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: OCTOBER 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:
EXECUTIVE VICE PRESIDENT AND
/s/ Wilford W. Simpson CHIEF FINANCIAL OFFICER
- --------------------------------------- ----------------------------
Original Signature of Responsible Party Title
WILFORD W. SIMPSON NOVEMBER 21, 2001
- --------------------------------------- ----------------------------
Printed Name of Responsible Party Date
PREPARER:
/s/ Dennis S. Faulkner ACCOUNTANT FOR DEBTOR
- --------------------------------------- ----------------------------
Original Signature of Preparer Title
DENNIS S. FAULKNER NOVEMBER 21, 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
ASSETS AMOUNT OCT-01 MONTH MONTH
- ------ ----------- ----------- --------- ---------
1. Unrestricted Cash (FOOTNOTE) 1,000 1,000
2. Restricted Cash
3. Total Cash 1,000 1,000
4. Accounts Receivable (Net)
5. Inventory
6. Notes Receivable
7. Prepaid Expenses
8. Other (Attach List) 459,000 1,700,000
9. Total Current Assets 460,000 1,701,000
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
15. Other (Attach List) 613,299,110 310,687,331
16. Total Assets 618,549,181 319,203,252
POST PETITION LIABILITIES
17. Accounts Payable
18. Taxes Payable
19. Notes Payable
20. Professional Fees
21. Secured Debt
22. Other (Attach List) 74,896,014
23. Total Post Petition Liabilities 74,896,014
PRE PETITION LIABILITIES
24. Secured Debt (FOOTNOTE) 75,885,064 14,891,816
25. Priority Debt
26. Unsecured Debt
27. Other (Attach List) 136,505,780 141,833,049
28. Total Pre Petition Liabilities 212,390,844 156,724,865
29. Total Liabilities 212,390,844 231,620,879
EQUITY
30. Pre Petition Owners' Equity 406,158,337
31. Post Petition Cumulative Profit Or (Loss) (6,444,301)
32. Direct Charges To Equity (Attach Explanation) (Footnote) (312,131,663)
33. Total Equity 87,582,373
34. Total Liabilities and Equity 319,203,252
</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
ASSETS AMOUNT OCT-01 MONTH MONTH
- ------ ----------- ------------ ----- -----
A. Prepaid Escrowed Retention Pmts 459,000
B. Escrowed Receivables from Asset Sales (FOOTNOTE) 1,700,000
C.
D.
E.
TOTAL OTHER ASSETS - LINE 8 459,000 1,700,000
A. Capitalized loan costs 4,790,071 4,311,436
B. Investment in Subsidiaries 2,503,485
C.
D.
E.
TOTAL OTHER ASSETS NET OF 4,790,071 6,814,921
AMORTIZATION - LINE 14
A. Intercompany Receivables (FOOTNOTE) 306,649,555
B. Interco. Promissory Note (FOOTNOTE) 235,981,314 235,981,314
C. Interco. Royalties (FOOTNOTE) 70,668,241 74,706,017
D.
E.
TOTAL OTHER ASSETS - LINE 15 613,299,110 310,687,331
POST PETITION LIABILITIES
A. Interco. Payables (FOOTNOTE) 63,071,490
B. Accrued Interest on Notes/Bonds 11,824,524
C.
D.
E.
TOTAL OTHER POST PETITION
LIABILITIES - LINE 22
74,896,014
PRE PETITION LIABILITIES
A. Interco. Liabilities (FOOTNOTE) 8,005,780 8,005,780
B. 10 3/8% Sr. Sub. Notes 105,000,000 105,000,000
C. Senior Sub. Exchangeable Notes 23,500,000 23,500,000
D. Accrued Interest on Notes/Bonds 5,327,269
E.
TOTAL OTHER PRE PETITION 136,505,780 141,833,049
LIABILITIES - LINE 27
</Table>
CASE NAME: KEVCO, INC. ACCRUAL BASIS - 2
CASE NUMBER: 401-40783-BJH-11
<Table>
<Caption>
INCOME STATEMENT
MONTH QUARTER
REVENUES OCT-01 MONTH MONTH 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 2,328,269 2,328,269
19. Depreciation / Depletion
20. Amortization
21. Other (Attach List)
22. Net Other Income & Expenses (2,328,269) (2,328,269)
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) (2,328,269) (2,328,269)
</Table>
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CASE NAME: KEVCO, INC. ACCRUAL BASIS - 3
CASE NUMBER: 401-40783-BJH-11
<Table>
<Caption>
CASH RECEIPTS AND MONTH QUARTER
DISBURSEMENTS OCT-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, INC., ET AL SUPPLEMENT TO ACCRUAL BASIS -3
OCTOBER, 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 -- 150,202 3,517,653 -- -- 1,000 3,668,855
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 460,000 460,000
8. OTHER 49,584 19,073 311,962 -- -- -- 380,619
INTERCOMPANY TRANSFERS 56,422 17,001 (73,423) -- --
SALE EXPENSE REIMBURSEMENT
INCOME TAX REFUND
RENT
PAYROLL TAX ADVANCE RETURNED 304,679
MISC 49,584 --
INTEREST INCOME 7,283
9. TOTAL NON OPERATING RECEIPTS 106,006 496,074 238,539 -- -- -- 840,619
10. TOTAL RECEIPTS 106,006 496,074 238,539 -- -- -- 840,619
11. CASH AVAILABLE 106,006 646,276 3,756,192 -- -- 1,000 4,509,474
OPERATING DISBURSEMENTS
12. NET PAYROLL 18,582 18,582
13. PAYROLL TAXES PAID -- 6,780 6,780
14. SALES, USE & OTHER TAXES PAID -- --
15. SECURED/RENTAL/LEASES -- 9,700 9,700
16. UTILITIES 138 -- 213 351
17. INSURANCE -- 20,726 20,726
18. INVENTORY PURCHASES -- --
19. VEHICLE EXPENSE -- --
20. TRAVEL -- --
21. ENTERTAINMENT -- --
22. REPAIRS & MAINTENANCE -- --
23. SUPPLIES -- --
24. ADVERTISING --
25. OTHER 105,868 495,471 3,362 -- -- -- 604,701
LOAN PAYMENTS 100,996 468,217 -- 569,213
FREIGHT 4,600 -- 4,600
CONTRACT LABOR -- 2,746 2,746
401 K PAYMENTS -- --
PAYROLL TAX ADVANCE ADP --
WAGE GARNISHMENTS --
MISC 272 27,254 616 28,142
26. TOTAL OPERATING DISBURSEMENTS 106,006 495,471 59,363 -- -- -- 660,840
REORGANIZATION DISBURSEMENTS
27. PROFESSIONAL FEES -- 90,292 90,292
28. US TRUSTEE FEES -- 13,750 13,750
29. OTHER --
30. TOTAL REORGANIZATION EXPENSE -- -- 104,042 -- -- -- 104,042
31. TOTAL DISBURSEMENTS 106,006 495,471 163,405 -- -- -- 764,882
32. NET CASH FLOW -- 603 75,134 -- -- -- 75,737
33. CASH- END OF MONTH -- 150,805 3,592,787 -- -- 1,000 3,744,592
</Table>
CASE NAME: KEVCO, INC. ACCRUAL BASIS - 4
CASE NUMBER: 401-40783-BJH-11
<Table>
<Caption>
SCHEDULED MONTH
ACCOUNTS RECEIVABLE AGING AMOUNT Oct-01 MONTH MONTH
- ------------------------- --------- ------ ----- -----
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: October-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: October-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: October-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 TYPE OF
BANK, ACCOUNT NAME & NUMBER OF 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: October-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 14,891,816
2.
3.
4.
5. (Attach List)
6. TOTAL 14,891,816
</Table>
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CASE NAME: KEVCO, INC. ACCRUAL BASIS - 7
CASE NUMBER: 401-40783-BJH-11
MONTH: October-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: October-01
----------------
<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
1 22A by the Court (see prior Monthly Operating
1 24 Reports for details), the Kevco Debtors have
sold most of their assets.
1 15A,B,C Intercompany assets were inadvertently doubled
1 32 on 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
1 3 No. 401-40789-BJH)' Kevco Holding, Inc. (Case
7 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).
</Table>