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
----------
MONTHLY OPERATING REPORT
MONTH ENDING: SEPTEMBER 30, 2002
------------------
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 25, 2002
- --------------------------------------- ----------------------------
Printed Name of Responsible Party Date
PREPARER:
/s/ Dennis S. Faulkner ACCOUNTANT FOR DEBTOR
- --------------------------------------- ----------------------------
Original Signature of Preparer Title
DENNIS S. FAULKNER OCTOBER 25, 2002
- --------------------------------------- ----------------------------
Printed Name of Preparer Date
CASE NAME: KEVCO, INC.
CASE NUMBER: 401-40783-BJH-11
PREFACE TO THE KEVCO, INC. MONTHLY OPERATING REPORT
Due to the financial impact of events transpiring in September, Debtors have
elected to preface the September Monthly Operating Report with a summary of
significant events and the impact these events have had on the substance as well
as presentation of Debtors' financial statements.
The Debtors' "Joint Application for Substantive Consolidation of Debtor Entities
and Elimination of Intercompany Debtor Claims" was approved September 18, 2002.
Accordingly, the September Monthly Operating Report is presented on a
consolidated basis and intercompany receivables and payables have been
eliminated. In addition, the Senior Notes and the Senior Subordinated
Convertible Notes which had been reflected by each Debtor due to their joint and
several nature, have also been adjusted accordingly.
An "Order Providing Official Committee of Unsecured Creditors and Debtors
Authority to Compromise Adversary Proceeding Against Lender Group and Approving
Settlement Pursuant to Fed.R.Bankr.P. 9019," entered June 25, 2002, approved a
settlement wherein certain of Debtors' remaining assets including real estate,
accounts receivable, insurance deposits and cash were transferred to the Lender
Group Liquidating Trust ("LGLT") in settlement of the remaining balance of
Debtors' secured debt. Certain assets were excluded, such as rights to all
recoveries associated with avoidance and tort claims (the value of these assets
cannot be quantified at this time, therefore, no value has been assigned). The
property and cash transactions were not consummated until September 2002 in
order that certain real estate sales could be closed. An amendment to the
agreement dated August 1, 2002 was entered into that defined the terms of the
interim period. During September, $1,115,039 in cash, real estate in Alabama,
Indiana, North Carolina and Kansas with a book value of $6,820,683 as well as
rights to the refund of a $300,000 letter of credit drawn by Liberty Mutual were
transferred to the LGLT pursuant to the terms of the agreement. A complete
itemization of transferred and retained assets is set forth in the Settlement
Agreement.
During September, substantial revisions were made to Debtors' financial
statements as set forth in the Monthly Operating Report. Some of the more
significant changes are summarized as follows:
(a) the Debtors were consolidated and intercompany accounts eliminated;
(b) the asset transfers to the Lender Group Liquidating Trust (see footnote
above) were recognized;
(c) liabilities were adjusted based on the Debtors' analysis of proofs of
claims filed since the petition date;
(d) unnecessary accrued liabilities were eliminated;
(e) all balance sheet accounts were reviewed in detail and the remaining
accounts were adjusted to more accurately reflect the assets and liabilities
known to exist at the present time;
(f) post-petition losses were reduced by approximately $21 million of
interest accruals associated with the Senior Notes and the Senior Subordinated
Convertible Notes;
(g) pre-petition Owners' Equity increased (and the corresponding liability
decreased) by approximately $1.4 million due to the elimination of the
duplicative debt balances associated with secured obligations which were joint
and several; and
(h) certain direct charges to equity were made as a result of the
adjustment of assets and liabilities noted above.
CASE NAME: KEVCO, INC. ACCRUAL BASIS - 1
CASE NUMBER: 401-40783-BJH-11
COMPARATIVE BALANCE SHEET
<Table>
<Caption>
SCHEDULED MONTH
ASSETS AMOUNT SEP-02 MONTH MONTH
- ------ --------- ------ ----- -----
1. Unrestricted Cash 6,642,444 4,570,339
2. Restricted Cash (FOOTNOTE) 88,200
3. Total Cash 6,642,444 4,658,539
4. Accounts Receivable (Net) 25,520,555
5. Inventory 42,404,867
6. Notes Receivable
7. Prepaid Expenses 3,883,962
8. Other (Attach List) 1,032,596
9. Total Current Assets 79,484,424 4,658,539
10. Property, Plant & Equipment 57,417,572
11. Less: Accumulated Depreciation/Depletion (15,601,607)
12. Net Property, Plant & Equipment 41,815,965
13. Due From Insiders
14. Other Assets - Net of Amortization (Attach List) 114,293,918
15. Other (Attach List) 616,627,534
16. Total Assets 852,221,841 4,658,539
POST PETITION LIABILITIES
17. Accounts Payable
18. Taxes Payable
19. Notes Payable
20. Professional Fees
21. Secured Debt
22. Other (Attach List) 88,200
23. Total Post Petition Liabilities 88,200
PRE PETITION LIABILITIES
24. Secured Debt 75,885,064
25. Priority Debt 2,997,467 274,919
26. Unsecured Debt 26,885,702 33,237,245
27. Other (Attach List) 663,396,485 130,466,927
28. Total Pre Petition Liabilities 769,164,718 163,979,091
29. Total Liabilities 769,164,718 164,067,291
EQUITY
30. Pre Petition Owners' Equity 83,057,123
31. Post Petition Cumulative Profit Or (Loss) (144,542,287)
32. Direct Charges To Equity (Attach Explanation) (97,923,588)
33. Total Equity (159,408,752)
34. Total Liabilities and Equity 4,658,539
</Table>
This form x does does not have related footnotes on Footnotes Supplement.
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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 SEP-02 MONTH MONTH
- ------ --------- ------ ----- -----
A. Inventory Vendor Deposit 136,598
B. Leased Facility Deposit 182,186
C. Prepaid Escrow Retention Pmts 459,000
D. Cash Surrender Value: Life Ins. 254,812
E.
TOTAL OTHER ASSETS - LINE 8 1,032,596
A. Capitalized loan costs 4,790,071
B. Goodwill 109,467,765
C. Capitalized Organization Costs 36,082
D.
E.
TOTAL OTHER ASSETS NET OF AMORTIZATION - LINE 14 114,293,918
A. Investment in Subsidiaries 81,731,049
B. Intercompany Receivables 534,896,485
C.
D.
E.
TOTAL OTHER ASSETS - LINE 15 616,627,534
POST PETITION LIABILITIES
A. Retention Bonus (FOOTNOTE) 88,200
B.
C.
D.
E.
TOTAL OTHER POST PETITION LIABILITIES - LINE 22 88,200
PRE PETITION LIABILITIES
A. Interco. Liabilities 534,896,485
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: Notes/Bonds 1,966,927
E.
TOTAL OTHER PRE PETITION LIABILITIES - LINE 27 663,396,485 130,466,927
</Table>
CASE NAME: KEVCO, INC. ACCRUAL BASIS - 2
CASE NUMBER: 401-40783-BJH-11
INCOME STATEMENT
<Table>
<Caption>
MONTH MONTH MONTH QUARTER
REVENUES JUL-02 AUG-02 SEP-02 TOTAL
- -------- ------ ------ ------ -------
1. Gross Revenues SEE FOOTNOTE SEE FOOTNOTE 0 0
2. Less: Returns & Discounts
3. Net Revenue 0 0
COST OF GOODS SOLD
4. Material
5. Direct Labor
6. Direct Overhead
7. Total Cost Of Goods Sold
8. Gross Profit 0 0
OPERATING EXPENSES
9. Officer / Insider Compensation 12,771 12,771
10. Selling & Marketing
11. General & Administrative 175 175
12. Rent & Lease 4,820 4,820
13. Other (Attach List) 46,607 46,607
14. Total Operating Expenses 64,373 64,373
15. Income Before Non-Operating
Income & Expense (64,373) (64,373)
OTHER INCOME & EXPENSES
16. Non-Operating Income (Att List) 37,408 37,408
17. Non-Operating Expense (Att List) 1,127,050 1,127,050
18. Interest Expense
19. Depreciation / Depletion
20. Amortization
21. Other (Attach List)
22. Net Other Income & Expenses (1,089,642) (1,089,642)
REORGANIZATION EXPENSES
23. Professional Fees 309,961 309,961
24. U.S. Trustee Fees
25. Other (Attach List)
26. Total Reorganization Expenses 309,961 309,961
27. Income Tax
28. Net Profit (Loss) (1,463,976) (1,463,976)
</Table>
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CASE NAME: KEVCO, INC. SUPPLEMENT TO
CASE NUMBER: 401-40783-BJH-11 ACCRUAL BASIS - 2
INCOME STATEMENT
<Table>
<Caption>
MONTH MONTH MONTH QUARTER
OPERATING EXPENSES JUL-02 AUG-02 SEP-02 TOTAL
- ------------------ ------ ------ ------ -------
A. Contract Labor SEE FOOTNOTE SEE FOOTNOTE 2,583 2,583
B. Insurance 39,080 39,080
C. Utilities 156 156
D. Payroll Taxes 4,788 4,788
E.
F. 0
TOTAL OTHER OPERATING EXPENSES - LINE 13 46,607 46,607
OTHER INCOME & EXPENSES
A. Lender Group Liquidating Trust expense
reimbursements (FOOTNOTE) 28,335 28,335
B. Interest Income 9,073 9,073
C. 0
D.
E.
TOTAL NON-OPERATING INCOME - LINE 16 37,408 37,408
A. SEC 8K Filing 11,511 11,511
B. Shareholder Mailing List 500 500
C. Transfer to Lender Group Liquidating Trust 1,115,039 1,115,039
D. 0
E. 0
TOTAL NON-OPERATING EXPENSE - LINE 17 1,127,050 1,127,050
REORGANIZATION EXPENSES
A. 0
B. 0
C. 0
D. 0
E. 0
TOTAL OTHER REORGANIZATION EXPENSES - LINE 25 0 0
</Table>
CASE NAME: KEVCO, INC. ACCRUAL BASIS - 3
CASE NUMBER: 401-40783-BJH-11
<Table>
<Caption>
CASH RECEIPTS AND MONTH MONTH MONTH QUARTER
DISBURSEMENTS JUL-02 AUG-02 SEP-02 TOTAL
- ----------------- ------ ------ ------ -------
1. Cash - Beginning Of Month SEE FOOTNOTE SEE FOOTNOTE 6,122,515 6,122,515
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) 37,408 37,408
9. Total Non-Operating Receipts 37,408 37,408
10. Total Receipts 37,408 37,408
11. Total Cash Available 6,159,923 6,159,923
OPERATING DISBURSEMENTS
12. Net Payroll 12,771 12,771
13. Payroll Taxes Paid 4,788 4,788
14. Sales, Use & Other Taxes Paid
15. Secured / Rental / Leases 4,820 4,820
16. Utilities 156 156
17. Insurance 39,080 39,080
18. ADP Payroll fees 164 164
19. Contract Labor 2,583 2,583
20. Delivery Expenses 11 11
21. SEC filing fees 11,511 11,511
22. Repairs & Maintenance
23. Supplies
24. Shareholder Mailing List 500 500
25. Other (Attach List) 1,115,039 1,115,039
26. Total Operating Disbursements 1,191,423 1,191,423
REORGANIZATION DISBURSEMENTS
27. Professional Fees 309,961 309,961
28. U.S. Trustee Fees
29. Other (Attach List)
30. Total Reorganization Expenses 309,961 309,961
31. Total Disbursements 1,501,384 1,501,384
32. Net Cash Flow (1,463,976) (1,463,976)
33. Cash - End of Month 4,658,539 4,658,539
</Table>
This form x does does not have related footnotes on Footnotes Supplement.
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CASE NAME: KEVCO, INC. SUPPLEMENT TO
CASE NUMBER: 401-40783-BJH-11 ACCRUAL BASIS - 3
CASH RECEIPTS AND
DISBURSEMENTS
<Table>
<Caption>
MONTH MONTH MONTH QUARTER
NON-OPERATING RECEIPTS JUL-02 2-AUG SEP-02 TOTAL
- ---------------------- ------ ----- ------ -------
A. SEE FOOTNOTE SEE FOOTNOTE 0
B. 0
C. 0
D. 0
E. 0
TOTAL LOANS & ADVANCES- LINE 6 0 0
A. Lender Group Liquidating Trust Expense
Reimbursement (FOOTNOTE) 28,335 28,335
B. Interest Income 9,073 9,073
C. 0
D. 0
E. 0
TOTAL OTHER NON-OPERATING RECEIPTS - LINE 8 37,408 37,408
OPERATING DISBURSEMENTS
A. Transfer to Lender Group Liquidating Trust
Pursuant to Settlement 1,115,039 1,115,039
B. 0
C. 0
D. 0
E. 0
F. 0
TOTAL OTHER OPERATING DISBURSEMENTS - LINE 25 1,115,039 1,115,039
REORGANIZATION DISBURSEMENTS
A. 0
B. 0
C. 0
D. 0
E. 0
TOTAL OTHER REORGANIZATION DISBURSEMENTS - LINE 29 0 0
</Table>
CASE NAME: KEVCO, INC. ACCRUAL BASIS - 4
CASE NUMBER: 401-40783-BJH-11
<Table>
<Caption>
SCHEDULED MONTH
ACCOUNTS RECEIVABLE AGING AMOUNT SEP-02 MONTH MONTH
- ------------------------- --------- ------ ----- -----
1. 0 - 30
2. 31 - 60
3. 61 - 90
4. 91 +
5. Total Accounts Receivable 25,520,555 0
6. (Amount Considered Uncollectible)
7. Accounts Receivable (Net) 25,520,555 0
</Table>
AGING OF POST PETITION MONTH: SEPTEMBER-02
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 0
6. Accounts Payable 0 0
</Table>
MONTH: SEPTEMBER-02
------------
STATUS OF POST PETITION TAXES
<Table>
<Caption>
BEGINNING TAX AMOUNT WITHHELD ENDING TAX
FEDERAL LIABILITY* AND/OR ACCRUED (AMOUNT PAID) LIABILITY
- ------- ------------- ---------------- ------------- ----------
1. Withholding ** 4,286 (4,286) 0
2. FICA - Employee ** 251 (251) 0
3. FICA - Employer ** 251 (251) 0
4. Unemployment
5. Income
6. Other (Attach List)
7. Total Federal Taxes 4,788 (4,788) 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 4,788 (4,788) 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, 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-02
------------
<Table>
<Caption>
BANK RECONCILIATIONS Account # 1 Account # 2 Other Accounts
- -------------------- ----------- ----------- --------------
A. BANK: Bank of America Bank of America (Attach List) TOTAL
B. ACCOUNT NUMBER: 1295026976 3750801912
C. PURPOSE (TYPE): Operating Account Payroll-Mgmt
1. Balance Per Bank Statement 172,262 10,351 4,488,641 4,671,254
2. Add: Total Deposits Not Credited
3. Subtract: Outstanding Checks (6,385) (6,330) (12,715)
4. Other Reconciling Items
5. Month End Balance Per Books 172,262 3,966 4,482,311 4,658,539
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 0
CASH
12. Currency On Hand 0
13. Total Cash - End of Month 4,658,539
</Table>
This form does x does not have related footnotes on Footnotes Supplement.
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CASE NAME: KEVCO, INC. SUPPLEMENT TO
CASE NUMBER: 401-40783-BJH-11 ACCRUAL BASIS - 5
MONTH: SEPTEMBER-02
------------
<Table>
<Caption>
BANK RECONCILIATIONS Account # 3 Account # 4 Account # 5
- -------------------- ----------- ----------- -----------
A. BANK: Bank of America Bank of America Bank of America TOTAL
B. ACCOUNT NUMBER: 3751629012 3751775241 3751930222 OTHER BANK
C. PURPOSE (TYPE): DIP Disbursement Account Stay Pay Money Market ACCOUNTS
1. Balance Per Bank Statement 11,691 88,200 4,388,750 4,488,641
2. Add: Total Deposits Not Credited 0 0 0
3. Subtract: Outstanding Checks (6,330) 0 0 (6,330)
4. Other Reconciling Items 0 0 0
5. Month End Balance Per Books 5,361 88,200 4,388,750 4,482,311
6. Number of Last Check Written 3138 N/A N/A
</Table>
INVESTMENT ACCOUNTS
<Table>
<Caption>
BANK, ACCOUNT NAME & NUMBER DATE OF PURCHASE TYPE OF INSTRUMENT PURCHASE PRICE CURRENT VALUE
- --------------------------- ---------------- ------------------ -------------- -------------
A.
B.
C.
D.
TOTAL OTHER INVESTMENT ACCOUNTS - LINE 10 0
</Table>
CASE NAME: KEVCO, INC. 2ND SUPPLEMENT TO
CASE NUMBER: 401-40783-BJH-11 ACCRUAL BASIS - 5
MONTH: AUGUST-02
---------
<Table>
<Caption>
BANK RECONCILIATIONS Account # 6
- -------------------- -----------
A. BANK: Bank of America/ Nations Funds TOTAL
B. ACCOUNT NUMBER: 846713 OTHER BANK
C. PURPOSE (TYPE): Kevco, Inc. S-T Investment ACCOUNTS
1. Balance Per Bank Statement 0 0
2. Add: Total Deposits Not Credited 0 0
3. Subtract: Outstanding Checks 0 0
4. Other Reconciling Items 0 0
5. Month End Balance Per Books 0 0
6. Number of Last Check Written N/A
</Table>
INVESTMENT ACCOUNTS
<Table>
<Caption>
BANK, ACCOUNT NAME & NUMBER DATE OF PURCHASE TYPE OF INSTRUMENT PURCHASE PRICE CURRENT VALUE
- --------------------------- ---------------- ------------------ -------------- -------------
A.
B.
C.
D.
TOTAL OTHER INVESTMENT ACCOUNTS - LINE 10 0
</Table>
CASE NAME: KEVCO, INC. ACCRUAL BASIS - 6
CASE NUMBER: 401-40783-BJH-11
MONTH: SEPTEMBER-02
------------
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. sa
INSIDERS
<Table>
<Caption>
NAME TYPE OF PAYMENT AMOUNT PAID TOTAL PAID TO DATE
---- --------------- ----------- ------------------
1. Sharon Romere Expense Reimb. 1,949
2. Joe Tomczak Expense Reimb. 626
3. John Wittig Expense Reimb. 263
4. Sharon Romere Payroll 126,246
5. Joe Tomczak Payroll 177,884
6. John Wittig Payroll 144,039
7. Wil Simpson Payroll 12,771 290,995
Other (see attached) 0 132,293
8. Total Payments To Insiders 12,771 874,295
</Table>
PROFESSIONALS
<Table>
<Caption>
DATE OF
COURT ORDER TOTAL
AUTHORIZING AMOUNT TOTAL PAID INCURRED
NAME PAYMENT APPROVED AMOUNT PAID TO DATE & UNPAID*
---- ----------- -------- ----------- ---------- ---------
1. Haynes and Boone 3/20/2001 1,371,480 24,797 1,371,480
2. Lain, Faulkner & Co., P.C. 3/20/2001 363,793 36,199 363,793
3. Baker & McKenzie 3/20/2001 480,314 480,314
4. Gordion Group 3/20/2001 17,438 17,438
5. (Attach List) 1,077,601 248,965 1,077,601
6. Total Payments To Professionals 3,310,626 309,961 3,310,626 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 MONTHLY AMOUNTS PAID TOTAL UNPAID
NAME OF CREDITOR PAYMENTS DUE DURING MONTH POST PETITION
---------------- ----------------- ------------ -------------
1. None N/A 0
2.
3.
4.
5. (Attach List)
6. TOTAL 0 0 0
</Table>
This form does x does not have related footnotes on Footnotes Supplement.
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CASE NAME: KEVCO, INC. SUPPLEMENT TO
CASE NUMBER: 401-40783-BJH-11 ACCRUAL BASIS - 6
PAYMENTS TO INSIDERS AND PROFESSIONALS MONTH: SEPTEMBER-02
------------
INSIDERS
<Table>
<Caption>
TOTAL PAID
NAME TYPE OF PAYMENT AMOUNT PAID TO DATE
---- --------------- ----------- ---------
A. Bill Estes Director's Fees 13,000
B. Peter McKee Director's Fees 12,000
C. Richard Nevins Director's Fees 13,000
D. Wingate Partners Management Fee 89,390
E. Wingate Partners Expense Reimb. 3,984
F. Wil Simpson Expense Reimb. 919
G.
H.
TOTAL OTHER PAYMENTS TO INSIDERS - LINE 5 132,293
</Table>
PROFESSIONALS
<Table>
<Caption>
DATE OF
COURT ORDER
AUTHORIZING AMOUNT AMOUNT TOTAL PAID TOTAL INCURRED
NAME PAYMENT APPROVED PAID TO DATE & UNPAID *
---- ----------- -------- ------ ---------- --------------
A. Ernst & Young 3/20/2001 77,715 77,715
B. Mark MacDonald & Assoc. 3/20/2001 872,110 248,965 872,110
C. David T. Roberts 3/20/2001 64,813 64,813
D. Barnes & Thornburg 3/20/2001 62,963 62,963
E. Cozen & O'Connor, PC
F. George Morgan & Sneed, PC
G.
H.
TOTAL OTHER PAYMENTS TO PROFESSIONALS-LINE 5 1,077,601 248,965 1,077,601
</Table>
* Include all fees incurred, both approved and unapproved
POST PETITION STATUS OF SECURED NOTES, LEASES PAYABLE AND ADEQUATE
PROTECTION PAYMENTS
<Table>
<Caption>
SCHEDULED MONTHLY AMOUNT PAID TOTAL UNPAID
NAME OF CREDITOR PAYMENTS DUE DURING MONTH POST PETITION
---------------- ----------------- ------------ -------------
A.
B.
C.
D.
E.
STATUS OF OTHER CREDITORS - LINE 5
</Table>
CASE NAME: KEVCO, INC. ACCRUAL BASIS - 7
CASE NUMBER: 401-40783-BJH-11
MONTH: SEPTEMBER-02
------------
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 Aon Risk Services 9/1/02-3/1/03 Semi-Annual $35,921
D&O Liability Great American Insurance 11/1/2001-10/31/2004 3-years $64,657
</Table>
This form x does does not have related footnotes on Footnotes Supplement.
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CASE NAME: KEVCO, INC. FOOTNOTES SUPPLEMENT
CASE NUMBER: 401-40783-BJH-11 ACCRUAL BASIS
MONTH: SEPTEMBER-02
------------
<Table>
<Caption>
ACCRUAL BASIS LINE
FORM NUMBER NUMBER FOOTNOTE / EXPLANATION
- ------------- ------ ----------------------
1 2 Pursuant to a March 14, 2001 Order, employee
1 22A retention plans were approved to provide incentives
for key employees to remain employed by the Debtors.
Wil Simpson, Kevco, Inc.'s Executive Vice President
and Chief Financial Officer, remains employed by the
Debtors and the retention bonus is being held in a
segregated account.
2,3 ALL For the months of July and August, 2002, the income
statements were presented on a separate entity basis.
In conjunction with the consolidation of the entities
pursuant to the Order Approving Debtors' Joint
Application for Substantive Consolidation of Debtor
Entities and Elimination of Intercompany Debtor
Claims, no attempt was made to consolidate prior
months income and cash flow statements. Please refer
to the individual Monthly Operating Reports for each
separate entity for this information.
2 16A The Lender Group Liquidating Trust, pursuant to the
3 8A Settlement Agreement dated June 24, 2002, as amended
August 1, 2002, is responsible for all pre- and
post-effective date expenses related to the creation
and maintenance of the LGLT and the Trust Assets.
7 1 See Preface to the Kevco, Inc. Monthly Operating
Report.
7 3 The Lender Group Liquidating Trust reimbursed the
Consolidated Debtor for 50% of the General Liability
policy premium. The D&O policy extension applies only
to the discovery period. Actual coverage ceased
November 2001.
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