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: APRIL 30, 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 MAY 29, 2001
- --------------------------------------- -------------------------------
Printed Name of Responsible Party Date
PREPARER:
/s/ DENNIS S. FAULKNER DEBTOR'S ACCOUNTANT
- --------------------------------------- -------------------------------
Original Signature of Preparer Title
DENNIS S. FAULKNER MAY 29, 2001
- --------------------------------------- -------------------------------
Printed Name of Preparer Date
2
CASE NAME: KEVCO DISTRIBUTION, LP ACCRUAL BASIS - 1
CASE NUMBER: 401-40789-BJH-11
COMPARATIVE BALANCE SHEET
SCHEDULED MONTH MONTH MONTH
ASSETS AMOUNT FEB-01 MAR-01 APR-01
- ------ --------- ------ ------ ------
1. Unrestricted Cash (FOOTNOTE) 41,421 41,529 1,483 0
2. Restricted Cash
3. Total Cash 41,421 41,529 1,483 0
4. Accounts Receivable (Net) 17,545,859 15,536,486 7,470,433 2,323,242
5. Inventory 27,611,039 21,704,255 19,390,060 19,661,390
6. Notes Receivable
7. Prepaid Rent 236,697 236,245 236,093 236,093
8. Other (Attach List) 303,392 397,801 464,235 261,378
9. Total Current Assets 45,738,408 37,916,316 27,562,304 22,482,103
10. Property, Plant & Equipment 22,049,500 22,050,042 22,049,500 22,047,961
11. Less: Accumulated Depreciation/Depletion (6,151,901) (6,316,718) (6,485,448) (6,654,425)
12. Net Property, Plant & Equipment 15,897,599 15,733,324 15,564,052 15,393,536
13. Due From Insiders
14. Other Assets - Net of Amortization (Attach List) 5,741,869 6,153,746 6,153,746 6,153,746
15. Other (Attach List) 100,961,429 108,257,291 116,823,646 120,511,198
16. Total Assets 168,339,305 168,060,678 166,103,748 164,540,583
POST PETITION LIABILITIES
17. Accounts Payable 2,173,714 3,073,468 4,274,725
18. Taxes Payable 693,679 761,086 755,087
19. Notes Payable
20. Professional Fees
21. Secured Debt
22. Other (Attach List) 5,176,106 3,742,032 3,295,878
23. Total Post Petition Liabilities 8,043,499 7,576,586 8,325,690
PRE PETITION LIABILITIES
24. Secured Debt (FOOTNOTE) 75,885,064 63,113,388 63,113,388 41,900,067
25. Priority Debt (FOOTNOTE) 1,412,879
26. Unsecured Debt 19,966,456 19,418,510 19,418,510 19,418,510
27. Other (Attach List) 243,205,150 244,090,104 244,988,081 244,988,081
28. Total Pre Petition Liabilities 340,469,549 326,622,002 327,519,979 306,306,658
29. Total Liabilities 340,469,549 334,665,501 335,096,565 314,632,348
EQUITY
30. Pre Petition Owners' Equity (172,130,244) (172,130,244) (172,130,244)
31. Post Petition Cumulative Profit Or (Loss) (5,525,420) (7,913,414) (10,225,683)
32. Direct Charges To Equity (FOOTNOTE) 11,050,841 11,050,841 32,264,162
33. Total Equity (166,604,823) (168,992,817) (150,091,765)
34. Total Liabilities and Equity 168,060,678 166,103,748 164,540,583
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
SCHEDULED MONTH MONTH MONTH
ASSETS AMOUNT FEB-01 MAR-01 APR-01
- ------ --------- ------ ------ ------
A. Inventory Vendor Deposit 130,000 224,409 224,409
B. Leased Facility Deposit 173,392 173,392 173,392 173,392
C. Miscellaneous Prepaids 66,434 87,986
D.
E.
TOTAL OTHER ASSETS - LINE 8 303,392 397,801 464,235 261,378
A. Goodwill: Shepherd Products 5,223,119 5,159,370 5,159,370 5,159,370
B. Goodwill: DARCO 518,750 512,500 512,500 512,500
C. Capitalized Lease (FOOTNOTE) 481,876 481,876 481,876
D.
E.
TOTAL OTHER ASSETS NET OF AMORTIZATION - LINE 14 5,741,869 6,153,746 6,153,746 6,153,746
A. Intercompany Receivables (FOOTNOTE) 100,961,429 108,257,291 116,823,646 120,511,198
B.
C.
D.
E.
TOTAL OTHER ASSETS - LINE 15 100,961,429 108,257,291 116,823,646 120,511,198
POST PETITION LIABILITIES
A. Accrued Liabilities (FOOTNOTE) 497,125 1,474,584 1,028,743
B. Long Term Leases (FOOTNOTE) 1,139,156 1,137,805 1,137,492
C. Accrued Interest: Bank 9,667 9,667 9,667
D. Payroll 3,530,159 1,119,976 1,119,976
E.
TOTAL OTHER POST PETITION LIABILITIES - LINE 22 5,176,106 3,742,032 3,295,878
PRE PETITION LIABILITIES
A. Interco.Payables (FOOTNOTE) 114,705,150 115,590,104 116,488,081 116,488,081
B. 10 3/8% Senior Sub. Notes 105,000,000 105,000,000 105,000,000 105,000,000
C. Sr. Sub. Exchangeable Notes 23,500,000 23,500,000 23,500,000 23,500,000
D.
E.
TOTAL OTHER PRE PETITION LIABILITIES - LINE 27 243,205,150 244,090,104 244,988,081 244,988,081
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CASE NAME: KEVCO DISTRIBUTION, LP ACCRUAL BASIS - 2
CASE NUMBER: 401-40789-BJH-11
INCOME STATEMENT
MONTH MONTH MONTH QUARTER
REVENUES FEB-01 MAR-01 APR-01 TOTAL
- -------- ------ ------ ------ -------
1. Gross Revenues 17,801,959 8,576,929 2,591,757 28,970,645
2. Less: Returns & Discounts (761,691) (491,194) (244,846) (1,497,731)
3. Net Revenue 17,040,268 8,085,735 2,346,911 27,472,914
COST OF GOODS SOLD
4. Material 15,875,204 7,502,620 2,907,772 26,285,596
5. Direct Labor 990,318 624,450 235,336 1,850,104
6. Direct Overhead 1,083,604 12,500 108,625 1,204,729
7. Total Cost Of Goods Sold 17,949,126 8,139,570 3,251,733 29,340,429
8. Gross Profit (908,858) (53,835) (904,822) (1,867,515)
OPERATING EXPENSES
9. Officer / Insider Compensation 14,885 15,592 17,655 48,132
10. Selling & Marketing 24,064 6,497 8,253 38,814
11. General & Administrative 63,447 90,336 198,663 352,446
12. Rent & Lease 526,422 286,646 308,180 1,121,248
13. Other (Attach List) 1,716,678 865,376 704,241 3,286,295
14. Total Operating Expenses 2,345,496 1,264,447 1,236,992 4,846,935
15. Income Before Non-Operating
Income & Expense (3,254,354) (1,318,282) (2,141,814) (6,714,450)
OTHER INCOME & EXPENSES
16. Non-Operating Income (Att List)
17. Non-Operating Expense (Att List) 2,029,261 897,977 2,927,238
18. Interest Expense 2,828 3,006 1,477 7,311
19. Depreciation / Depletion 238,977 168,729 168,978 576,684
20. Amortization
21. Other (Attach List)
22. Net Other Income & Expenses (2,271,066) (1,069,712) (170,455) (3,511,233)
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) (2,387,994) (2,312,269) (10,225,683)
This form x does 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 MAR-01 APR-01 TOTAL
- ------------------ ------ ------ ------ -------
A. Payroll & Employee Benefits 918,390 208,836 256,889 1,384,115
B. Insurance 267,714 259,019 199,134 725,867
C. Utilities & Telephone 226,150 244,174 188,205 658,529
D. Taxes 304,424 153,347 60,013 517,784
E.
TOTAL OTHER OPERATING
EXPENSES - LINE 13 1,716,678 865,376 704,241 3,286,295
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 211,855 118,950 330,805
C. Interco. Royalty Fee 565,996 282,998 848,994
D. Interco. Interest Expense 992,059 496,029 1,488,088
E. Accrued Liabilities 42,844 42,844
TOTAL NON-OPERATING
EXPENSE - LINE 17 2,029,261 897,977 2,927,238
A.
B.
C.
D.
E.
TOTAL OTHER EXPENSE - LINE 21
REORGANIZATION EXPENSES
A.
B.
C.
D.
E.
TOTAL OTHER
REORGANIZATION EXPENSES -
LINE 25
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CASE NAME: KEVCO DISTRIBUTION, LP ACCRUAL BASIS - 3
CASE NUMBER: 401-40789-BJH-11
CASH RECEIPTS AND MONTH MONTH MONTH QUARTER
DISBURSEMENTS FEB-01 MAR-01 APR-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
APRIL, 2001
CASE NUMBER: 401-40789-BJH-11 CASH RECEIPTS AND DISBURSEMENTS
DIST LP MFG MGMT HOLDING COMP KEVCO INC TOTAL
------- --- ---- ------- ---- --------- -----
1 CASH-BEGINNING OF MONTH 1,483 (95,242) 26,213,696 5,010 6,050 1,000 26,131,997
RECEIPTS FROM OPERATIONS
2 CASH SALES 121,372 -- 121,372
COLLECTION OF ACCOUNTS RECEIVABLE
3 PRE PETITION 61,354 -- 61,354
4 POST PETITION 7,225,297 4,705,194 11,930,491
5 TOTAL OPERATING RECEIPTS 7,408,023 4,705,194 -- -- -- -- 12,113,217
NON OPERATING RECEIPTS
6 LOANS & ADVANCES -- --
7 SALE OF ASSETS 38,500 7,012,936 7,051,436
8 OTHER 171,186 -- 87,708 -- -- -- 258,894
INTERCOMPANY TRANSFERS (4,591,461) (2,381,789) 6,973,250 -- -- --
SALE EXPENSE REIMBURSEMENT
LIFE INSURANCE CASH VALUE 152,493
RENT 16,000
TAX REFUND 2,693
MISC. --
INTEREST INCOME 87,708
9 TOTAL NON OPERATING RECEIPTS (4,381,775) 4,631,147 7,060,958 -- -- -- 7,310,330
10 TOTAL RECEIPTS 3,026,248 9,336,341 7,060,958 -- -- -- 19,423,547
11 CASH AVAILABLE 3,027,731 9,241,099 33,274,654 5,010 6,050 1,000 45,555,544
OPERATING DISBURSEMENTS
12 NET PAYROLL 500,771 560,149 112,437 1,173,357
13 PAYROLL TAXES PAID -- 524,486 524,486
14 SALES, USE & OTHER TAXES PAID 9,429 770 10,199
15 SECURED/RENTAL/LEASES 496,959 130,335 71,718 699,012
16 UTILITIES 100,185 88,360 211,235 399,780
17 INSURANCE 6,099 -- 597,388 603,487
18 INVENTORY PURCHASES 1,269,266 1,178,079 2,447,345
19 VEHICLE EXPENSE 64,627 10,109 74,736
20 TRAVEL 21,689 12,853 643 35,185
21 ENTERTAINMENT -- 369 369
22 REPAIRS & MAINTENANCE 2,617 19,292 2,790 24,699
23 SUPPLIES 9,375 40,685 50,060
24 ADVERTISING -- -- --
25 OTHER 546,714 7,266,715 15,367,241 -- -- -- 23,180,670
LOAN PAYMENTS 324,609 7,012,936 15,000,000 22,337,545
FREIGHT 97,953 152,540 250,493
CONTRACT LABOR 617 1,976 31,937 34,530
401 K PAYMENTS -- 157,719 157,719
PAYROLL TAX ADVANCE ADP --
WAGE GARNISHMENTS --
MISC. 123,535 99,263 177,585 400,383
26 TOTAL OPERATING DISBURSEMENTS 3,027,731 9,307,716 16,887,938 -- -- -- 29,223,385
REORGANIZATION DISBURSEMENTS
27 PROFESSIONAL FEES -- 492,647 492,647
28 US TRUSTEE FEES -- --
29 OTHER --
30 TOTAL REORGANIZATION EXPENSE -- -- 492,647 -- -- -- 492,647
31 TOTAL DISBURSEMENTS 3,027,731 9,307,716 17,380,585 -- -- -- 29,716,032
32 NET CASH FLOW (1,483) 28,625 (10,319,627) -- -- -- (10,292,485)
33 CASH- END OF MONTH -- (66,617) 15,894,069 5,010 6,050 1,000 15,839,512
8
CASE NAME: KEVCO DISTRIBUTION, LP ACCRUAL BASIS - 4
CASE NUMBER: 401-40789-BJH-11
SCHEDULED MONTH MONTH MONTH
ACCOUNTS RECEIVABLE AGING AMOUNT FEB-01 MAR-01 APR-01
- ------------------------- --------- ------ ------ ------
1. 0 - 30 14,608,699 4,662,400 1,132,282
2. 31 - 60 927,787 2,418,683 733,972
3. 61 - 90 389,350 456,988
4. 91 +
5. Total Accounts Receivable 17,545,859 15,536,486 7,470,433 2,323,242
6. (Amount Considered Uncollectible)
7. Accounts Receivable (Net) 17,545,859 15,536,486 7,470,433 2,323,242
AGING OF POST PETITION MONTH: APRIL-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)
5. Total Taxes Payable
6. Accounts Payable (FOOTNOTE) 1,123,035 779,992 2,035,448 3,938,475
MONTH: APRIL-01
STATUS OF POST PETITION TAXES ---------------
BEGINNING TAX AMOUNT WITHHELD ENDING TAX
FEDERAL LIABILITY * AND/OR ACCRUED (AMOUNT PAID) LIABILITY
- ------- ------------- --------------- ------------- -----------
1. Withholding ** 98,029 (98,029)
2. FICA - Employee ** 53,076 (53,076)
3. FICA - Employer ** 53,076 (53,076)
4. Unemployment 727 (727)
5. Income
6. Other (Attach List)
7. Total Federal Taxes 204,908 (204,908)
STATE AND LOCAL
8. Withholding 20,984 (20,984)
9. Sales (FOOTNOTE) 12,093 (5,998) 6,095
10. Excise
11. Unemployment 2,339 (2,339)
12. Real Property (FOOTNOTE) 748,992 748,992
13. Personal Property
14. Other (Attach List) 24,879 (24,879)
15. Total State And Local 761,085 48,202 (54,200) 755,087
16. Total Taxes 761,085 253,110 (259,108) 755,087
* 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: APRIL-01
------------------
BANK RECONCILIATIONS Account # 1 Account # 2
- -------------------- ----------- -----------
A. BANK: Other Accounts
B. ACCOUNT NUMBER: (Attach List) TOTAL
C. PURPOSE (TYPE):
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
BANK, ACCOUNT NAME & NUMBER DATE OF PURCHASE TYPE OF 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 does x does not have related footnotes on Footnotes Supplement.
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CASE NAME: KEVCO DISTRIBUTION, LP ACCRUAL BASIS - 6
CASE NUMBER: 401-40789-BJH-11 MONTH: APRIL-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 17,365 47,134
2. Martin, Steve Exp. Reimb. 290 998
3.
4.
5. (Attach List)
6. Total Payments To Insiders 17,655 48,132
PROFESSIONALS
DATE OF
COURT ORDER TOTAL
AUTHORIZED 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) 21,213,321 41,900,067
2. Leases Payable (FOOTNOTE) Not Available
3.
4.
5. (Attach List)
6. TOTAL 21,213,321 41,900,067
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: APRIL-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 FOOTNOTE)
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 $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: APRIL 30, 2001
---------------------
FOOTNOTES SUPPLEMENT ACCRUAL BASIS
ACCRUAL
BASIS
FORM LINE
NUMBER NUMBER FOOTNOTE / EXPLANATION
- ------ ------ ----------------------
1 1 Pursuant to the February 12, 2001 Order (1) Authorizing
3 1 Continued 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 maintains several small petty cash
accounts for use by its operating divisions that 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
7 3 Manufacturing, 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).
1 22A 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."
13
PAGE 2
ACCRUAL
BASIS
FORM LINE
NUMBER NUMBER FOOTNOTE / EXPLANATION
- ------ ------ ----------------------
1 24 (A) Pursuant to an Asset Purchase Agreement approved by the
6 1 Court on February 23, 2001 and effective as of the same date
7 4 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 debtor'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. Kevco, Inc.'s
report reflects the transaction detail (see Footnote 1,32).
(B) Pursuant to an Asset Purchase Agreement approved by the
Court on April 3, 2001 and effective as of the same date among
Universal Forest Products Eastern Division, Inc. and Kevco
Manufacturing, LP, Universal purchased the assets (inventory,
equipment, machinery and five of the seven facilities at which
Sunbelt Wood Components Division operates) of the Sunbelt
division of Kevco Manufacturing, LP. Approximately $7 million
in sales proceeds were paid directly to Bank of America
thereby reducing pre-petition secured debt.
(C) Debtor paid $15 million from available cash during April
to Bank of America to reduce pre-petition secured debt.
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 32 The direct charges to equity are due to secured debt
reductions pursuant to sales of two of Kevco Manufacturing,
LP's operating divisions (Design Components and Sunbelt Wood),
as well as a direct cash payment of $15 million (see footnote
1,24). 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 1,27A); 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.
Kevco, Inc.'s report will reflect the cash portion of the
transaction.
4 6 The amounts in the 61-90 day aging column of Accounts Payable
are inflated due to wire transfer payments that have not yet
been applied to invoices.
4 9 Sales tax owing is an accrual only and not yet due. Some of
4 12 the property taxes payable may be pre-petition. Once they
are identified, the monthly operating report will be adjusted.
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.