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
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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:
/s/ Wilford W. Simpson TREASURER
- --------------------------------------- --------------------------
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 HOLDING, INC. ACCRUAL BASIS - 1
CASE NUMBER: 401-40785-BJH-11
COMPARATIVE BALANCE SHEET
<Table>
<Caption>
SCHEDULED MONTH
ASSETS AMOUNT OCT-01 MONTH MONTH
- ------ ----------- ---------- ----- -----
1. Unrestricted Cash (FOOTNOTE) 232 0
2. Restricted Cash
3. Total Cash 232 0
4. Accounts Receivable (Net)
5. Inventory
6. Notes Receivable
7. Prepaid Expenses
8. Other (Attach List) 0 0
9. Total Current Assets 232 0
10. Property, Plant & Equipment
11. Less: Accumulated Depreciation/Depletion
12. Net Property, Plant & Equipment 0 0
13. Due From Insiders
14. Other Assets - Net of Amortization 95,356,800 0
15. Other (Attach List) 14,496,631 14,496,631
16. Total Assets 109,853,663 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
23. Total Post Petition Liabilities 0
PRE PETITION LIABILITIES
24. Secured Debt (FOOTNOTE) 75,885,064 14,891,816
25. Priority Debt
26. Unsecured Debt
27. Other (Attach List) 328,039,345 321,188,722
28. Total Pre Petition Liabilities 403,924,409 336,080,538
29. Total Liabilities 403,924,409 336,080,538
EQUITY
30. Pre Petition Owners' Equity (294,070,746)
31. Post Petition Cumulative Profit Or (Loss) (88,505,859)
32. Direct Charges To Equity (FOOTNOTE) 60,992,698
33. Total Equity (321,583,907)
34. Total Liabilities and Equity 14,496,631
</Table>
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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
ASSETS AMOUNT OCT-01 MONTH MONTH
- ------ ----------- ----------- ----- -----
A.
B.
C.
D.
E.
TOTAL OTHER ASSETS - LINE 8 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
A. Investment in Subsidiaries 14,496,631 14,496,631
B.
C.
D.
E.
TOTAL OTHER ASSETS - LINE 15 14,496,631 14,496,631
POST PETITION LIABILITIES
A.
B.
C.
D.
E.
TOTAL OTHER POST PETITION LIABILITIES - LINE 22 0
PRE PETITION LIABILITIES
A. Interco. Payables (FOOTNOTE) 199,539,345 192,688,722
B. 10 3/8% Senior Sub. Notes 105,000,000 105,000,000
C. Sr. Sub. Exchangeable Notes 23,500,000 23,500,000
D.
E.
TOTAL OTHER PRE PETITION LIABILITIES - LINE 27 328,039,345 321,188,722
</Table>
CASE NAME: KEVCO HOLDING, INC. ACCRUAL BASIS - 2
CASE NUMBER: 401-40785-BJH-11
INCOME STATEMENT
<Table>
<Caption>
MONTH QUARTER
REVENUES OCT-01 MONTH MONTH TOTAL
- -------- ------ ----- ----- -------
1. Gross Revenues 0
2. Less: Returns & Discounts 0
3. Net Revenue 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
8. Gross Profit 0 0
OPERATING EXPENSES
9. Officer / Insider Compensation 0
10. Selling & Marketing 0
11. General & Administrative 0
12. Rent & Lease 0
13. Other (Attach List) 0
14. Total Operating Expenses 0 0
15. Income Before Non-Operating
Income & Expense 0 0
OTHER INCOME & EXPENSES
16. Non-Operating Income (Att List) 0 0
17. Non-Operating Expense (Att List) 0 0
18. Interest Expense 0
19. Depreciation / Depletion 0
20. Amortization 0
21. Other (Attach List) 0 0
22. Net Other Income & Expenses 0 0
REORGANIZATION EXPENSES
23. Professional Fees 0
24. U.S. Trustee Fees 0
25. Other (Attach List) 0
26. Total Reorganization Expenses 0 0
27. Income Tax 0
28. Net Profit (Loss) 0 0
</Table>
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CASE NAME: KEVCO HOLDING, INC. ACCRUAL BASIS - 3
CASE NUMBER: 401-40785-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 (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>
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CASE NAME: KEVCO HOLDING, INC. SUPPLEMENT TO ACCRUAL BASIS - 3
OCTOBER, 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 -- 150,202 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 HOLDING, INC. ACCRUAL BASIS - 4
CASE NUMBER: 401-40785-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 0 0 0 0
6. (Amount Considered Uncollectible)
7. Accounts Receivable (Net) 0 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 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: OCTOBER-01
---------------
STATUS OF POST PETITION TAXES
<Table>
<Caption>
AMOUNT
BEGINNING TAX WITHHELD AND/OR ENDING TAX
FEDERAL LIABILITY* 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.
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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: OCTOBER-01
---------------
<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 TYPE OF
BANK, ACCOUNT NAME & NUMBER OF 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>
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CASE NAME: KEVCO HOLDING, INC. ACCRUAL BASIS - 6
CASE NUMBER: 401-40785-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 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 14,891,816
2.
3.
4.
5. (Attach List)
6. TOTAL 0 0 14,891,816
</Table>
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CASE NAME: KEVCO HOLDING, INC. ACCRUAL BASIS - 7
CASE NUMBER: 401-40785-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.
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>
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CASE NAME: KEVCO HOLDING, INC. FOOTNOTES SUPPLEMENT
CASE NUMBER: 401-40785-BJH-11 ACCRUAL BASIS
MONTH: OCTOBER-01
--------------
<Table>
<Caption>
ACCRUAL BASIS LINE
FORM NUMBER NUMBER FOOTNOTE / EXPLANATION
------------- ------ ----------------------
1 1 Pursuant to a 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. (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 24 The direct charges to equity are due to the
1 32 secured debt reductions pursuant to 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 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>