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: SEPTEMBER 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/ Wilford W. Simpson TREASURER
- --------------------------------------- ----------------------------------
Original Signature of Responsible Party Title
WILFORD W. SIMPSON OCTOBER 29, 2001
- --------------------------------------- ----------------------------------
Printed Name of Responsible Party Date
PREPARER:
/s/ Dennis S. Faulkner DEBTOR'S ACCOUNTANT
- --------------------------------------- ----------------------------------
Original Signature of Preparer Title
DENNIS S. FAULKNER OCTOBER 29, 2001
- --------------------------------------- ----------------------------------
Printed Name of Preparer Date
CASE NAME: KEVCO DISTRIBUTION, LP ACCRUAL BASIS - 1
CASE NUMBER: 401-40789-BJH-11
COMPARATIVE BALANCE SHEET
<Table>
<Caption>
SCHEDULED MONTH MONTH MONTH
ASSETS AMOUNT JUL-01 AUG-01 SEP-01
- ------ ----------- ----------- ----------- -----------
1. Unrestricted Cash (FOOTNOTE) 41,421 0 0 0
2. Restricted Cash
3. Total Cash 41,421 0 0 0
4. Accounts Receivable-Net (FOOTNOTE) 17,545,859 321,431 321,431 321,431
5. Inventory (FOOTNOTE) 27,611,039
6. Notes Receivable
7. Prepaid Rent 236,697
8. Other (Attach List) 303,392
9. Total Current Assets 45,738,408 321,431 321,431 321,431
10. Property, Plant & Equipment 22,049,500 9,739,582 9,739,582 9,739,582
11. Less: Accumulated Depreciation/Depletion (6,151,901) (844,526) (844,526) (844,526)
12. Net Property, Plant & Equipment (FOOTNOTE) 15,897,599 8,895,056 8,895,056 8,895,056
13. Due From Insiders
14. Other Assets - Net of Amortization (Attach List) 5,741,869 481,876 481,876 481,876
15. Other (Attach List) 100,961,429 124,276,836 124,264,675 124,218,545
16. Total Assets 168,339,305 133,975,199 133,963,038 133,916,908
POST PETITION LIABILITIES
17. Accounts Payable
18. Taxes Payable (FOOTNOTE) 419,121 419,121 416,251
19. Notes Payable
20. Professional Fees
21. Secured Debt
22. Other (Attach List) (FOOTNOTE) 1,766,039 1,766,039 1,705,946
23. Total Post Petition Liabilities 2,185,160 2,185,160 2,122,197
PRE PETITION LIABILITIES
24. Secured Debt (FOOTNOTE) 75,885,064 15,071,491 14,930,296 15,365,448
25. Priority Debt (FOOTNOTE) 1,412,879
26. Unsecured Debt 19,966,456 18,466,898 18,554,883 18,555,081
27. Other (Attach List) 243,205,150 244,988,081 244,988,081 244,988,081
28. Total Pre Petition Liabilities 340,469,549 278,526,470 278,473,260 278,908,610
29. Total Liabilities 340,469,549 280,711,630 280,658,420 281,030,807
EQUITY
30. Pre Petition Owners' Equity (172,130,244) (172,130,244) (172,130,244)
31. Post Petition Cumulative Profit Or (Loss) (33,698,923) (33,799,069) (33,782,435)
32. Direct Charges To Equity (FOOTNOTE) 59,092,736 59,233,931 58,798,780
33. Total Equity (146,736,431) (146,695,382) (147,113,899)
34. Total Liabilities and Equity 133,975,199 133,963,038 133,916,908
</Table>
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 - 1
COMPARATIVE BALANCE SHEET
<Table>
<Caption>
SCHEDULED MONTH MONTH MONTH
ASSETS AMOUNT JUL-01 AUG-01 SEP-01
- ------ ----------- ----------- ----------- -----------
A. Inventory Vendor Deposit 130,000
B. Leased Facility Deposit 173,392
C.
D.
E.
TOTAL OTHER ASSETS - LINE 8 303,392 0 0 0
A. Goodwill: Shepherd Products (FOOTNOTE) 5,223,119
B. Goodwill: DARCO (FOOTNOTE) 518,750
C. Capitalized Lease 481,876 481,876 481,876
D.
E.
TOTAL OTHER ASSETS NET OF
AMORTIZATION - LINE 14 5,741,869 481,876 481,876 481,876
A. Intercompany Receivables (FOOTNOTE) 100,961,429 124,276,836 124,264,675 124,218,545
B.
C.
D.
E.
TOTAL OTHER ASSETS - LINE 15 100,961,429 124,276,836 124,264,675 124,218,545
POST PETITION LIABILITIES
A. Accrued Liabilities 648,880 648,880 588,787
B. Long Term Leases 1,107,492 1,107,492 1,107,492
C. Accrued Interest: Bank 9,667 9,667 9,667
D.
E.
TOTAL OTHER POST PETITION
LIABILITIES - LINE 22 1,766,039 1,766,039 1,705,946
PRE PETITION LIABILITIES
A. Interco.Payables (FOOTNOTE) 114,705,150 116,488,081 116,488,081 116,488,081
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 27 243,205,150 244,988,081 244,988,081 244,988,081
</Table>
CASE NAME: KEVCO DISTRIBUTION, LP ACCRUAL BASIS - 2
CASE NUMBER: 401-40789-BJH-11
INCOME STATEMENT
<Table>
<Caption>
MONTH MONTH MONTH QUARTER
REVENUES JUL-01 AUG-01 SEP-01 TOTAL
- -------- ---------- -------- -------- ----------
1. Gross Revenues (FOOTNOTE) (135) (135)
2. Less: Returns & Discounts
3. Net Revenue (135) (135)
COST OF GOODS SOLD
4. Material
5. Direct Labor
6. Direct Overhead 104,436 21,755 5,182 131,373
7. Total Cost Of Goods Sold 104,436 21,755 5,182 131,373
8. Gross Profit (104,571) (21,755) (5,182) (131,508)
OPERATING EXPENSES
9. Officer / Insider Compensation 16,538 16,538
10. Selling & Marketing 1,011 1,011
11. General & Administrative 17,180 22,600 15 39,795
12. Rent & Lease 48,646 48,646
13. Other (Attach List) 394,288 234,196 86,859 715,343
14. Total Operating Expenses 477,663 256,796 86,874 821,333
15. Income Before Non-Operating
Income & Expense (582,234) (278,551) (92,056) (952,841)
OTHER INCOME & EXPENSES
16. Non-Operating Income (Att List)
17. Non-Operating Expense (Att List) 4,077,813 (178,405) (108,690) 3,790,718
18. Interest Expense
19. Depreciation / Depletion 1,268 1,268
20. Amortization
21. Other (Attach List)
22. Net Other Income & Expenses (4,079,081) 178,405 108,690 (3,791,986)
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) (4,661,315) (100,146) 16,634 (4,744,827)
</Table>
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CASE NAME: KEVCO DISTRIBUTION, LP SUPPLEMENT TO
CASE NUMBER: 401-40789-BJH-11 ACCRUAL BASIS - 2
INCOME STATEMENT
<Table>
<Caption>
MONTH MONTH MONTH QUARTER
OPERATING EXPENSES JUL-01 AUG-01 SEP-01 TOTAL
- ------------------ --------- -------- -------- ---------
A. Payroll & Employee Benefits (FOOTNOTE) 338,412 234,196 572,608
B. Insurance (FOOTNOTE) 5,358 77,282 82,640
C. Utilities & Telephone 22,742 9,577 32,319
D. Taxes 27,776 27,776
E.
TOTAL OTHER OPERATING
EXPENSES - LINE 13 394,288 234,196 86,859 715,343
OTHER INCOME & EXPENSES
A.
B.
C.
D.
E.
TOTAL NON-OPERATING INCOME - LINE 16
A. Loss/(Gain) on sale of Assets (FOOTNOTE) 4,077,813 (178,405) (108,690) 3,790,718
B.
C.
D.
E.
TOTAL NON-OPERATING
EXPENSE - LINE 17 4,077,813 (178,405) (108,690) 3,790,718
A.
B.
C.
D.
E.
TOTAL OTHER EXPENSE - LINE 21
REORGANIZATION EXPENSES
A.
B.
C.
D.
E.
TOTAL OTHER REORGANIZATION
EXPENSES - LINE 25
</Table>
CASE NAME: KEVCO DISTRIBUTION, LP ACCRUAL BASIS - 3
CASE NUMBER: 401-40789-BJH-11
<Table>
<Caption>
CASH RECEIPTS AND MONTH MONTH MONTH QUARTER
DISBURSEMENTS JUL-01 AUG-01 SEP-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
</Table>
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CASE NAME: KEVCO DISTRIBUTION LP SUPPLEMENT TO ACCRUAL BASIS -3
SEPTEMBER, 2001
CASE NUMBER: 401-40789-BJH-11 CASH RECEIPTS AND DISBURSEMENTS
<Table>
<Caption>
DIST LP MFG MGMT HOLDING COMP KEVCO INC TOTAL
-------- --------- --------- -------- -------- --------- ---------
1 CASH--BEGINNING OF MONTH -- 150,505 3,618,707 -- -- 1,000 3,770,212
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 -- --
7 SALE OF ASSETS 100,000 -- 100,000
8 OTHER 36,713 28,468 46,412 -- 23,268 -- 134,861
INTERCOMPANY TRANSFERS (127,561) 42,440 108,389 -- (23,268) --
SALE EXPENSE REIMBURSEMENT
INCOME TAX REFUND 23,268
RENT
PAYROLL TAX ADVANCE RETURNED
MISC. 36,713 37,857 --
INTEREST INCOME 8,555
9 TOTAL NON OPERATING RECEIPTS 9,152 70,908 154,801 -- -- -- 234,861
10 TOTAL RECEIPTS 9,152 70,908 154,801 -- -- -- 234,861
11 CASH AVAILABLE 9,152 221,413 3,773,508 -- -- 1,000 4,005,073
OPERATING DISBURSEMENTS
12 NET PAYROLL 18,582 18,582
13 PAYROLL TAXES PAID -- 6,780 6,780
14 SALES, USE & OTHER TAXES PAID 2,870 -- 2,870
15 SECURED/RENTAL/LEASES -- 5,002 5,002
16 UTILITIES 262 -- 2,690 2,952
17 INSURANCE -- 112,200 112,200
18 INVENTORY PURCHASES -- --
19 VEHICLE EXPENSE -- --
20 TRAVEL -- --
21 ENTERTAINMENT -- --
22 REPAIRS & MAINTENANCE 2,656 -- 2,656
23 SUPPLIES -- --
24 ADVERTISING --
25 OTHER 3,364 71,211 99,384 -- -- -- 173,959
LOAN PAYMENTS -- --
FREIGHT 959 -- 1,165 2,124
CONTRACT LABOR -- 96,405 96,405
401 K PAYMENTS -- --
PAYROLL TAX ADVANCE ADP --
WAGE GARNISHMENTS --
MISC. 2,405 71,211 1,814 75,430
26 TOTAL OPERATING DISBURSEMENTS 9,152 71,211 244,638 -- -- -- 325,001
REORGANIZATION DISBURSEMENTS
27 PROFESSIONAL FEES -- 11,217 11,217
28 US TRUSTEE FEES -- --
29 OTHER --
30 TOTAL REORGANIZATION EXPENSE -- -- 11,217 -- -- -- 11,217
31 TOTAL DISBURSEMENTS 9,152 71,211 255,855 -- -- -- 336,218
32 NET CASH FLOW -- (303) (101,054) -- -- -- (101,357)
33 CASH-- END OF MONTH -- 150,202 3,517,653 -- -- 1,000 3,668,855
</Table>
CASE NAME: KEVCO DISTRIBUTION, LP ACCRUAL BASIS - 4
CASE NUMBER: 401-40789-BJH-11
<Table>
<Caption>
SCHEDULED MONTH MONTH MONTH
ACCOUNTS RECEIVABLE AGING AMOUNT JUL-01 AUG-01 SEP-01
- ------------------------- ---------- ------- ------- -------
1. 0 - 30
2. 31 - 60
3. 61 - 90 321,431
4. 91 + 321,431 321,431
5. Total Accounts Receivable 17,545,859 321,431 321,431 321,431
6. (Amount Considered Uncollectible)
7. Accounts Receivable (Net) (FOOTNOTE) 17,545,859 321,431 321,431 321,431
</Table>
AGING OF POST PETITION MONTH: SEPTEMBER-01
TAXES AND PAYABLES ----------------
<Table>
<Caption>
0 - 30 31 - 60 61 - 90 91 +
TAXES PAYABLE DAYS DAYS DAYS DAYS TOTAL
- ------------- ------- ------- ------- ---- -------
1. Federal
2. State 2,671 2,671
3. Local
4. Other (See Below) 413,580 413,580
5. Total Taxes Payable 416,251 416,251
6. Accounts Payable 0
</Table>
MONTH: SEPTEMBER-01
----------------
STATUS OF POST PETITION TAXES
<Table>
<Caption>
BEGINNING TAX AMOUNT WITHHELD ENDING TAX
FEDERAL LIABILITY* AND/OR ACCRUED (AMOUNT PAID) LIABILITY
- ------- ------------- --------------- ------------- ----------
1. Withholding **
2. FICA - Employee **
3. FICA - Employer **
4. Unemployment
5. Income
6. Other (Attach List)
7. Total Federal Taxes
STATE AND LOCAL
8. Withholding
9. Sales (FOOTNOTE) 2,671 2,671
10. Excise
11. Unemployment
12. Real Property (FOOTNOTE) 413,580 413,580
13. Personal Property
14. Other (Attach List)
15. Total State And Local 416,251 416,251
16. Total Taxes 416,251 416,251
</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 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: SEPTEMBER-01
--------------
<Table>
<Caption>
BANK RECONCILIATIONS Account # 1 Account # 2
- -------------------- ----------- -----------
A. BANK:
B. ACCOUNT NUMBER: Other Accounts TOTAL
C. PURPOSE (TYPE): (Attach List)
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 0
6. Number of Last Check Written
</Table>
INVESTMENT ACCOUNTS
<Table>
<Caption>
DATE OF TYPE OF
BANK, ACCOUNT NAME & NUMBER PURCHASE INSTRUMENT PURCHASE PRICE CURRENT VALUE
- --------------------------- -------- ---------- -------------- -------------
7.
8.
9.
10. (Attach List)
11. Total Investments 0
CASH
12. Currency On Hand 0
13. Total Cash - End of Month 0
</Table>
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CASE NAME: KEVCO DISTRIBUTION, LP ACCRUAL BASIS - 6
CASE NUMBER: 401-40789-BJH-11 MONTH: SEPTEMBER-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. Martin, Steve Payroll 99,229
2. Martin, Steve Exp. Reimb. 1,390
3.
4.
5. (Attach List)
6. Total Payments To Insiders 100,619
</Table>
PROFESSIONALS
<Table>
<Caption>
DATE OF
COURT ORDER TOTAL
AUTHORIZING AMOUNT AMOUNT TOTAL PAID TO INCURRED &
NAME PAYMENT APPROVED PAID DATE UNPAID*
---- ----------- -------- ------ ------------- ----------
1.
2.
3.
4.
5. (Attach List)
6. Total Payments To
Professionals
</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
MONTHLY PAID
PAYMENTS DURING TOTAL UNPAID
NAME OF CREDITOR DUE MONTH POST PETITION
---------------- --------- ------- -------------
1. Bank of America 15,365,448
2. Leases Payable None
3.
4.
5. (Attach List)
6. TOTAL 15,365,448
</Table>
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CASE NAME: KEVCO DISTRIBUTION, LP ACCRUAL BASIS - 7
CASE NUMBER: 401-40789-BJH-11
MONTH: SEPTEMBER-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 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 DISTRIBUTION, LP FOOTNOTES SUPPLEMENT
CASE NUMBER: 401-40789-BJH-11 ACCRUAL BASIS
MONTH: SEPTEMBER 30, 2001
------------------
<Table>
<Caption>
ACCRUAL
BASIS
FORM
NUMBER LINE 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 as of the end of May closed all of its
bank accounts.
1 4 As of July, the remaining accounts receivable are for commissions
4 7 earned for the sale of consigned inventory. Although collection is
uncertain, Debtor will maintain these receivables on the balance
sheet until such time as the likelihood of collection can be more
accurately determined.
1 5 During this quarter, Debtor adjusted its books and records to more
1 12 accurately reflect its remaining fixed assets and inventory. In
2 17A addition, certain expense accruals made at the beginning of the year
were reversed because the liabilities will not be incurred as
estimated. The gains and losses from these adjustments were netted
and classified as Loss/(Gain) on Sale of Assets.
1 5, 12 Pursuant to Asset Purchase Agreements approved by the Court (see
1 14A,B prior Monthly Operating Reports for details), Debtor has sold most
of its assets.
1 22 The Debtor records on its books accruals for certain liabilities
based on historical estimates. While 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 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).
1 18 Sales tax owing is an accrual only and not yet due. Some of the
4 9 property taxes payable may be pre-petition. Once they are identified,
4 12 the monthly operating report will be adjusted.
</Table>
<Table>
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 24 The direct charges to equity are due to secured debt reductions
1 32 pursuant to sales of Kevco Manufacturing, LP's operating divisions,
the asset sale of the South Region of Kevco Distribution, as well
as direct cash payments. The secured debt owed to Bank of America
by Kevco, Inc. (Case No. 401-40783-BJH) 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.
1 24 In September, Liberty Mutual, Debtor's Workman's Compensation
carrier, drew $300,000 On a letter of credit issued during 2000 as
reflected on the financial statements of Kevco Management, Inc.
2 13A During July, all Debtor's employees 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 on August 6.
</Table>