EXHIBIT 99.2
CASE NAME: KEVCO MANAGEMENT, INC. ACCRUAL BASIS
CASE NUMBER: 401-40788-BJH-11
JUDGE: BARBARA J. HOUSER
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF TEXAS
-------- -----
FORT WORTH DIVISION
----------
MONTHLY OPERATING REPORT
MONTH ENDING: JULY 31, 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/ Wilford W. Simpson TREASURER
- --------------------------------------- ------------------------------
Original Signature of Responsible Party Title
WILFORD W. SIMPSON SEPTEMBER 24, 2001
- --------------------------------------- ------------------------------
Printed Name of Responsible Party Date
PREPARER:
/s/ Dennis S. Faulkner ACCOUNTANT FOR DEBTOR
- --------------------------------------- ------------------------------
Original Signature of Preparer Title
DENNIS S. FAULKNER SEPTEMBER 24, 2001
- --------------------------------------- ------------------------------
Printed Name of Preparer Date
CASE NAME: KEVCO MANAGEMENT, INC. ACCRUAL BASIS - 1
CASE NUMBER: 401-40788-BJH-11
COMPARATIVE BALANCE SHEET
<Table>
<Caption>
SCHEDULED MONTH MONTH
ASSETS AMOUNT JULY-01 AUGUST-01 MONTH
- ------ --------- ------- --------- -----
1. Unrestricted Cash (FOOTNOTE) 6,557,974 4,259,402
2. Restricted Cash
3. Total Cash 6,557,974 4,259,402
4. Accounts Receivable (Net)
5. Inventory
6. Notes Receivable
7. Prepaid Expenses (FOOTNOTE) 3,450,681 1,108,092
8. Other (Attach List) 263,606 0
9. Total Current Assets 10,272,261 5,367,494
10. Property, Plant & Equipment (FOOTNOTE) 3,285,885 0
11. Less: Accumulated Depreciation/Depletion (1,753,163) 0
12. Net Property, Plant & Equipment 1,532,722 0
13. Due From Insiders
14. Other Assets - Net of Amortization (Attach List) 36,082 0
15. Other (Attach List) (FOOTNOTE) 153,399,371 39,971,438
16. Total Assets 165,240,436 45,338,932
POST PETITION LIABILITIES
17. Accounts Payable
18. Taxes Payable 11,634
19. Notes Payable
20. Professional Fees
21. Secured Debt
22. Other (Attach List) (FOOTNOTE) 2,776,114
23. Total Post Petition Liabilities 2,787,748
PRE PETITION LIABILITIES
24. Secured Debt (FOOTNOTE) 75,885,064 15,071,491
25. Priority Debt (FOOTNOTE) 200,832 91,281
26. Unsecured Debt 1,779,701 1,720,667
27. Other (Attach List) 242,243,558 169,279,290
28. Total Pre Petition Liabilities 320,109,155 186,162,729
29. Total Liabilities 320,109,155 188,950,477
EQUITY
30. Pre Petition Owners' Equity (154,868,719)
31. Post Petition Cumulative Profit Or (Loss) (5,202,539)
32. Direct Charges To Equity (Attach Explanation FOOTNOTE) 16,459,713
33. Total Equity (143,611,545)
34. Total Liabilities and Equity 45,338,932
</Table>
This form x does does not have related footnotes on Footnotes Supplement.
--- ---
CASE NAME: KEVCO MANAGEMENT, INC. SUPPLEMENT TO
CASE NUMBER: 401-40788-BJH-11 ACCRUAL BASIS - 1
COMPARATIVE BALANCE SHEET
<Table>
<Caption>
SCHEDULED MONTH
ASSETS AMOUNT JUL-01 MONTH MONTH
- ------ --------- ------ ----- -----
A. Security Deposit 8,794 0
B. Cash Surrender Value: Life Ins. 254,812 0
C.
D.
E.
TOTAL OTHER ASSETS - LINE 8 263,606 0
A. Organizational Costs (FOOTNOTE) 36,082 0
B.
C.
D.
E.
TOTAL OTHER ASSETS NET OF
AMORTIZATION - LINE 14 36,082 0
A. Intercompany Receivables 113,743,558 0
B. Intercompany Royalties 39,655,813 39,971,438
C.
D.
E.
TOTAL OTHER ASSETS - LINE 15 153,399,371 39,971,438
POST PETITION LIABILITIES
A. Accrued Liabilities Other 1,338,789
B. Deferred Compensation 960,371
C. Accrued Health Claims 476,954
D.
E.
F.
G.
TOTAL OTHER POST PETITION
LIABILITIES - LINE 22 2,776,114
PRE PETITION LIABILITIES
A. Intercompany Payables (FOOTNOTE) 113,743,558 40,779,290
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 27 242,243,558 169,279,290
</Table>
CASE NAME: KEVCO MANAGEMENT, INC. ACCRUAL BASIS - 2
CASE NUMBER: 401-40788-BJH-11
INCOME STATEMENT
<Table>
<Caption>
MONTH QUARTER
REVENUES JUL-01 MONTH MONTH TOTAL
- -------- ------ ----- ----- -------
1. Gross Revenues 0
2. Less: Returns & Discounts 0
3. Net Revenue 0 0
COST OF GOODS SOLD
4. Material 0
5. Direct Labor 0
6. Direct Overhead 0
7. Total Cost Of Goods Sold 0 0
8. Gross Profit 0 0
OPERATING EXPENSES
9. Officer / Insider Compensation (FOOTNOTE) 153,348 153,348
10. Selling & Marketing 0
11. General & Administrative 88,795 88,795
12. Rent & Lease 17,456 17,456
13. Other (Attach List) 521,733 521,733
14. Total Operating Expenses 781,332 781,332
15. Income Before Non-Operating
Income & Expense (781,332) (781,332)
OTHER INCOME & EXPENSES
16. Non-Operating Income (Att List) 8,914 8,914
17. Non-Operating Expense (Att List) 114,757 114,757
18. Interest Expense 0
19. Depreciation / Depletion 35,680 35,680
20. Amortization 0
21. Other (Attach List) 0
22. Net Other Income & Expenses (141,523) (141,523)
REORGANIZATION EXPENSES
23. Professional Fees 160,801 160,801
24. U.S. Trustee Fees 0
25. Other (Attach List) 0
26. Total Reorganization Expenses 160,801 160,801
27. Income Tax 0
28. Net Profit (Loss) (1,083,656) (1,083,656)
</Table>
This form x does does not have related footnotes on Footnotes Supplement.
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CASE NAME: KEVCO MANAGEMENT, INC. SUPPLEMENT TO
CASE NUMBER: 401-40788-BJH-11 ACCRUAL BASIS - 2
INCOME STATEMENT
<Table>
<Caption>
MONTH QUARTER
OPERATING EXPENSES JUL-01 MONTH MONTH TOTAL
- ------------------ ------ ----- ----- --------
A. Payroll (FOOTNOTE) 503,153 503,153
B. Insurance 868 868
C. Utilities & Telephone 189 189
D. Taxes 17,523 17,523
E. 0
TOTAL OTHER OPERATING
EXPENSES - LINE 13 521,733 521,733
OTHER INCOME & EXPENSES
A. Interest and Misc. Income 8,914 8,914
B. Balance Sheet Adjustments 0
C. 0
D. 0
E. 0
TOTAL NON-OPERATING
INCOME - LINE 16 8,914 8,914
A. Balance Sheet Adjustments
(FOOTNOTE) 114,757 114,757
B. 0
C. 0
D. 0
E. 0
TOTAL NON-OPERATING
EXPENSE - LINE 17 114,757 114,757
REORGANIZATION EXPENSES
A. 0
B. 0
C. 0
D. 0
E. 0
TOTAL OTHER REORGANIZATION
EXPENSES - LINE 25 0 0
</Table>
CASE NAME: KEVCO MANAGEMENT, INC. ACCRUAL BASIS - 3
CASE NUMBER: 401-40788-BJH-11
<Table>
<Caption>
CASH RECEIPTS AND MONTH QUARTER
DISBURSEMENTS JULY-01 MONTH MONTH TOTAL
- ----------------- ------- ----- ----- -------
1. Cash - Beginning Of Month SEE ATTACHED SUPPLEMENT AND FOOTNOTE
RECEIPTS FROM OPERATIONS
2. Cash Sales 0
COLLECTION OF ACCOUNTS RECEIVABLE
3. Pre Petition 0
4. Post Petition 0
5. Total Operating Receipts 0 0
NON-OPERATING RECEIPTS
6. Loans & Advances (Attach List) 0
7. Sale of Assets 0
8. Other (Attach List) 0
9. Total Non-Operating Receipts 0 0
10. Total Receipts 0 0
11. Total Cash Available 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
26. Total Operating Disbursements 0 0
REORGANIZATION DISBURSEMENTS
27. Professional Fees 0
28. U.S. Trustee Fees 0
29. Other (Attach List) 0
30. Total Reorganization Expenses 0 0
31. Total Disbursements 0 0
32. Net Cash Flow 0 0
33. Cash - End of Month 0 0
</Table>
This form x does does not have related footnotes on Footnotes Supplement.
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CASE NAME: KEVCO MANAGEMENT, INC. SUPPLEMENT TO ACCRUAL BASIS - 3
JULY, 2001
CASE NUMBER: 401-40788-BJH-11 CASH RECEIPTS AND DISBURSEMENTS
<Table>
<Caption>
DIST LP MFG MGMT HOLDING COMP KEVCO INC TOTAL
------- ----- --------- ------- ----- --------- ---------
1 CASH-BEGINNING OF MONTH -- 3,739 5,395,155 4,631 5,668 1,000 5,410,193
RECEIPTS FROM OPERATIONS
2 CASH SALES -- -- --
COLLECTION OF ACCOUNTS RECEIVABLE
3 PRE PETITION -- -- --
4 POST PETITION 47,759 -- 47,759
5 TOTAL OPERATING RECEIPTS 47,759 -- -- -- -- -- 47,759
NON OPERATING RECEIPTS
6 LOANS & ADVANCES -- --
7 SALE OF ASSETS 482,442 55,779 68,000 606,221
8 OTHER -- 50,449 95,885 -- -- -- 146,334
INTERCOMPANY TRANSFERS 88,194 121,941 (210,135) -- -- --
SALE EXPENSE REIMBURSEMENT
LIFE INSURANCE CASH VALUE
RENT
PAYROLL TAX ADVANCE RETURNED 43,264
MISC. 43,707 --
INTEREST INCOME 8,914
9 TOTAL NON OPERATING RECEIPTS 570,636 228,169 (46,250) -- -- -- 752,555
10 TOTAL RECEIPTS 618,395 228,169 (46,250) -- -- -- 800,314
11 CASH AVAILABLE 618,395 231,908 5,348,905 4,631 5,668 1,000 6,210,507
OPERATING DISBURSEMENTS
12 NET PAYROLL 342,427 9,430 282,924 634,781
13 PAYROLL TAXES PAID -- 238,878 238,878
14 SALES, USE & OTHER TAXES PAID -- --
15 SECURED/RENTAL/LEASES 15,069 3,223 40,094 58,386
16 UTILITIES 67,481 3,641 13,097 84,219
17 INSURANCE -- 137,376 137,376
18 INVENTORY PURCHASES -- --
19 VEHICLE EXPENSE -- --
20 TRAVEL 4,264 -- 4,264
21 ENTERTAINMENT -- --
22 REPAIRS & MAINTENANCE 2,954 74 5,492 8,520
23 SUPPLIES 3,873 -- 30,637 34,510
24 ADVERTISING --
25 OTHER 182,327 61,801 183,730 -- -- -- 427,858
LOAN PAYMENTS 55,779 55,779
FREIGHT 14,204 3,126 17,330
CONTRACT LABOR 846 -- 45,359 46,205
401 K PAYMENTS -- --
PAYROLL TAX ADVANCE ADP --
WAGE GARNISHMENTS 1,761 1,761
MISC. 167,277 2,896 136,610 306,783
26 TOTAL OPERATING DISBURSEMENTS 618,395 78,169 932,228 -- -- -- 1,628,792
REORGANIZATION DISBURSEMENTS
27 PROFESSIONAL FEES -- 157,275 157,275
28 US TRUSTEE FEES -- --
29 OTHER --
30 TOTAL REORGANIZATION EXPENSE -- -- 157,275 -- -- -- 157,275
31 TOTAL DISBURSEMENTS 618,395 78,169 1,089,503 -- -- -- 1,786,067
32 NET CASH FLOW -- 150,000 (1,135,753) -- -- -- (985,753)
33 CASH- END OF MONTH -- 153,739 4,259,402 4,631 5,668 1,000 4,424,440
</Table>
CASE NAME: KEVCO MANAGEMENT, INC. ACCRUAL BASIS - 4
CASE NUMBER: 401-40788-BJH-11
<Table>
<Caption>
SCHEDULED MONTH
ACCOUNTS RECEIVABLE AGING AMOUNT JULY-01 MONTH MONTH
- ------------------------- --------- ------- ----- -----
1. 0 - 30
2. 31 - 60
3. 61 - 90
4. 91 +
5. Total Accounts Receivable 0 0 0 0
6. (Amount Considered Uncollectible)
7. Accounts Receivable (Net) 0 0 0 0
</Table>
AGING OF POST PETITION MONTH: JULY-01
TAXES AND PAYABLES ---------------
<Table>
<Caption>
0 - 30 31 - 60 61 - 90 91 +
TAXES PAYABLE DAYS DAYS DAYS DAYS TOTAL
- ------------- ------ ------- ------- ---- -----
1. Federal 0
2. State 6,412 6,412
3. Local 0
4. Other (See below) 5,222 5,222
5. Total Taxes Payable 11,634 0 0 0 11,634
6. Accounts Payable 0
</Table>
MONTH: JULY-01
-------------
STATUS OF POST PETITION TAXES
<Table>
<Caption>
BEGINNING TAX AMOUNT WITHHELD ENDING TAX
FEDERAL LIABILITY* AND/OR ACCRUED (AMOUNT PAID) LIABILITY
- ------- ------------- --------------- ------------- ---------
1. Withholding ** 61,013 (61,013) 0
2. FICA - Employee ** 17,131 (17,131) 0
3. FICA - Employer ** 17,132 (17,132) 0
4. Unemployment 0 0
5. Income 0
6. Other (Attach List)
7. Total Federal Taxes 0 95,276 (95,276) 0
STATE AND LOCAL
8. Withholding 0 0
9. Sales (FOOTNOTE) 6,412 6,412
10. Excise 0
11. Unemployment 0 0
12. Real Property (FOOTNOTE) 0
13. Personal Property 4,167 1,055 5,222
14. Other (Attach List) 0
15. Total State And Local 10,579 1,055 0 11,634
16. Total Taxes 10,579 96,331 (95,276) 11,634
</Table>
* 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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CASE NAME: KEVCO MANAGEMENT, INC. ACCRUAL BASIS - 5
CASE NUMBER: 401-40788-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: JULY-01
----------------
<Table>
<Caption>
BANK RECONCILIATIONS Account # 1 Account # 2
- -------------------- ----------- -----------
A. BANK: Bank of America Bank of America Other Accounts
B. ACCOUNT NUMBER: 1295026976 3751629012 (Attach List) TOTAL
C. PURPOSE (TYPE): DIP Disbursement
Operating Account Account
1. Balance Per Bank Statement 741,411 250,830 3,388,421 4,380,662
2. Add: Total Deposits Not Credited 0 0
3. Subtract: Outstanding Checks (40,861) (13,884) (54,745)
4. Other Reconciling Items (45,683) (20,832) (66,515)
5. Month End Balance Per Books 654,867 250,830 3,353,705 4,259,402
6. Number of Last Check Written N/A N/A
</Table>
INVESTMENT ACCOUNTS
<Table>
<Caption>
DATE TYPE OF
BANK, ACCOUNT NAME & NUMBER OF PURCHASE INSTRUMENT PURCHASE PRICE CURRENT VALUE
- --------------------------- ----------- ---------- -------------- -------------
7.
8.
9.
10. (Attach List)
11. Total Investments 0 0
CASH
12. Currency On Hand
13. Total Cash - End of Month 4,259,402
</Table>
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CASE NAME: KEVCO MANAGEMENT, INC. SUPPLEMENT TO
CASE NUMBER: 401-40788-BJH-11 ACCRUAL BASIS - 5
MONTH: JULY-01
----------------
<Table>
<Caption>
BANK RECONCILIATIONS Account # 3 Account # 4 Account # 5
- -------------------- ----------- ----------- -----------
Bank of America/ Bank of Bank of
A. BANK: Nations Funds America America TOTAL
B. ACCOUNT NUMBER: 846713 3751775241 3750801912 OTHER BANK
Kevco, Inc. S-T Stay Pay ACCOUNTS
C. PURPOSE (TYPE): Investment (FOOTNOTE) Payroll-Mgmt
1. Balance Per Bank Statement 2,366,860 984,080 3,966 3,354,906
2. Add: Total Deposits Not Credited 0
3. Subtract: Outstanding Checks 0
4. Other Reconciling Items 0
5. Month End Balance Per Books 2,366,860 984,080 3,966 3,354,906
6. Number of Last Check Written N/A N/A N/A
</Table>
INVESTMENT ACCOUNTS
<Table>
<Caption>
DATE OF TYPE OF
BANK, ACCOUNT NAME & NUMBER PURCHASE INSTRUMENT PURCHASE PRICE CURRENT VALUE
- --------------------------- -------- ---------- -------------- -------------
A.
B.
C.
D.
TOTAL OTHER INVESTMENT
ACCOUNTS - LINE 10 0 0
</Table>
CASE NAME: KEVCO MANAGEMENT, INC. 2ND SUPPLEMENT TO
CASE NUMBER: 401-40788-BJH-11 ACCRUAL BASIS - 5
MONTH: JULY-01
----------------
<Table>
<Caption>
BANK RECONCILIATIONS Account # 6 Account # 7 Account # 8
- -------------------- ----------- ----------- -----------
A. BANK: Bank of America Bank of America TOTAL
B. ACCOUNT NUMBER: 1295027040 3750768628 OTHER BANK
C. PURPOSE (TYPE): Payroll-Dist Payroll-MFG ACCOUNTS
1. Balance Per Bank Statement 28,791 4,724 33,515
2. Add: Total Deposits Not Credited 0
3. Subtract: Outstanding Checks (13,884) (13,884)
4. Other Reconciling Items (20,832) (20,832)
5. Month End Balance Per Books (5,925) 4,724 (1,201)
6. Number of Last Check Written N/A N/A
</Table>
INVESTMENT ACCOUNTS
<Table>
<Caption>
DATE OF TYPE OF
BANK, ACCOUNT NAME & NUMBER PURCHASE INSTRUMENT PURCHASE PRICE CURRENT VALUE
- --------------------------- -------- ---------- -------------- -------------
A.
B.
C.
D.
TOTAL OTHER INVESTMENT
ACCOUNTS - LINE 10 0 0
</Table>
CASE NAME: KEVCO MANAGEMENT, INC. ACCRUAL BASIS - 6
CASE NUMBER: 401-40788-BJH-11
MONTH: JULY-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
<Table>
<Caption>
TYPE OF AMOUNT TOTAL PAID
NAME PAYMENT PAID TO DATE
---- --------------- ----------- --------------
1. Sharon Romere Expense Reimb. 383
2. Joe Tomczak Expense Reimb. 626
3. John Wittig Expense Reimb. 263
4. Sharon Romere Payroll 9,615 48,076
5. Joe Tomczak Payroll 177,884
6. John Wittig Payroll 77,404 144,039
7. Will Simpson Payroll 21,635 69,501
Other (see attached) 45,360 131,083
8. Total Payments To Insiders 154,014 571,855
</Table>
PROFESSIONALS
<Table>
<Caption>
DATE OF
COURT ORDER TOTAL
AUTHORIZING AMOUNT AMOUNT TOTAL PAID INCURRED &
NAME PAYMENT APPROVED PAID TO DATE UNPAID*
---- ----------- -------- ------- ---------- ----------
1. Haynes and Boone 3/20/01 858,001 139,039 858,001 266,977
2. Lain, Faulkner & Co., P.C. 3/20/01 158,386 18,236 158,386 60,181
3. Baker & McKenzie 3/20/01 93,418 0 93,418 0
4.
5. (Attach List)
6. Total Payments To
Professionals 1,109,805 157,275 1,109,805 327,158
</Table>
* Include all fees incurred, both approved and unapproved
POST PETITION STATUS OF SECURED NOTES, LEASES PAYABLE AND ADEQUATE
PROTECTION PAYMENTS
<Table>
<Caption>
SCHEDULED AMOUNTS TOTAL
MONTHLY PAID UNPAID
PAYMENTS DURING POST
NAME OF CREDITOR DUE MONTH PETITION
---------------- --------- ------ --------
1. Bank of America (FOOTNOTE) N/A 0 15,071,491
2. Leases Payable (FOOTNOTE) (Not Available)
3.
4.
5. (Attach List)
6. TOTAL 0 0 15,071,491
</Table>
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CASE NAME: KEVCO MANAGEMENT, INC. SUPPLEMENT TO
CASE NUMBER: 401-40788-BJH-11 ACCRUAL BASIS - 6
PAYMENTS TO INSIDERS AND PROFESSIONALS MONTH: JULY-01
----------------
INSIDERS
<Table>
<Caption>
TYPE OF AMOUNT TOTAL PAID
NAME PAYMENT PAID TO DATE
---- ------- ------ --------
A. Bill Estes Director's Fees 13,000
B. Peter McKee Director's Fees 12,000
C. Richard Nevins Director's Fees 13,000
D. Wingate Partners Management Fee 44,695 89,390
E. Wingate Partners Expense Reimb. 665 3,693
F.
G.
H.
TOTAL OTHER PAYMENTS
TO INSIDERS - LINE 5 45,360 131,083
</Table>
PROFESSIONALS
<Table>
<Caption>
DATE OF
COURT ORDER TOTAL
AUTHORIZING AMOUNT AMOUNT TOTAL PAID INCURRED &
NAME PAYMENT APPROVED PAID TO DATE UNPAID*
---- ----------- -------- ------- ---------- ----------
A.
B.
C.
D.
E.
F.
G.
H.
TOTAL OTHER PAYMENTS
TO PROFESSIONALS-LINE 5
</Table>
* Include all fees incurred, both approved and unapproved
POST PETITION STATUS OF SECURED NOTES, LEASES PAYABLE AND ADEQUATE
PROTECTION PAYMENTS
<Table>
<Caption>
SCHEDULED AMOUNTS TOTAL
MONTHLY PAID UNPAID
PAYMENTS DURING POST
NAME OF CREDITOR DUE MONTH PETITION
---------------- --------- ------ --------
A.
B.
C.
D.
E.
STATUS OF OTHER CREDITORS - LINE 5
</Table>
CASE NAME: KEVCO MANAGEMENT, INC. ACCRUAL BASIS - 7
CASE NUMBER: 401-40788-BJH-11
MONTH: JULY-01
---------------
QUESTIONNAIRE
<Table>
<Caption>
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
</Table>
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
<Table>
<Caption>
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.
</Table>
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
<Table>
<Caption>
TYPE OF POLICY CARRIER PERIOD COVERED PAYMENT AMOUNT & FREQUENCY
-------------- ------- -------------- --------------------------
Property Lexingon, Allianz 5/29/00-3/1/02 Semi-Annual $26,485
Group Health Blue Cross Blue Shield Terminated 08/01/01 N/A
Auto Liberty Mutual 9/1/00-3/1/02 Semi-Annual $ 3,333
D&O Liability Great American Insurance 10/31/98-10/31/01 Annual $64,657
</Table>
This form x does does not have related footnotes on Footnotes Supplement.
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CASE NAME: KEVCO MANAGEMENT, INC. FOOTNOTES SUPPLEMENT
CASE NUMBER: 401-40788-BJH-11 ACCRUAL BASIS
MONTH: JULY-01
-----------------
<Table>
<Caption>
ACCRUAL
BASIS
FORM
NUMBER LINE NUMBER FOOTNOTE/EXPLANATION
- ------ ----------- --------------------
1 1 Pursuant to the February 12, 2001 Order (1) Authorizing Continued Use of Existing Forms
3 1 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. 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.
1 7 Prepaid Expenses consist primarily of professional fee retainers.
1 10 During July, expense accruals made at the beginning of the year were reversed because the
1 14A liabilities will not be incurred as estimated. In addition, all property, plant, equipment,
2 17A fixed and other assets were written off. These balance sheet and income statement adjustments
were made in order to more accurately reflect Debtor's assets, liabilities and expenses. The
income statement gains and losses were netted and classified as Balance Sheet adjustments.
1 10 Pursuant to Asset Purchase Agreements approved by the Court (see prior Monthly Operating
1 24 Reports for details), the Kevco Debtors have sold most of their assets except for
6 1 certain items of real property currently being marketed.
1 15 Intercompany receivables/payables are from/to co-debtors Kevco Manufacturing, LP (Case
1 27A No. 401-40784-BJH-11), Kevco Distribution, LP (Case No. 401-40789-BJH-11), Kevco
7 3 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). Changes in
intercompany have not been reflected as post-petition assets and liabilities.
1 22 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."
</Table>
CASE NAME: KEVCO MANAGEMENT, INC. FOOTNOTES SUPPLEMENT
CASE NUMBER: 401-40788-BJH-11 ACCRUAL BASIS
MONTH: JULY-01
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<Table>
<Caption>
ACCRUAL
BASIS
FORM
NUMBER LINE NUMBER FOOTNOTE/EXPLANATION
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1 25 Pursuant to Order dated February 12, 2001 and Supplemental Order dated March 14, 2001,
2 9, 13A debtors were authorized to pay pre-petition salaries and wages up to a maximum of $4,300
5 Supp. 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. During July, all Debtor's employees except two, Sharon Romere and Wil
Simpson, were terminated. In accordance with a March 14, 2001 Order Granting Motion to
Approve Management and Employee Retention Plan by Kevco, Inc., stay bonuses were paid to
participating employees from Debtors' DIP operating account. Funds maintained in the
Bank of America "Stay Pay" account will be transferred in August to the operating
account as reimbursement.
1 32 Adjustments to equity are due to secured debt reductions pursuant to the sales of Kevco
Manufacturing, LP's operating divisions, the asset sale of the South Region of Kevco
Distribution, as well as direct cash payments (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.
4 9,12 Sales/property tax liabilities represent accruals of tax and are not yet due.
6 2 The Debtor is the lessee on hundreds of real and personal property leases, the vast
majority of which have been 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.
</Table>