EXHIBIT 99.3
CASE NAME: KEVCO HOLDING, INC. ACCRUAL BASIS
CASE NUMBER: 401-40785-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
------------------
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 ACCOUNTANT FOR DEBTOR
- --------------------------------------- ---------------------------
Original Signature of Preparer Title
DENNIS S. FAULKNER OCTOBER 29, 2001
- --------------------------------------- ---------------------------
Printed Name of Preparer Date
CASE NAME: KEVCO HOLDING, INC. ACCRUAL BASIS - 1
CASE NUMBER: 401-40785-BJH-11
COMPARATIVE BALANCE SHEET
<Table>
<Caption>
SCHEDULED MONTH MONTH MONTH
ASSETS AMOUNT JUL-01 AUG-01 SEP-01
- ------ ------------ ------------ ------------ ------------
1. Unrestricted Cash (FOOTNOTE) 232 4,631 0 0
2. Restricted Cash
3. Total Cash 232 4,631 0 0
4. Accounts Receivable (Net)
5. Inventory
6. Notes Receivable
7. Prepaid Expenses
8. Other (Attach List) 0 0 0 0
9. Total Current Assets 232 4,631 0 0
10. Property, Plant & Equipment
11. Less: Accumulated Depreciation/Depletion
12. Net Property, Plant & Equipment 0 0 0 0
13. Due From Insiders
14. Other Assets - Net of Amortization
(Attach List) (FOOTNOTE) 95,356,800 0 0 0
15. Other (Attach List) 14,496,631 14,496,631 14,496,631 14,496,631
16. Total Assets 109,853,663 14,501,262 14,496,631 14,496,631
POST PETITION LIABILITIES
17. Accounts Payable
18. Taxes Payable
19. Notes Payable
20. Professional Fees
21. Secured Debt
22. Other (Attach List) 0 0 0
23. Total Post Petition Liabilities 0 0 0
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) 328,039,345 321,192,806 321,188,722 321,188,722
28. Total Pre Petition Liabilities 403,924,409 336,264,297 336,119,018 336,554,170
29. Total Liabilities 403,924,409 336,264,297 336,119,018 336,554,170
EQUITY
30. Pre Petition Owners' Equity (294,070,746) (294,070,746) (294,070,746)
31. Post Petition Cumulative Profit Or
(Loss) (88,505,859) (88,506,406) (88,506,406)
32. Direct Charges To Equity (FOOTNOTE) 60,813,570 60,954,765 60,519,613
33. Total Equity (321,763,035) (321,622,387) (322,057,539)
34. Total Liabilities and Equity 14,501,262 14,496,631 14,496,631
</Table>
This form x does does not have related footnotes on Footnotes Supplement.
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CASE NAME: KEVCO HOLDING, INC. SUPPLEMENT TO
CASE NUMBER: 401-40785-BJH-11 ACCRUAL BASIS - 1
COMPARATIVE BALANCE SHEET
<Table>
<Caption>
SCHEDULED MONTH MONTH MONTH
ASSETS AMOUNT JUL-01 AUG-01 SEP-01
- ------ ------------ ------------ ------------ ------------
A.
B.
C.
D.
E.
TOTAL OTHER ASSETS - LINE 8 0 0 0 0
A. Goodwill: SSS 6,097,280
B. Goodwill: Bowen 13,569,437
C. Goodwill: BTE 1,657,846
D. Goodwill: Shelter 74,032,237
E.
TOTAL OTHER ASSETS NET OF
AMORTIZATION - LINE 14 95,356,800 0 0 0
A. Investment in Subsidiaries 14,496,631 14,496,631 14,496,631 14,496,631
B.
C.
D.
E.
TOTAL OTHER ASSETS - LINE 15 14,496,631 14,496,631 14,496,631 14,496,631
POST PETITION LIABILITIES
A.
B.
C.
D.
E.
TOTAL OTHER POST PETITION
LIABILITIES - LINE 22 0 0 0
PRE PETITION LIABILITIES
A. Interco. Payables (FOOTNOTE) 199,539,345 192,692,806 192,688,722 192,688,722
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 27 328,039,345 321,192,806 321,188,722 321,188,722
</Table>
CASE NAME: KEVCO HOLDING, INC. ACCRUAL BASIS - 2
CASE NUMBER: 401-40785-BJH-11
INCOME STATEMENT
<Table>
<Caption>
MONTH MONTH MONTH QUARTER
REVENUES JUL-01 AUG-01 SEP-01 TOTAL
- -------- ----------- --------- --------- ----------
1. Gross Revenues 0
2. Less: Returns & Discounts 0
3. Net Revenue 0 0 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 0 0
8. Gross Profit 0 0 0 0
OPERATING EXPENSES
9. Officer / Insider Compensation 0
10. Selling & Marketing 0
11. General & Administrative 507 0 507
12. Rent & Lease 0
13. Other (Attach List) 40 0 40
14. Total Operating Expenses 0 547 0 547
15. Income Before Non-Operating
Income & Expense 0 (547) 0 (547)
OTHER INCOME & EXPENSES
16. Non-Operating Income (Att List) 0 0 0 0
17. Non-Operating Expense (Att List) 0 0 0 0
18. Interest Expense 0
19. Depreciation / Depletion 0
20. Amortization 0
21. Other (Attach List) (1,636,742) 0 0 (1,636,742)
22. Net Other Income & Expenses (1,636,742) 0 0 (1,636,742)
REORGANIZATION EXPENSES
23. Professional Fees 0
24. U.S. Trustee Fees 0
25. Other (Attach List) 0
26. Total Reorganization Expenses 0 0 0 0
27. Income Tax 0
28. Net Profit (Loss) (1,636,742) (547) 0 (1,637,289)
</Table>
This form x does does not have related footnotes on Footnotes Supplement.
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CASE NAME: KEVCO HOLDING, INC. SUPPLEMENT TO
CASE NUMBER: 401-40785-BJH-11 ACCRUAL BASIS - 2
INCOME STATEMENT
<Table>
<Caption>
MONTH MONTH MONTH QUARTER
OPERATING EXPENSES JUL-01 AUG-01 SEP-01 TOTAL
- ----------------- ----------- --------- --------- ----------
A. Payroll Tax 40 40
B. 0
C. 0
D. 0
E. 0
TOTAL OTHER OPERATING
EXPENSES - LINE 13 0 40 0 40
OTHER INCOME & EXPENSES
A. 0
B. 0
C. 0
D. 0
E. 0
TOTAL NON-OPERATING INCOME -
LINE 16 0 0 0 0
A. Write off of Goodwill (FOOTNOTE) (1,636,742) 0 0 (1,636,742)
B.
C. 0
D. 0
E. 0
TOTAL NON-OPERATING EXPENSE -
LINE 21 (1,636,742) 0 0 (1,636,742)
REORGANIZATION EXPENSES
A. 0
B. 0
C. 0
D. 0
E. 0
TOTAL OTHER REORGANIZATION
EXPENSES - LINE 25 0 0 0 0
</Table>
CASE NAME: KEVCO HOLDING, INC. ACCRUAL BASIS - 3
CASE NUMBER: 401-40785-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 (Interco. Transfer)
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>
This form x does does not have related footnotes on Footnotes Supplement.
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CASE NAME: KEVCO HOLDING, INC. SUPPLEMENT TO ACCRUAL BASIS - 3
SEPTEMBER, 2001
CASE NUMBER: 401-40785-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 HOLDING, INC. ACCRUAL BASIS - 4
CASE NUMBER: 401-40785-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 0 0 0 0
6. (Amount Considered Uncollectible)
7. Accounts Receivable (Net) 0 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 0
2. State 0
3. Local 0
4. Other (Attach List) 0 0 0 0 0
5. Total Taxes Payable 0 0 0 0 0
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 ** 0
2. FICA - Employee ** 0
3. FICA - Employer ** 0
4. Unemployment 0
5. Income 0
6. Other (Attach List) 0 0 0 0
7. Total Federal Taxes 0 0 0 0
STATE AND LOCAL
8. Withholding 0
9. Sales 0
10. Excise 0
11. Unemployment 0
12. Real Property 0
13. Personal Property 0
14. Other (Attach List) 0
15. Total State And Local 0 0 0 0
16. Total Taxes 0 0 0 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.
This form does x does not have related footnotes on Footnotes Supplement.
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CASE NAME: KEVCO HOLDING, INC. ACCRUAL BASIS - 5
CASE NUMBER: 401-40785-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
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<Table>
<Caption>
BANK RECONCILIATIONS Account # 1 Account # 2
- -------------------- ----------- -----------
A. BANK: Other Accounts
B. ACCOUNT NUMBER: (Attach List) TOTAL
C. PURPOSE (TYPE):
1. Balance Per Bank Statement 0
2. Add: Total Deposits Not Credited 0
3. Subtract: Outstanding Checks 0
4. Other Reconciling Items 0
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 0
CASH
12. Currency On Hand 0
13. Total Cash - End of Month 0
</Table>
This form does X does not have related footnotes on Footnotes Supplement.
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CASE NAME: KEVCO HOLDING, INC. ACCRUAL BASIS - 6
CASE NUMBER: 401-40785-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 0 0
</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 0 0 0 0
</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 0 15,365,448
2.
3.
4.
5. (Attach List)
6. TOTAL 0 0 15,365,448
</Table>
This form does x does not have related footnotes on Footnotes Supplement.
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CASE NAME: KEVCO HOLDING, INC. ACCRUAL BASIS - 7
CASE NUMBER: 401-40785-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.
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.
KEVCO HOLDING, INC. HAS NO EMPLOYEES; OPERATES AS A HOLDING COMPANY.
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>
This form does X does not have related footnotes on Footnotes Supplement.
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CASE NAME: KEVCO HOLDING, INC. FOOTNOTES SUPPLEMENT
CASE NUMBER: 401-40785-BJH-11 ACCRUAL BASIS
MONTH: SEPTEMBER-01
-----------------
<Table>
<Caption>
ACCRUAL
BASIS
FORM
NUMBER LINE NUMBER FOOTNOTE/EXPLANATION
- ------- ----------- --------------------
1 1 Pursuant to a February 12, 2001 Order (1) Authorizing Continued Use of Existing
3 1 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). 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 closed its petty cash account during August.
1 14 Kevco Holding, Inc. is the holding company for Kevco Manufacturing, LP (Case
2 21A No. 00-40784-BJH) and Kevco Distribution, LP (Case No. 00-40789-BJH). In
conjunction with the asset sales recorded in Kevco Manufacturing LP's and Kevco
Distribution LP's books and records (see prior Monthly Operating Reports for
details), losses were recorded on this Debtor's income statement for its
write-off of related goodwill.
1 24 The direct charges to equity are due to the secured debt reductions pursuant to
1 32 sales of Kevco Manufacturing, L.P.'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-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.
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.
1 27A Intercompany payables are to co-debtors Kevco Management Co. (Case No.
401-40788-BJH-11), Kevco Distribution, LP (Case No. 401-40789-BJH-11), Kevco
Manufacturing, LP (Case No. 401-40784-BJH-11), DCM Delaware, Inc. (Case No.
401-40787-BJH-11), Kevco, Inc. (Case No. 401-40783-BJH-11), Kevco GP, Inc. (Case
No. 401-40786-BJH-11), and Kevco Components, Inc. (Case No. 401-40790-BJH-11).
</Table>