMBER: 401-40789-BJH-11
COMPARATIVE BALANCE SHEET
MONTH MONTH MONTH
SCHEDULED ----- ----- -----
ASSETS AMOUNT FEB-01
- ------ ------------ ------------ --------- ---------
1. Unrestricted Cash (FOOTNOTE) 41,421 41,529
2. Restricted Cash
3. Total Cash 41,421 41,529
4. Accounts Receivable (Net) 17,545,859 15,536,486
5. Inventory 27,611,039 21,704,255
6. Notes Receivable
7. Prepaid Rent 236,697 236,245
8. Other (Attach List) 303,392 397,801
9. Total Current Assets 45,738,408 37,916,316
10. Property, Plant & Equipment 22,049,500 22,050,042
11. Less: Accumulated
Depreciation/Depletion (6,151,901) (6,316,718)
12. Net Property, Plant & Equipment 15,897,599 15,733,324
13. Due From Insiders
14. Other Assets - Net of Amortization
(Attach List) 5,741,869 6,153,746
15. Other (Attach List) 100,961,429 108,257,291
16. Total Assets 168,339,305 168,060,678
POST PETITION LIABILITIES
17. Accounts Payable 2,173,714
18. Taxes Payable 693,679
19. Notes Payable
20. Professional Fees
21. Secured Debt
22. Other (Attach List) 5,176,106
23. Total Post Petition Liabilities 8,043,499
PRE PETITION LIABILITIES
24. Secured Debt (FOOTNOTE) 75,885,064 63,113,388
25. Priority Debt (FOOTNOTE) 1,412,879
26. Unsecured Debt (FOOTNOTE) 19,966,456 19,418,510
27. Other (Attach List) 243,205,150 244,090,104
28. Total Pre Petition Liabilities 340,469,549 326,622,002
29. Total Liabilities 340,469,549 334,665,501
EQUITY
30. Pre Petition Owners' Equity (172,130,244)
31. Post Petition Cumulative Profit
Or (Loss) 5,525,420
32. Direct Charges To Equity
(Attach Explanation Footnote)
33. Total Equity (166,604,824)
34. Total Liabilities and Equity 168,060,677
This form X does does not have related footnotes on Footnotes Supplement.
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3
CASE NAME: KEVCO DISTRIBUTION, LP SUPPLEMENT TO
CASE NUMBER: 401-40789-BJH-11 ACCRUAL BASIS - 1
COMPARATIVE BALANCE SHEET
MONTH MONTH MONTH
SCHEDULED ----- ----- -----
ASSETS AMOUNT FEB-01
- ------ ------------ ------------ --------- ---------
A. Inventory Vendor Deposit 130,000 224,409
B. Leased Facility Deposit 173,392 173,392
C.
D.
E.
TOTAL OTHER ASSETS - LINE 8 303,392 397,801
A. Goodwill: Shepherd Products 5,223,119 5,159,370
B. Goodwill: DARCO 518,750 512,500
C. Capitalized Lease (FOOTNOTE) 481,876
D.
E.
TOTAL OTHER ASSETS NET OF
AMORTIZATION - LINE 14 5,741,869 6,153,746
Intercompany Receivables
A. (FOOTNOTE) 100,961,429 108,257,291
B.
C.
D.
E.
TOTAL OTHER ASSETS - LINE 15 100,961,429 108,257,291
POST PETITION LIABILITIES
A. Accrued Liabilities (FOOTNOTE) 497,125
B. Long Term Leases (FOOTNOTE) 1,139,156
C. Accrued Interest: Bank 9,667
D. Payroll 3,530,159
E.
TOTAL OTHER POST PETITION
LIABILITIES - LINE 22 5,176,106
PRE PETITION LIABILITIES
A. Interco.Payables (FOOTNOTE) 114,705,150 115,590,104
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 27 243,205,150 244,090,104
4
CASE NAME: KEVCO DISTRIBUTION, LP ACCRUAL BASIS - 2
CASE NUMBER: 401-40789-BJH-11
INCOME STATEMENT
MONTH MONTH MONTH
----- ----- ----- QUARTER
REVENUES FEB-01 TOTAL
- -------- ----------- --------- -------- -----------
1. Gross Revenues 17,801,959 17,801,959
2. Less: Returns & Discounts (761,691) (761,691)
3. Net Revenue 17,040,268 17,040,268
COST OF GOODS SOLD
4. Material 15,875,204 15,875,204
5. Direct Labor 990,318 990,318
6. Direct Overhead 1,083,604 1,083,604
7. Total Cost Of Goods Sold 17,949,126 17,949,126
8. Gross Profit (908,858) (908,858)
OPERATING EXPENSES
9. Officer / Insider Compensation 14,885 14,885
10. Selling & Marketing 24,064 24,064
11. General & Administrative 63,447 63,447
12. Rent & Lease 526,422 526,422
13. Other (Attach List) 1,716,678 1,716,678
14. Total Operating Expenses 2,345,496 2,345,496
15. Income Before Non-Operating
Income & Expense (3,254,354) (3,254,354)
OTHER INCOME & EXPENSES
16. Non-Operating Income (Att List)
17. Non-Operating Expense (Att List) 2,029,261 2,029,261
18. Interest Expense 2,828 2,828
19. Depreciation / Depletion 238,977 238,977
20. Amortization
21. Other (Attach List)
22. Net Other Income & Expenses (2,271,066) (2,271,066)
REORGANIZATION EXPENSES
23. Professional Fees
24. U.S. Trustee Fees
25. Other (Attach List)
26. Total Reorganization Expenses
27. Income Tax
28. Net Profit (Loss) (5,525,420) (5,525,420)
This form does X does not have related footnotes on Footnotes Supplement.
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CASE NAME: KEVCO DISTRIBUTION, LP SUPPLEMENT TO
CASE NUMBER: 401-40789-BJH-11 ACCRUAL BASIS - 2
INCOME STATEMENT
MONTH MONTH MONTH
----- ----- ----- QUARTER
OPERATING EXPENSES FEB-01 TOTAL
- ------------------ ---------- ------- ------- ----------
A. Payroll & Employee Benefits 918,390 918,390
B. Insurance 267,714 267,714
C. Utilities & Telephone 226,150 226,150
D. Taxes 304,424 304,424
E.
TOTAL OTHER OPERATING
EXPENSES - LINE 13 1,716,678 1,716,678
OTHER INCOME & EXPENSES
A.
B.
C.
D.
E.
TOTAL NON-OPERATING
INCOME - LINE 16
A. Interco. Asset Charge 216,507 216,507
B. Interco. Management Fee 211,855 211,855
C. Interco. Royalty Fee 565,996 565,996
D. Interco. Interest Expense 992,059 992,059
E. Accrued Liabilities (FOOTNOTE) 42,844 42,844
TOTAL NON-OPERATING
EXPENSE - LINE 17 2,029,261 2,029,261
A.
B.
C.
D.
E.
TOTAL OTHER EXPENSE - LINE
21
REORGANIZATION EXPENSES
A.
B.
C.
D.
E.
TOTAL OTHER
REORGANIZATION EXPENSES -
LINE 25
6
CASE NAME: KEVCO DISTRIBUTION, LP ACCRUAL BASIS - 3
CASE NUMBER: 401-40789-BJH-11
MONTH MONTH MONTH
CASH RECEIPTS AND ----- ----- ----- QUARTER
DISBURSEMENTS FEB-01 TOTAL
- ------------- -------- ------- ------- -------
1. Cash - Beginning Of Month SEE ATTACHED SUPPLEMENT AND FOOTNOTE
RECEIPTS FROM OPERATIONS
2. Cash Sales
COLLECTION OF ACCOUNTS RECEIVABLE
3. Pre Petition
4. Post Petition
5. Total Operating Receipts
NON-OPERATING RECEIPTS
6. Loans & Advances (Attach List)
7. Sale of Assets
8. Other (Attach List)
9. Total Non-Operating Receipts
10. Total Receipts
11. Total Cash Available
OPERATING DISBURSEMENTS
12. Net Payroll
13. Payroll Taxes Paid
14. Sales, Use & Other Taxes Paid
15. Secured / Rental / Leases
16. Utilities
17. Insurance
18. Inventory Purchases
19. Vehicle Expenses
20. Travel
21. Entertainment
22. Repairs & Maintenance
23. Supplies
24. Advertising
25. Other (Attach List)
26. Total Operating Disbursements
REORGANIZATION DISBURSEMENTS
27. Professional Fees
28. U.S. Trustee Fees
29. Other (Attach List)
30. Total Reorganization Expenses
31. Total Disbursements
32. Net Cash Flow
33. Cash - End of Month
This form X does does not have related footnotes on Footnotes Supplement.
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CASE NAME: KEVCO DISTRIBUTION, LP SUPPLEMENT TO
ACCRUAL BASIS - 3
CASE NUMBER: 401-40789-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
=========== ============ ============ ========= ========== ======== ===========
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CASE NAME: KEVCO DISTRIBUTION, LP ACCRUAL BASIS - 4
CASE NUMBER: 401-40789-BJH-11
MONTH MONTH MONTH
SCHEDULED ----- ----- -----
ACCOUNTS RECEIVABLE AGING AMOUNT FEB-01
- ------------------------- ----------- ------------- --------- ---------
1. 0 - 30 14,608,699
2. 31 - 60 927,787
3. 61 - 90
4. 91 +
5. Total Accounts Receivable 17,545,859 15,536,486
6. (Amount Considered Uncollectible)
7. Accounts Receivable (Net) 17,545,859 15,536,486
AGING OF POST PETITION MONTH: FEB-01
TAXES AND PAYABLES ---------------------------------
0 - 30 31 - 60 61 - 90 91 +
TAXES PAYABLE DAYS DAYS DAYS DAYS TOTAL
------------- ------------ ------------- -------------- ----------- -----------
1. Federal
2. State
3. Local
4. Other (See Below) 693,679 693,679
5. Total Taxes Payable 693,679 693,679
6. Accounts Payable 2,173,714 2,173,714
MONTH: FEB-01
---------------------------------
STATUS OF POST PETITION TAXES
BEGINNING TAX AMOUNT WITHHELD ENDING TAX
FEDERAL LIABILITY* AND/OR ACCRUED (AMOUNT PAID) LIABILITY
- ------- ------------- --------------- ------------- -----------
1. Withholding ** 88,629 (88,629)
2. FICA - Employee ** 54,510 (54,510)
3. FICA - Employer ** 54,510 (54,510)
4. Unemployment 3,872 (3,872)
5. Income
6. Other (Attach List)
7. Total Federal Taxes 201,521 (201,521)
STATE AND LOCAL
8. Withholding 23,236 (23,236)
9. Sales (FOOTNOTE) 8,627 8,627
10. Excise
11. Unemployment 8,032 (8,032)
12. Real Property
13. Personal Property (FOOTNOTE) 685,052 685,052
14. Other (Attach List)
15. Total State And Local 693,679 31,268 (31,268) 693,679
16. Total Taxes 693,679 232,788 (232,788) 693,679
* 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 DISTRIBUTION, LP ACCRUAL BASIS - 5
CASE NUMBER: 401-40789-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: FEB-01
----------------------------------
BANK RECONCILIATIONS Account # 1 Account # 2
- -------------------- ------------ ------------
A. BANK: SEE FOOTNOTE
B. ACCOUNT NUMBER: Other Accounts
C. PURPOSE (TYPE): (Attach List) TOTAL
1. Balance Per Bank Statement
2. Add: Total Deposits Not Credited
3. Subtract: Outstanding Checks
4. Other Reconciling Items
5. Month End Balance Per Books
6. Number of Last Check Written
INVESTMENT ACCOUNTS
DATE OF TYPE OF
BANK, ACCOUNT NAME & NUMBER PURCHASE INSTRUMENT PURCHASE PRICE CURRENT VALUE
- --------------------------- -------- ---------- -------------- -------------
7.
8.
9.
10. (Attach List)
11. Total Investments
CASH
12. Currency On Hand
13. Total Cash - End of Month
This form X does does not have related footnotes on Footnotes Supplement.
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10
CASE NAME: KEVCO DISTRIBUTION, LP ACCRUAL BASIS - 6
CASE NUMBER: 401-40789-BJH-11
MONTH: FEB-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. Martin, Steve Payroll 14,885 14,885
2. Martin, Steve Exp. Reimb. 1,397 1,397
3.
4.
5. (Attach List)
6. Total Payments To Insiders 16,282 16,282
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 TOTAL
MONTHLY PAID UNPAID
PAYMENTS DURING POST
NAME OF CREDITOR DUE MONTH PETITION
---------------- --------- ----------- -----------
1. Bank of America (FOOTNOTE) 11,782,255 63,113,388
2. Leases Payable (FOOTNOTE) Not Available
3.
4.
5. (Attach List)
6. TOTAL 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 DISTRIBUTION, LP ACCRUAL BASIS - 7
CASE NUMBER: 401-40789-BJH-11
MONTH: FEB-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
PAYMENT AMOUNT &
TYPE OF POLICY CARRIER PERIOD COVERED FREQUENCY
-------------- ------- ----------------- --------------------
Property Lexington, Allianz 5/29/00-5/29/01 Annual $ 286,600
Group Health Blue Cross/Blue Shield Self Insured Annual $1,504,861
Auto Liberty Mutual 9/1/00-9/1/01 Annual $ 250,245
General Liability Liberty Mutual 9/1/00-9/1/01 Annual $ 313,520
Umbrella National Union 6/1/00-9/1/01 Annual $ 103,349
Workers Compensation Liberty Mutual 9/1/00-9/1/01 Annual $ 944,320
Marine Cargo Firemans Fund 9/1/00-9/1/01 Annual $ 6,000
This form X does does not have related footnotes on Footnotes Supplement.
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12
CASE NAME: KEVCO DISTRIBUTION, LP
CASE NUMBER: 401-40789-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
3 1 Use of 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 14C Debtor has capitalized certain long-term property leases in
1 22B accordance with Generally Accepted Accounting Principles. The
asset "Capitalized Lease" was inadvertently omitted from Debtor's
Schedules. The liabilities were not included in Debtor's
Schedules although the leases were included in Schedule G.
1 15A Intercompany receivables/payables are from/to co-debtors Kevco
1 27A Management Co. (Case No. 401-40788-BJH-11), Kevco Manufacturing,
7 3 LP (Case No. 401-40784-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
$108,257,291 of intercompany receivables and $115,590,104 of
intercompany payables. The amounts reflected on Debtor's
schedules were $100,961,429 and $114,705,150 respectively. The
change in intercompany balances has not been included in
post-petition activity due to the nature of the asset/liability.
1 22A The Debtor records on its books accruals for certain liabilities
2 17E 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."
13
PAGE 2
ACCRUAL
BASIS
FORM LINE
NUMBER NUMBER FOOTNOTE / EXPLANATION
- ------- ------ -------------------------------------------------------
1 24 Pursuant to an Asset Purchase Agreement approved by the
6 1 Court on February 23, 2001 and effective as of the same
7 4 date among Kevco, Inc., Kevco Manufacturing, LP,
Wingate Management Co. II, LP and Adorn, LLC, certain
assets and liabilities of Design Components, a division
of Kevco Manufacturing, were transferred to Adorn, LLC.
At the effective date of purchase, Buyer assumed
certain executory contracts, approximately $1.6 million
of Kevco Manufacturing's unsecured pre-petition
liabilities. $3.5 million of accounts receivable, $5
million of inventory and $2.2 million (book value) of
property and equipment. Payment was made directly to
Bank of America, the secured lender, thereby reducing
pre-petition secured debt. 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. Kevco, Inc.'s report reflects the
transaction detail.
1 25 Pursuant to Order dated February 12, 2001 and
Supplemental Order dated March 14, 2001, debtors were
authorized to pay pre-petition 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.
1 26 The pre-petition unsecured debt reduction is partially
due to vendor rebates earned pre-petition and applied
to pre-petition debt. In addition, certain credits have
been applied and invoice adjustments have been recorded
in the debtor's books and records. These adjustments
have been reflected on Line 26 of Accrual Basis--1.
4 9 Sales tax owing is an accrual only and not yet due.
4 13 Some of the property taxes payable may be pre-petition.
Once they are identified, the monthly operating report
will be adjusted.
5 1 Kevco Distribution, LP maintains several small petty
cash accounts for use by its various operating
divisions. Debtor has been unable to reconcile the bank
statements as of the date of filing this report.
Certain of the bank statements have not been located.
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.
14
PAGE 3
ACCRUAL
BASIS
FORM LINE
NUMBER NUMBER FOOTNOTE / EXPLANATION
- ------- ------ -------------------------------------------------------
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.