EXHIBIT 99.1
CASE NAME: KEVCO, INC. ACCRUAL BASIS
CASE NUMBER: 401-40783-BJH-11
JUDGE: BARBARA J. HOUSER
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF TEXAS
-------- -----
FORT WORTH DIVISION
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MONTHLY OPERATING REPORT
MONTH ENDING: SEPTEMBER 30, 2001
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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:
EXECUTIVE VICE PRESIDENT AND
/s/ Wilford W. Simpson CHIEF FINANCIAL OFFICER
- --------------------------------------- ------------------------------------
Original Signature of Responsible Party Title
WILFORD W. SIMPSON OCTOBER 29, 2001
- --------------------------------------- ------------------------------------
Printed Name of Responsible Party Date
PREPARER:
/s/ Dennis S. Faulkner ACCOUNTANT FOR DEBTOR
- --------------------------------------- ------------------------------------
Original Signature of Preparer Title
DENNIS S. FAULKNER OCTOBER 29, 2001
- --------------------------------------- ------------------------------------
Printed Name of Preparer Date
CASE NAME: KEVCO, INC. ACCRUAL BASIS - 1
CASE NUMBER: 401-40783-BJH-11
COMPARATIVE BALANCE SHEET
<Table>
<Caption>
SCHEDULED MONTH MONTH MONTH
ASSETS AMOUNT JUL-01 AUG-01 SEP-01
- ------ ----------- ----------- ----------- -----------
1. Unrestricted Cash (FOOTNOTE) 1,000 1,000 1,000 1,000
2. Restricted Cash
3. Total Cash 1,000 1,000 1,000 1,000
4. Accounts Receivable (Net)
5. Inventory
6. Notes Receivable
7. Prepaid Expenses
8. Other (Attach List) 459,000 2,801,750 2,300,000 2,200,000
9. Total Current Assets 460,000 2,802,750 2,301,000 2,201,000
10. Property, Plant & Equipment
11. Less: Accumulated Depreciation/Depletion
12. Net Property, Plant & Equipment
13. Due From Insiders
14. Other Assets - Net of Amortization (Attach List) 4,790,071 6,814,921 6,814,921 6,814,921
15. Other (Attach List) 613,299,110 310,687,331 310,687,331 310,787,331
16. Total Assets 618,549,181 320,305,002 319,803,252 319,803,252
POST PETITION LIABILITIES
17. Accounts Payable
18. Taxes Payable
19. Notes Payable
20. Professional Fees
21. Secured Debt
22. Other (Attach List) 70,858,165 71,830,484 72,694,112
23. Total Post Petition Liabilities 70,858,165 71,830,484 72,694,112
PRE PETITION LIABILITIES
24. Secured Debt (Footnote) 75,885,064 15,071,491 14,930,296 15,365,448
25. Priority Debt
26. Unsecured Debt
27. Other (Attach List) 136,505,780 141,833,049 141,833,049 141,833,049
28. Total Pre Petition Liabilities 212,390,844 156,904,540 156,763,345 157,198,497
29. Total Liabilities 212,390,844 227,762,705 228,593,829 229,892,609
EQUITY
30. Pre Petition Owners' Equity 406,158,337 406,158,337 406,158,337
31. Post Petition Cumulative Profit Or (Loss) (4,116,032) (5,448,906) (6,747,686)
32. Direct Charges To Equity (Attach
Explanation) (FOOTNOTE) (309,500,008) (309,500,008) (309,500,008)
33. Total Equity 92,542,297 91,209,423 89,910,643
34. Total Liabilities and Equity 320,305,002 319,803,252 319,803,252
</Table>
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CASE NAME: KEVCO, INC. SUPPLEMENT TO
CASE NUMBER: 401-40783-BJH-11 ACCRUAL BASIS - 1
COMPARATIVE BALANCE SHEET
<Table>
<Caption>
SCHEDULED MONTH MONTH MONTH
ASSETS AMOUNT JUL-01 AUG-01 SEP-01
- ------ ----------- ----------- ----------- -----------
A. Prepaid Escrowed Retention Pmts. 459,000
B. Escrowed Receivables from Asset Sales (FOOTNOTE) 2,801,750 2,300,000 2,200,000
C.
D.
E.
TOTAL OTHER ASSETS - LINE 8 459,000 2,801,750 2,300,000 2,200,000
A. Capitalized loan costs 4,790,071 4,311,436 4,311,436 4,311,436
B. Investment in Subsidiaries 2,503,485 2,503,485 2,503,485
C.
D.
E.
TOTAL OTHER ASSETS NET OF AMORTIZATION - LINE 14 4,790,071 6,814,921 6,814,921 6,814,921
A. Intercompany Receivables (FOOTNOTE) 306,649,555
B. Interco. Promissory Note (FOOTNOTE) 235,981,314 235,981,314 235,981,314 236,081,314
C. Interco. Royalties (FOOTNOTE) 70,668,241 74,706,017 74,706,017 74,706,017
D.
E.
TOTAL OTHER ASSETS - LINE 15 613,299,110 310,687,331 310,687,331 310,787,331
POST PETITION LIABILITIES
A. Interco. Payables (FOOTNOTE) 63,692,244 63,440,494 63,111,748
B. Accrued Interest on Notes/Bonds 7,165,921 8,389,990 9,582,364
C.
D.
E.
TOTAL OTXER POST PETITION LIABILITIES - LINE 22 70,858,165 71,830,484 72,694,112
PRE PETITION LIABILITIES
A. Interco. Liabilities (FOOTNOTE) 8,005,780 8,005,780 8,005,780 8,005,780
B. 10 3/8% Sr. Sub. Notes 105,000,000 105,000,000 105,000,000 105,000,000
C. Senior Sub. Exchangeable Notes 23,500,000 23,500,000 23,500,000 23,500,000
D. Accrued Interest on Notes/Bonds 5,327,269 5,327,269 5,327,269
E.
TOTAL OTHER PRE PETITION LIABILITIES - LINE 27 136,505,780 141,833,049 141,833,049 141,833,049
</Table>
CASE NAME: KEVCO, INC. ACCRUAL BASIS - 2
CASE NUMBER: 401-40783-BJH-11
INCOME STATEMENT
<Table>
<Caption>
MONTH MONTH MONTH QUARTER
REVENUES JUL-01 AUG-01 SEP-01 TOTAL
- -------- ---------- ---------- ---------- ----------
1. Gross Revenues
2. Less: Returns & Discounts
3. Net Revenue
COST OF GOODS SOLD
4. Material
5. Direct Labor
6. Direct Overhead
7. Total Cost Of Goods Sold
8. Gross Profit
OPERATING EXPENSES
9. Officer / Insider Compensation
10. Selling & Marketing
11. General & Administrative
12. Rent & Lease
13. Other (Attach List)
14. Total Operating Expenses
15. Income Before Non-Operating
Income & Expense
OTHER INCOME & EXPENSES
16. Non-Operating Income (Att List)
17. Non-Operating Expense (Att List)
18. Interest Expense 1,436,566 1,332,874 1,298,780 4,068,220
19. Depreciation / Depletion
20. Amortization
21. Other (Attach List)
22. Net Other Income & Expenses (1,436,566) (1,332,874) (1,298,780) (4,068,220)
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) (1,436,566) (1,332,874) (1,298,780) (4,068,220)
</Table>
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CASE NAME: KEVCO, INC. ACCRUAL BASIS - 3
CASE NUMBER: 401-40783-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, INC., ET AL SUPPLEMENT TO ACCRUAL BASIS -3
SEPTEMBER, 2001
CASE NUMBER: 401-40783-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, INC. ACCRUAL BASIS - 4
CASE NUMBER: 401-40783-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
4. 91 +
5. Total Accounts Receivable
6. (Amount Considered Uncollectible)
7. Accounts Receivable (Net) 0 0 0
</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
3. Local
4. Other (Attach List)
5. Total Taxes Payable 0
6. Accounts Payable 0
</Table>
MONTH: SEPTEMBER-01
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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 0
STATE AND LOCAL
8. Withholding
9. Sales
10. Excise
11. Unemployment
12. Real Property
13. Personal Property
14. Other (Attach List)
15. Total State And Local 0
16. Total Taxes 0
</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, INC. ACCRUAL BASIS - 5
CASE NUMBER: 401-40783-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: Bank of America Other Accounts TOTAL
B. ACCOUNT NUMBER: 3750768521 (Attach List)
C. PURPOSE (TYPE): DIP Account
1. Balance Per Bank Statement 1,000 1,000
2. Add: Total Deposits Not Credited
3. Subtract: Outstanding Checks
4. Other Reconciling Items
5. Month End Balance Per Books 1,000 1,000
6. Number of Last Check Written N/A
</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 1,000
</Table>
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CASE NAME: KEVCO, INC. ACCRUAL BASIS - 6
CASE NUMBER: 401-40783-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.
2.
3.
4.
5. (Attach List)
6. Total Payments To Insiders
</Table>
PROFESSIONALS
<Table>
<Caption>
DATE OF
COURT ORDER TOTAL
AUTHORIZING AMOUNT AMOUNT TOTAL PAID INCURRED
NAME PAYMENT APPROVED PAID TO DATE & UNPAID*
---- ----------- -------- ------ ---------- ---------
1.
2.
3.
4.
5. (Attach List)
6. Total Payments To
Professionals
</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 15,365,448
2.
3.
4.
5. (Attach List)
6. TOTAL 15,365,448
</Table>
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CASE NAME: KEVCO, INC. ACCRUAL BASIS - 7
CASE NUMBER: 401-40783-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
-------------- ------- -------------- --------------------------
General Liability Liberty Mutual 9/1/00-3/1/02 Semi-Annual $64,657
</Table>
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CASE NAME: KEVCO, INC. FOOTNOTES SUPPLEMENT
CASE NUMBER: 401-40783-BJH-11 ACCRUAL BASIS
MONTH: SEPTEMBER-01
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<Table>
<Caption>
ACCRUAL
BASIS
FORM
NUMBER LINE NUMBER FOOTNOTE/EXPLANATION
- ------ ----------- --------------------
1 1 Pursuant to the February 12, 2001 Order (1)
3 1 Authorizing 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. 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 8B Pursuant to Asset Purchase Agreements approved by
1 22A the Court (see prior Monthly Operating Reports
1 24 for details), the Kevco Debtors have sold most of
their assets.
1 15A,B,C Intercompany assets were inadvertently doubled on
1 32 Debtor's Schedules. The adjustment to equity
corrects the error.
1 15B,C Intercompany receivables/payables are from/to
1 22A co-debtors Kevco Management Co. (Case No.
1 27A 401-40788-BJH), Kevco Distribution, LP (Case No.
7 3 401-40789-BJH), Kevco Holding, Inc. (Case No.
401-40785-BJH), DCM Delaware, Inc. (Case No.
401-40787-BJH), Kevco GP, Inc. (Case No.
401-40786-BJH), Kevco Components, Inc. (Case No.
401-40790-BJH), and Kevco Manufacturing, LP. (Case
No. 401-40784-BJH).
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.
</Table>