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: 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 DEBTOR'S ACCOUNTANT
- --------------------------------------- ----------------------------
Original Signature of Preparer Title
DENNIS S. FAULKNER SEPTEMBER 24, 2001
- --------------------------------------- ----------------------------
Printed Name of Preparer Date
CASE NAME: KEVCO MANUFACTURING, LP ACCRUAL BASIS - 1
CASE NUMBER: 401-40784-BJH-11
COMPARATIVE BALANCE SHEET
<Table>
<Caption>
SCHEDULED MONTH
ASSETS AMOUNT JUL-01 MONTH MONTH
- ------ --------- ------ ----- -----
1. Unrestricted Cash (FOOTNOTE) 41,683 153,739
2. Restricted Cash
3. Total Cash 41,683 153,739
4. Accounts Receivable (Net) (FOOTNOTE) 7,974,696 0
5. Inventory (FOOTNOTE) 14,793,828 0
6. Notes Receivable
7. Prepaid Expenses 196,584 0
8. Other (Attach List) 0 0
9. Total Current Assets 23,006,791 153,739
10. Property, Plant & Equip. (FOOTNOTE) 32,082,187 2,220,574
11. Less: Accumulated Depreciation (7,696,543) (250,320)
12. Net Property, Plant & Equipment 24,385,644 1,970,254
13. Due From Insiders
14. Other Assets - Net of Amortization (Attach List) 8,369,096 0
15. Other (Attach List) 13,541,943 45,814,902
16. Total Assets 69,303,474 47,938,895
POST PETITION LIABILITIES
17. Accounts Payable
18. Taxes Payable (FOOTNOTE) 26,492
19. Notes Payable
20. Professional Fees
21. Secured Debt
22. Other (Attach List) 131,387
23. Total Post Petition Liabilities 157,879
PRE PETITION LIABILITIES
24. Secured Debt (FOOTNOTE) 75,885,064 15,071,491
25. Priority Debt (FOOTNOTE) 1,383,756
26. Unsecured Debt (FOOTNOTE) 5,139,545 2,883,206
27. Other (Attach List) 197,008,999 197,951,008
28. Total Pre Petition Liabilities 279,417,364 215,905,705
29. Total Liabilities 279,417,364 216,063,584
EQUITY
30. Pre Petition Owners' Equity (210,107,292)
31. Post Petition Cumulative Profit Or (Loss) (18,705,507)
32. Direct Charges To Equity (Attach Explanation FOOTNOTE) 60,688,110
33. Total Equity (168,124,689)
34. Total Liabilities and Equity 47,938,895
</Table>
This form x does does not have related footnotes on Footnotes Supplement.
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CASE NAME: KEVCO MANUFACTURING, LP SUPPLEMENT TO
CASE NUMBER: 401-40784-BJH-11 ACCRUAL BASIS - 1
COMPARATIVE BALANCE SHEET
<Table>
<Caption>
SCHEDULED MONTH
ASSETS AMOUNT JUL-01 MONTH MONTH
- ------ --------- ------ ----- -----
A. 0
B.
C.
D.
E.
TOTAL OTHER ASSETS - LINE 8 0 0
A. Goodwill: Consolidated Forest Products (FOOTNOTE) 8,369,096
B.
C.
D.
E.
TOTAL OTHER ASSETS NET OF AMORTIZATION - LINE 14 8,369,096 0
A. Intercompany Receivables (FOOTNOTE) 13,541,943 45,814,902
B.
C.
D.
E.
TOTAL OTHER ASSETS - LINE 15 13,541,943 45,814,902
POST PETITION LIABILITIES
A. Accrued Liabilities (FOOTNOTE) 131,387
B.
C.
D.
E.
TOTAL OTHER POST PETITION LIABILITIES - LINE 22 131,387
PRE PETITION LIABILITIES
A. Interco. Payables (FOOTNOTE) 68,508,999 69,451,008
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 27 197,008,999 197,951,008
</Table>
CASE NAME: KEVCO MANUFACTURING, LP ACCRUAL BASIS - 2
CASE NUMBER: 401-40784-BJH-11
INCOME STATEMENT
<Table>
<Caption>
MONTH QUARTER
REVENUES JUL-01 MONTH MONTH TOTAL
- -------- ------ ----- ----- -------
1. Gross Revenues 0 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 (393) (393)
7. Total Cost of Goods Sold (393) (393)
8. Gross Profit 393 393
OPERATING EXPENSES
9. Officer / Insider Compensation 40,500 40,500
10. Selling & Marketing 0
11. General & Administrative 2,320 2,320
12. Rent & Lease 0 0
13. Other (Attach List) 16,267 16,267
14. Total Operating Expenses 59,087 59,087
15. Income Before Non-Operating
Income & Expense (58,694) (58,694)
OTHER INCOME & EXPENSES
16. Non-Operating (Income) (Att List) (197,204) (197,204)
17. Non-Operating Expense (Att List) 0 0
18. Interest Expense 0
19. Depreciation / Depletion 0
20. Amortization 0
21. Other (Attach List) 0
22. Net Other Income & (Expenses) 197,204 197,204
REORGANIZATION EXPENSES
23. Professional Fees 0
24. U.S. Trustee Fees 0
25. Other (Attach List) 0
26. Total Reorganization Expenses 0 0
27. Income Tax 0
28. Net Profit (Loss) 138,510 138,510
</Table>
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CASE NAME: KEVCO MANUFACTURING, LP SUPPLEMENT TO
CASE NUMBER: 401-40784-BJH-11 ACCRUAL BASIS - 2
INCOME STATEMENT
<Table>
<Caption>
MONTH QUARTER
OPERATING EXPENSES JUL-01 MONTH MONTH TOTAL
- ------------------ ------ ----- ----- -------
A. Payroll & Employee Benefits 11,684 11,684
B. Insurance Expense 278 278
C. Utilities and Telephone 2,248 2,248
D. Taxes 2,057 2,057
E. 0
TOTAL OTHER OPERATING EXPENSES - LINE 13 16,267 16,267
OTHER INCOME & EXPENSES
A. Income Statement Adjustments (FOOTNOTE) (197,204) (197,204)
B. 0
C.
TOTAL NON-OPERATING INCOME - LINE 16 (197,204) (197,204)
A. 0
B. 0
C. 0
D.
TOTAL NON-OPERATING EXPENSE - LINE 17 0 0
REORGANIZATION EXPENSES
A. 0
B. 0
C. 0
D. 0
E. 0
TOTAL OTHER REORGANIZATION EXPENSES - LINE 25 0 0
</Table>
CASE NAME: KEVCO MANUFACTURING, LP ACCRUAL BASIS - 3
CASE NUMBER: 401-40784-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
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
</Table>
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CASE NAME: KEVCO MANUFACTURING LP SUPPLEMENT TO ACCRUAL BASIS - 3
JULY, 2001
CASE NUMBER: 401-40784-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 MANUFACTURING, LP ACCRUAL BASIS - 4
CASE NUMBER: 401-40784-BJH-11
<Table>
<Caption>
SCHEDULED MONTH
ACCOUNTS RECEIVABLE AGING AMOUNT JUL-01 MONTH MONTH
- ------------------------- --------- ------ ------ ------
1. 0 - 30 0
2. 31 - 60
3. 61 - 90
4. 91 +
5. Total Accounts Receivable 7,974,696 0
6. (Amount Considered Uncollectible)
7. Accounts Receivable (Net) 7,974,696 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 --
2. State 5,000 5,000
3. Local --
4. Other (See Below) 21,492 21,492
5. Total Taxes Payable 26,492 -- -- -- 26,492
6. Accounts Payable -- -- --
</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 ** 1,254 (1,254) 0
2. FICA - Employee ** 885 (885) 0
3. FICA - Employer ** 885 (885) 0
4. Unemployment 0 0
5. Income 0
6. Other (Attach List) 0
7. Total Federal Taxes 0 3,024 (3,024) 0
STATE AND LOCAL
8. Withholding 0 0
9. Sales (FOOTNOTE) 5,000 0 5,000
10. Excise 0
11. Unemployment 0 0
12. Real Property 0
13. Personal Property (FOOTNOTE) 21,492 0 21,492
14. Other (Attach List) 0
15. Total State And Local 26,492 0 0 26,492
16. Total Taxes 26,492 3,024 (3,024) 26,492
</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.
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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,
MONTH: JULY-01
-----------
<Table>
<Caption>
BANK RECONCILIATIONS Account # 1 Account # 2
- -------------------- ------------ ------------
A. BANK: Bank of America GWJones Exch Bank Other Accounts TOTAL
B. ACCOUNT NUMBER: 3751764595 0005006226 (Attach List)
C. PURPOSE (TYPE): DIP Disbursement-BB DIP Disbursement-DF
1. Balance Per Bank Statement 6,137 3,671 -- 9,808
2. Add: Total Deposits Not Credited -- -- --
3. Subtract: Outstanding Checks (777) (244) -- (1,021)
4. Other Reconciling Items (5,057) 9 150,000 144,952
5. Month End Balance Per Books 303 3,436 150,000 153,739
6. Number of Last Check Written N/A N/A
</Table>
INVESTMENT ACCOUNTS
<Table>
<Caption>
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 --
Reclass to Accounts Payable
13. Total Cash - End of Month 153,739
</Table>
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CASE NAME: KEVCO MANUFACTURING, LP SUPPLEMENT TO
CASE NUMBER: 401-40784-BJH-11 ACCRUAL BASIS - 5
MONTH: JULY-01
---------------
<Table>
<Caption>
BANK RECONCILIATIONS Account # 3 Account # 4 Account # 5
- -------------------- ----------- ----------- -----------
A. BANK: Summit Bank Summit Bank TOTAL
B. ACCOUNT NUMBER: 1-0138099 1-0137836 OTHER BANK
C. PURPOSE (TYPE): Depository Depository ACCOUNTS
1. Balance Per Bank Statement 0
2. Add: Total Deposits Not Credited 0
3. Subtract: Outstanding Checks 0
4. Other Reconciling Items 5,000 145,000 150,000
5. Month End Balance Per Books 5,000 145,000 150,000
6. Number of Last Check Written N/A N/A
</Table>
INVESTMENT ACCOUNTS
<Table>
<Caption>
BANK, ACCOUNT NAME & NUMBER DATE OF PURCHASE TYPE OF INSTRUMENT PURCHASE PRICE CURRENT VALUE
- --------------------------- ---------------- ------------------ -------------- -------------
A.
B.
C.
D.
TOTAL OTHER INVESTMENT ACCOUNTS - LINE 10 0 0
</Table>
CASE NAME: KEVCO MANUFACTURING, LP ACCRUAL BASIS - 6
CASE NUMBER: 401-40784-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. Lee Denham Payroll/severance 134,620
2. Lee Denham Expense Reimb. 254
3. Jim Connors Consulting fees and expenses 9,000 102,897
4. Jim Connors Duo-Form Sale Bonus 31,500 31,500
5. (Attach List)
6. Total Payments To Insiders 40,500 269,271
</Table>
PROFESSIONALS
<Table>
<Caption>
DATE OF
COURT ORDER TOTAL
AUTHORIZING AMOUNT AMOUNT TOTAL PAID INCURRED
NAME PAYMENT APPROVED PAID TO DATE $ UNPAID*
---- ----------- -------- ------ ---------- ---------
1. Gordion Group 03/20/01 301,398 301,398 --
2.
3.
4.
5. (Attach List)
6. Total Payments To Professionals 301,398 -- 301,398 --
</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 N/A $ 15,071,491
2. Status of Leases Payable (FOOTNOTE) Unknown
3.
4.
5. (Attach List)
6. TOTAL $ -- $ -- $ 15,071,491
</Table>
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CASE NAME: KEVCO MANUFACTURING, LP ACCRUAL BASIS - 7
CASE NUMBER: 401-40784-BJH-11
MONTH: JULY-01
------------
QUESTIONNAIRE
<Table>
<Caption>
YES NO
--- --
1. Have any Assets been sold or transferred outside the normal course of X
business this reporting period?
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 Lexington, Allianz 5/29/00-3/1/02 Semi-Annual $ 26,485
Group Health Blue Cross/Blue Shield Terminated 8/1/01 N/A
Auto Liberty Mutual 9/1/00-3/1/02 Semi-Annual 3,333
General Liability Liberty Mutual 9/1/00-3/1/02 Semi-Annual 64,657
</Table>
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CASE NAME: KEVCO MANUFACTURING, LP FOOTNOTES SUPPLEMENT
CASE NUMBER: 401-40784-BJH-11 ACCRUAL BASIS
MONTH: JULY 31, 2001
---------------
<Table>
<Caption>
DUAL
BASIS
FORM
NUMBER LINE 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 two small petty cash accounts that are
included in the cash supplement schedule.
1 4,5 Pursuant to Asset Purchase Agreements approved by the Court
1 10,14 (see prior Monthly Operating Reports for details), the Kevco
1 24 Debtors have sold most of their assets except for certain
1 26 items of real property currently being marketed.
1 15A Intercompany receivables/payables are from/to co-debtors
1 27A Kevco Management Co. (Case No. 401-40788-BJH-11), Kevco
7 3 Distribution, LP (Case No. 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).
1 18 Sales and property tax owing are accruals only and not yet
4 9, 13 due.
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."
1 25 Pursuant to Order dated February 12, 2001 and Supplemental
Order dated March 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.
1 32 The direct charges to equity are due to secured debt
reductions pursuant to asset sales by Debtor and its
co-debtors as well as direct cash payments of $25 million.
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.
2 16A During July, expense accruals made at the beginning of the
year were reversed because the liabilities will not be
incurred as estimated. These Income Statement adjustments
were made in order to more accurately reflect Debtor's
assets and liabilities.
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>