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: 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 11, 2001
- ---------------------------------------- ------------------------
Printed Name of Responsible Party Date
PREPARER:
/s/ Dennis S. Faulkner DEBTOR'S ACCOUNTANT
- ---------------------------------------- ------------------------
Original Signature of Preparer Title
DENNIS S. FAULKNER OCTOBER 11, 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 MONTH MONTH
ASSETS AMOUNT JUL-01 AUG-01 SEP-01
- ------ ----------- ---------- ---------- ------
1. Unrestricted Cash (FOOTNOTE) 41,683 153,739 150,505
2. Restricted Cash
3. Total Cash 41,683 153,739 150,505 0
4. Accounts Receivable (Net) (FOOTNOTE) 7,974,696 0 0 0
5. Inventory (FOOTNOTE) 14,793,828 0 0 0
6. Notes Receivable
7. Prepaid Expenses 196,584 0 0 0
8. Other (Attach List) 0 0 0 0
9. Total Current Assets 23,006,791 153,739 150,505 0
10. Property, Plant & Equip. (FOOTNOTE) 32,082,187 2,220,574 2,220,574 2,220,574
11. Less: Accumulated Depreciation (7,696,543) (250,320) (250,320) (250,320)
12. Net Property, Plant & Equipment 24,385,644 1,970,254 1,970,254 1,970,254
13. Due From Insiders
14. Other Assets - Net of Amortization (Attach List) 8,369,096 0 0 0
15. Other (Attach List) 13,541,943 45,814,902 45,590,669 0
16. Total Assets 69,303,474 47,938,895 47,711,428 1,970,254
POST PETITION LIABILITIES
17. Accounts Payable
18. Taxes Payable (FOOTNOTE) 26,492 26,492 26,492
19. Notes Payable
20. Professional Fees
21. Secured Debt
22. Other (Attach List) 131,387 131,387 131,387
23. Total Post Petition Liabilities 157,879 157,879 157,879
PRE PETITION LIABILITIES
24. Secured Debt (FOOTNOTE) 75,885,064 15,071,491 14,930,296
25. Priority Debt (FOOTNOTE) 1,383,756
26. Unsecured Debt (FOOTNOTE) 5,139,545 2,883,206 2,883,206 2,883,206
27. Other (Attach List) 197,008,999 197,951,008 197,951,008 197,951,008
28. Total Pre Petition Liabilities 279,417,364 215,905,705 215,764,510 200,834,214
29. Total Liabilities 279,417,364 216,063,584 215,922,389 200,992,093
EQUITY
30. Pre Petition Owners' Equity (210,107,292) (210,107,292) (210,107,292)
31. Post Petition Cumulative Profit Or (Loss) (18,705,507) (18,932,974)
32. Direct Charges To Equity (Attach Explanation FOOTNOTE) 60,688,110 60,829,305
33. Total Equity (168,124,689) (168,210,961) (210,107,292)
34. Total Liabilities and Equity 47,938,895 47,711,428 (9,115,199)
</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 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: Consolidated Forest Products (FOOTNOTE) 8,369,096 0 0 0
B.
C.
D.
E.
TOTAL OTHER ASSETS NET OF
AMORTIZATION - LINE 14 18,369,096 0 0 0
A. Intercompany Receivables (FOOTNOTE) 13,541,943 45,814,902 45,590,669
B.
C.
D.
E.
TOTAL OTHER ASSETS - LINE 15 13,541,943 45,814,902 45,590,669 0
POST PETITION LIABILITIES
A. Accrued Liabilities (FOOTNOTE) 131,387 131,387 131,387
B.
C.
D.
E.
TOTAL OTHER POST PETITION
LIABILITIES - LINE 22 131,387 131,387 131,387
PRE PETITION LIABILITIES
A. Interco. Payables (FOOTNOTE) 68,508,999 69,451,008 69,451,008 69,451,008
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 27 197,008,999 197,951,008 197,951,008 197,951,008
</Table>
CASE NAME: KEVCO MANUFACTURING, LP ACCRUAL BASIS - 2
CASE NUMBER: 401-40784-BJH-11
INCOME STATEMENT
<Table>
<Caption>
MONTH MONTH MONTH QUARTER
REVENUES JUL-01 AUG-01 SEP-01 TOTAL
- -------- ------ ------ ------ ------
1. Gross Revenues 0 0 0 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 (393) 0 0 (393)
7. Total Cost of Goods Sold (393) 0 0 (393)
8. Gross Profit 393 0 0 393
OPERATING EXPENSES
9. Officer / Insider Compensation 40,500 0 0 40,500
10. Selling & Marketing 0
11. General & Administrative 2,320 3,282 5,602
12. Rent & Lease 0 0
13. Other (Attach List) 16,267 1,148 0 17,415
14. Total Operating Expenses 59,087 4,430 0 63,517
15. Income Before Non-Operating
Income & Expense (58,694) (4,430) 0 (63,124)
OTHER INCOME & EXPENSES
16. Non-Operating (Income) (Att List) (197,204) (3,087) (200,291)
17. Non-Operating Expense (Att List) 0 226,124 226,124
18. Interest Expense 0
19. Depreciation / Depletion 0
20. Amortization 0
21. Other (Attach List) 0
22. Net Other Income & (Expenses) 197,204 (223,037) 0 (25,833)
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) 138,510 (227,467) 0 (88,957)
</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 MONTH MONTH QUARTER
OPERATING EXPENSES JUL-01 AUG-01 SEP-01 TOTAL
- ------------------ ------ ------ ------ -------
A. Payroll & Employee Benefits 11,684 1,085 12,769
B. Insurance Expense 278 278
C. Utilities and Telephone 2,248 63 2,311
D. Taxes 2,057 2,057
E. 0
TOTAL OTHER OPERATING
EXPENSES - LINE 13 16,267 1,148 0 17,415
OTHER INCOME & EXPENSES
A. Income Statement Adjustments (FOOTNOTE) (197,204) (197,204)
B. Gain on sale of assets (2,885) (2,885)
C. Interest Income (202) (202)
TOTAL NON-OPERATING
INCOME - LINE 16 (197,204) (3,087) 0 (200,291)
A. Income Statement Adjustments (FOOTNOTE) 226,124 226,124
B. 0
C. 0
D.
TOTAL NON-OPERATING
EXPENSE - LINE 17 0 226,124 0 226,124
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 MANUFACTURING, LP ACCRUAL BASIS - 3
CASE NUMBER: 401-40784-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 MANUFACTURING LP SUPPLEMENT TO ACCRUAL BASIS - 3
AUGUST, 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 -- 153,739 4,259,402 4,631 5,668 1,000 4,424,440
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 250,000 250,000
8 OTHER 53,554 60,449 7,229 -- -- -- 121,232
INTERCOMPANY TRANSFERS 97,483 (10,425) (77,851) (4,084) (5,123) --
SALE EXPENSE REIMBURSEMENT
LIFE INSURANCE CASH VALUE
RENT
PAYROLL TAX ADVANCE RETURNED
MISC. 53,554 60,247 --
INTEREST INCOME 202 7,229
9 TOTAL NON OPERATING RECEIPTS 151,037 300,024 (70,622) (4,084) (5,123) -- 371,232
10 TOTAL RECEIPTS 151,037 300,024 (70,622) (4,084) (5,123) -- 371,232
11 CASH AVAILABLE 151,037 453,763 4,188,780 547 545 1,000 4,795,672
OPERATING DISBURSEMENTS
12 NET PAYROLL 99,215 128,012 227,227
13 PAYROLL TAXES PAID -- 90,139 90,139
14 SALES, USE & OTHER TAXES PAID -- --
15 SECURED/RENTAL/LEASES -- 14,708 14,708
16 UTILITIES 3,170 79 8,130 11,379
17 INSURANCE -- 55,317 55,317
18 INVENTORY PURCHASES -- --
19 VEHICLE EXPENSE -- --
20 TRAVEL -- --
21 ENTERTAINMENT -- --
22 REPAIRS & MAINTENANCE -- 32 32
23 SUPPLIES 581 -- 195 776
24 ADVERTISING --
25 OTHER 48,071 303,179 9,916 547 545 -- 362,258
LOAN PAYMENTS 250,000 250,000
FREIGHT 12,357 -- 12,357
CONTRACT LABOR -- 5,659 5,659
401 K PAYMENTS -- --
PAYROLL TAX ADVANCE ADP --
WAGE GARNISHMENTS --
MISC. 35,714 53,179 4,257 547 545 94,242
26 TOTAL OPERATING DISBURSEMENTS 151,037 303,258 306,449 547 545 -- 761,836
REORGANIZATION DISBURSEMENTS
27 PROFESSIONAL FEES -- 232,374 232,374
28 US TRUSTEE FEES -- 31,250 31,250
29 OTHER --
30 TOTAL REORGANIZATION EXPENSE -- -- 263,624 -- -- -- 263,624
31 TOTAL DISBURSEMENTS 151,037 303,258 570,073 547 545 -- 1,025,460
32 NET CASH FLOW -- (3,234) (640,695) (4,631) (5,668) -- (654,228)
33 CASH- END OF MONTH -- 150,505 3,618,707 -- -- 1,000 3,770,212
</Table>
CASE NAME: KEVCO MANUFACTURING, LP ACCRUAL BASIS - 4
CASE NUMBER: 401-40784-BJH-11
<Table>
<Caption>
SCHEDULED MONTH MONTH MONTH
ACCOUNTS RECEIVABLE AGING AMOUNT JUL-01 AUG-01 SEP-01
- ------------------------- --------- ------ ------ -----
1. 0 - 30 0 0 0
2. 31 - 60
3. 61 - 90
4. 91 +
5. Total Accounts Receivable 7,974,696 0 0 0
6. (Amount Considered Uncollectible)
7. Accounts Receivable (Net) 7,974,696 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 5,000 5,000
3. Local --
4. Other (See Below) 21,492 21,492
5. Total Taxes Payable 26,492 0 0 0 26,492
6. Accounts Payable 0 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
7. Total Federal Taxes 0 0 0 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 0 0 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: SEPTEMBER-01
-------------------
<Table>
<Caption>
BANK RECONCILIATIONS Account # 1 Account # 2
- -------------------- ------------------- -----------
A. BANK: Bank of America Summit Bank Other Accounts TOTAL
B. ACCOUNT NUMBER: 3751764595 1-0137836 (Attach List)
C. PURPOSE (TYPE): DIP Disbursement-BB Depository
1. Balance Per Bank Statement 6,137 145,202 5,000 156,339
2. Add: Total Deposits Not Credited
3. Subtract: Outstanding Checks (777) (777)
4. Other Reconciling Items (5,057) (5,057)
5. Month End Balance Per Books 303 145,202 5,000 150,505
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
- --------------------------- -------- ---------- -------------- -------------
7.
8.
9.
10. (Attach List)
11. Total Investments
CASH
12. Currency On Hand
Reclass to Accounts Payable
13. Total Cash - End of Month 150,505
</Table>
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CASE NAME: KEVCO MANUFACTURING, LP SUPPLEMENT TO
CASE NUMBER: 401-40784-BJH-11 ACCRUAL BASIS - 5
MONTH: SEPTEMBER-01
------------------
<Table>
<Caption>
BANK RECONCILIATIONS Account # 3
- -------------------- -----------
A. BANK: Summit Bank TOTAL
B. ACCOUNT NUMBER: 1-0138099 OTHER BANK
C. PURPOSE (TYPE): Depository ACCOUNTS
1. Balance Per Bank Statement 5,000 5,000
2. Add: Total Deposits Not Credited 0
3. Subtract: Outstanding Checks 0
4. Other Reconciling Items 0
5. Month End Balance Per Books 5,000 5,000
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
- --------------------------- -------- ---------- -------------- -------------
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: 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. Lee Denham Payroll/severance 134,620
2. Lee Denham Expense Reimb. 254
3. Jim Connors Consulting fees and expenses 102,897
4. Jim Connors Duo-Form Sale Bonus 31,500
5. (Attach List)
6. Total Payments To Insiders 0 269,271
</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 0 301,398 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 N/A $ 14,930,296
2. Status of Leases Payable None
3.
4.
5. (Attach List)
6. TOTAL $ -- $ -- $ 14,930,296
</Table>
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CASE NAME: KEVCO MANUFACTURING, LP ACCRUAL BASIS - 7
CASE NUMBER: 401-40784-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 MANUFACTURING, LP
CASE NUMBER: 401-40784-BJH-11
MONTH: JULY 31, 2001
-------------
FOOTNOTES SUPPLEMENT ACCRUAL BASIS
<Table>
<Caption>
DUAL
BASIS
FORM
NUMBER LINE NUMBER FOOTNOTE/EXPLANATION
- ------ ----------- --------------------
1 1 Pursuant to the February 12, 2001 Order (1) Authorizing Continued
Use of Existing Forms and Records; (2) Authorizing Maintenance of
3 1 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.
1 4,5 Pursuant to Asset Purchase Agreements approved by the Court (see prior
1 10,14A Monthly Operating Reports for details), Debtor has sold most of its assets.
1 26
1 15A Intercompany receivables/payables are from/to co-debtors Kevco Management
1 27A Co. (Case No. 401-40788-BJH-11), Kevco Distribution, LP (Case No.
7 3 401-40789-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 due.
4 9, 13
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 24 The direct charges to equity are due to secured debt reductions pursuant to
1 32 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, 17A During July and August, expense accruals made at the beginning of the year
were reversed as the liabilities will not be incurred as estimated. These
Income Statement adjustments were made in order to more accurately reflect
Debtor's expenses.
</Table>