EX-99.8 9 d86769ex99-8.txt MONTHLY OPERATING REPORT FOR KEVCO DISTRIBUITON 1 EXHIBIT 99.8 CASE NAME: KEVCO DISTRIBUTION, LP ACCRUAL BASIS CASE NUMBER: 401-40789-BJH-11 JUDGE: BARBARA J. HOUSER UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF TEXAS -------- ----- FORT WORTH DIVISION ---------- MONTHLY OPERATING REPORT MONTH ENDING: MARCH 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/ JOSEPH P. TOMCZAK TREASURER ---------------------------------------- ---------------------------------- Original Signature of Responsible Party Title JOSEPH P. TOMCZAK MAY 2, 2001 ---------------------------------------- ---------------------------------- Printed Name of Responsible Party Date PREPARER: /s/ DENNIS S. FAULKNER DEBTOR'S ACCOUNTANT ---------------------------------------- ---------------------------------- Original Signature of Preparer Title DENNIS S. FAULKNER MAY 2, 2001 ---------------------------------------- ---------------------------------- Printed Name of Preparer Date 2 CASE NAME: KEVCO DISTRIBUTION, LP ACCRUAL BASIS - 1 CASE NUMBER: 401-40789-BJH-11 COMPARATIVE BALANCE SHEET
SCHEDULED MONTH MONTH ASSETS AMOUNT FEB-01 MAR-01 MONTH ------ --------- ------ ------ ----- 1. Unrestricted Cash (FOOTNOTE) 41,421 41,529 1,483 2. Restricted Cash 3. Total Cash 41,421 41,529 1,483 4. Accounts Receivable (Net) 17,545,859 15,536,486 7,470,433 5. Inventory 27,611,039 21,704,255 19,390,060 6. Notes Receivable 7. Prepaid Rent 236,697 236,245 236,093 8. Other (Attach List) 303,392 397,801 464,235 9. Total Current Assets 45,738,408 37,916,316 27,562,304 10. Property, Plant & Equipment 22,049,500 22,050,042 22,049,500 11. Less: Accumulated Depreciation/Depletion (6,151,901) (6,316,718) (6,485,448) 12. Net Property, Plant & Equipment 15,897,599 15,733,324 15,564,052 13. Due From Insiders 14. Other Assets - Net of Amortization (Attach List) 5,741,869 6,153,746 6,153,746 15. Other (Attach List) 100,961,429 108,257,291 116,823,646 16. Total Assets 168,339,305 168,060,678 166,103,748 POST PETITION LIABILITIES 17. Accounts Payable 2,173,714 3,073,468 18. Taxes Payable 693,679 761,086 19. Notes Payable 20. Professional Fees 21. Secured Debt 22. Other (Attach List) 5,176,106 3,742,032 23. Total Post Petition Liabilities 8,043,499 7,576,586 PRE PETITION LIABILITIES 24. Secured Debt (FOOTNOTE) 75,885,064 63,113,388 63,113,388 25. Priority Debt (FOOTNOTE) 1,412,879 26. Unsecured Debt 19,966,456 19,418,510 19,418,510 27. Other (Attach List) 243,205,150 244,090,104 244,988,081 28. Total Pre Petition Liabilities 340,469,549 326,622,002 327,519,979 29. Total Liabilities 340,469,549 334,665,501 335,096,565 EQUITY 30. Pre Petition Owners' Equity (172,130,244) (172,130,244) 31. Post Petition Cumulative Profit Or (Loss) (5,525,420) (7,913,414) 32. Direct Charges To Equity (FOOTNOTE) 11,050,841 11,050,841 33. Total Equity (166,604,823) (168,992,817) 34. Total Liabilities and Equity 168,060,678 166,103,748
This form x does does not have related footnotes on Footnotes Supplement. --- --- 3 CASE NAME: KEVCO DISTRIBUTION, LP SUPPLEMENT TO CASE NUMBER: 401-40789-BJH-11 ACCRUAL BASIS - 1 COMPARATIVE BALANCE SHEET
SCHEDULED MONTH MONTH ASSETS AMOUNT FEB-01 MAR-01 MONTH ------ --------- ------ ------ ----- A. Inventory Vendor Deposit 130,000 224,409 224,409 B. Leased Facility Deposit 173,392 173,392 173,392 C. Miscellaneous Prepaids 66,434 D. E. TOTAL OTHER ASSETS - LINE 8 303,392 397,801 464,235 A. Goodwill: Shepherd Products 5,223,119 5,159,370 5,159,370 B. Goodwill: DARCO 518,750 512,500 512,500 C. Capitalized Lease (FOOTNOTE) 481,876 481,876 D. E. TOTAL OTHER ASSETS NET OF AMORTIZATION - LINE 14 5,741,869 6,153,746 6,153,746 A. Intercompany Receivables (FOOTNOTE) 100,961,429 108,257,291 116,823,646 B. C. D. E. TOTAL OTHER ASSETS - LINE 15 100,961,429 108,257,291 116,823,646 POST PETITION LIABILITIES A. Accrued Liabilities (FOOTNOTE) 497,125 1,474,584 B. Long Term Leases (FOOTNOTE) 1,139,156 1,137,805 C. Accrued Interest: Bank 9,667 9,667 D. Payroll 3,530,159 1,119,976 E. TOTAL OTHER POST PETITION LIABILITIES - LINE 22 5,176,106 3,742,032 PRE PETITION LIABILITIES A. Interco.Payables (FOOTNOTE) 114,705,150 115,590,104 116,488,081 B. 10 3/8% Senior Sub. Notes 105,000,000 105,000,000 105,000,000 C. Sr. Sub. Exchangeable Notes 23,500,000 23,500,000 23,500,000 D. E. TOTAL OTHER PRE PETITION LIABILITIES - LINE 27 243,205,150 244,090,104 244,988,081
4 CASE NAME: KEVCO DISTRIBUTION, LP ACCRUAL BASIS - 2 CASE NUMBER: 401-40789-BJH-11 INCOME STATEMENT
MONTH MONTH QUARTER REVENUES FEB-01 MAR-01 MONTH TOTAL -------- ------ ------ ----- ----- 1. Gross Revenues 17,801,959 8,576,929 26,378,888 2. Less: Returns & Discounts (761,691) (491,194) (1,252,885) 3. Net Revenue 17,040,268 8,085,735 25,126,003 COST OF GOODS SOLD 4. Material 15,875,204 7,502,620 23,377,824 5. Direct Labor 990,318 624,450 1,614,768 6. Direct Overhead 1,083,604 12,500 1,096,104 7. Total Cost Of Goods Sold 17,949,126 8,139,570 26,088,696 8. Gross Profit (908,858) (53,835) (962,693) OPERATING EXPENSES 9. Officer/Insider Compensation 14,885 15,592 30,477 10. Selling & Marketing 24,064 6,497 30,561 11. General & Administrative 63,447 90,336 153,783 12. Rent & Lease 526,422 286,646 813,068 13. Other (Attach List) 1,716,678 865,376 2,582,054 14. Total Operating Expenses 2,345,496 1,264,447 3,609,943 15. Income Before Non-Operating Income & Expense (3,254,354) (1,318,282) (4,572,636) OTHER INCOME & EXPENSES 16. Non-Operating Income (Att List) 17. Non-Operating Expense (Att List) 2,029,261 897,977 2,927,238 18. Interest Expense 2,828 3,006 5,834 19. Depreciation/Depletion 238,977 168,729 407,706 20. Amortization 21. Other (Attach List) 22. Net Other Income & Expenses (2,271,066) (1,069,712) (3,340,778) 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) (5,525,420) (2,387,994) (7,913,414)
This form x does does not have related footnotes on Footnotes Supplement. --- --- 5 CASE NAME: KEVCO DISTRIBUTION, LP SUPPLEMENT TO CASE NUMBER: 401-40789-BJH-11 ACCRUAL BASIS - 2 INCOME STATEMENT
MONTH MONTH QUARTER OPERATING EXPENSES FEB-01 MAR-01 MONTH TOTAL ------------------ ------ ------ ----- ------- A. Payroll & Employee Benefits 918,390 208,836 1,127,226 B. Insurance 267,714 259,019 526,733 C. Utilities & Telephone 226,150 244,174 470,324 D. Taxes 304,424 153,347 457,771 E. TOTAL OTHER OPERATING EXPENSES - LINE 13 1,716,678 865,376 2,582,054 OTHER INCOME & EXPENSES A. B. C. D. E. TOTAL NON-OPERATING INCOME - LINE 16 A. Interco. Asset Charge 216,507 216,507 B. Interco. Management Fee 211,855 118,950 330,805 C. Interco. Royalty Fee 565,996 282,998 848,994 D. Interco. Interest Expense 992,059 496,029 1,488,088 E. Accrued Liabilities 42,844 42,844 TOTAL NON-OPERATING EXPENSE - LINE 17 2,029,261 897,977 2,927,238 A. B. C. D. E. TOTAL OTHER EXPENSE - LINE 21 REORGANIZATION EXPENSES A. B. C. D. E. TOTAL OTHER REORGANIZATION EXPENSES - LINE 25
6 CASE NAME: KEVCO DISTRIBUTION, LP ACCRUAL BASIS - 3 CASE NUMBER: 401-40789-BJH-11
CASH RECEIPTS AND MONTH MONTH QUARTER DISBURSEMENTS FEB-01 MAR-01 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
This form x does does not have related footnotes on Footnotes Supplement. --- --- 7 CASE NAME: KEVCO DISTRIBUTION, LP SUPPLEMENT TO CASE NUMBER: 401-40789-BJH-11 ACCRUAL BASIS - 3 MARCH-01 -----------------
KEVCO KEVCO KEVCO KEVCO KEVCO KEVCO DIST LP MFG.LP MGMT HOLDING COMPONENTS INC TOTAL ------- ------ ----- ------- ---------- ----- ----- 1 CASH-BEGINNING OF MONTH 41,529 (55,996) 17,746,282 232 134 1,000 17,733,181 RECEIPTS FROM OPERATIONS 2 CASH SALES 274,302 -- 274,302 COLLECTION OF ACCOUNTS RECEIVABLE 3 PRE PETITION 1,120,290 367,383 1,487,673 4 POST PETITION 15,181,617 6,014,122 21,195,739 5 TOTAL OPERATING RECEIPTS 16,576,209 6,381,505 -- -- -- -- 22,957,714 NON OPERATING RECEIPTS 6 LOANS & ADVANCES -- -- 7 SALE OF ASSETS 286 -- 286 8 OTHER -- -- -- -- 2,700 -- 2,700 SALE EXPENSE REIMBURSEMENT ADP ADVANCE MISC. 2,700 INTEREST INCOME 9 TOTAL NON OPERATING RECEIPTS 286 -- -- -- 2,700 -- 2,986 10 TOTAL RECEIPTS 16,576,495 6,381,505 -- -- 2,700 -- 22,960,700 11 CASH AVAILABLE 16,618,024 6,325,509 17,746,282 232 2,834 1,000 40,693,881 OPERATING DISBURSEMENTS 12 NET PAYROLL 2,105,173 1,038,694 250,403 3,394,270 13 PAYROLL TAXES PAID -- 1,538,108 221 221 1,538,550 14 SALES, USE & OTHER TAXES PAID 235 1,675 50 1,960 15 SECURED/RENTAL/LEASES 327,171 99,127 97,670 500 500 524,968 16 UTILITIES 119,696 124,447 344,565 38 38 588,784 17 INSURANCE 5,770 1,447 1,241,403 1,248,620 18 INVENTORY PURCHASES 3,246,839 2,943,026 6,189,865 19 VEHICLE EXPENSE 55,871 32,906 88,777 20 TRAVEL 17,371 11,694 512 29,577 21 ENTERTAINMENT 7,156 1,384 8,540 22 REPAIRS & MAINTENANCE 9,451 32,333 470 42,254 23 SUPPLIES 10,799 58,576 69,375 24 ADVERTISING -- -- -- 25 OTHER 394,411 226,566 214,929 179 259 -- 836,344 FREIGHT 357,913 143,548 501,461 CONTRACT LABOR 1,602 7,601 63,360 72,563 401 K PAYMENTS -- 151,450 151,450 PAYROLL TAX ADVANCE ADP -- WAGE GARNISHMENTS -- MISC. 34,896 75,417 119 179 259 110,870 26 TOTAL OPERATING DISBURSEMENTS 6,299,943 4,571,875 3,688,060 988 1,018 -- 14,561,884 REORGANIZATION DISBURSEMENTS 27 PROFESSIONAL FEES -- -- 28 US TRUSTEE FEES -- -- 29 OTHER 10,316,598 1,848,876 (12,155,474) (5,766) (4,234) -- -- LOAN PAYMENTS -- -- INTERCOMPANY TRANSFERS 10,316,598 1,848,876 (12,155,474) (5,766) (4,234) -- -- -- 30 TOTAL REORGANIZATION EXPENSE 10,316,598 1,848,876 (12,155,474) (5,766) (4,234) -- -- 31 TOTAL DISBURSEMENTS 16,616,541 6,420,751 (8,467,414) (4,778) (3,216) -- 14,561,884 32 NET CASH FLOW (40,046) (39,246) 8,467,414 4,778 5,916 -- 8,398,816 ---------- --------- ----------- ------ ------ ----- ---------- 33 CASH-END OF MONTH 1,483 (95,242) 26,213,696 5,010 6,050 1,000 26,131,997 ========== ========= =========== ====== ====== ===== ==========
8 CASE NAME: KEVCO DISTRIBUTION, LP ACCRUAL BASIS - 4 CASE NUMBER: 401-40789-BJH-11
SCHEDULED MONTH MONTH ACCOUNTS RECEIVABLE AGING AMOUNT FEB-01 MAR-01 MONTH ------------------------- --------- ------ ------ ----- 1. 0 - 30 14,608,699 4,662,400 2. 31 - 60 927,787 2,418,683 3. 61 - 90 389,350 4. 91 + 5. Total Accounts Receivable 17,545,859 15,536,486 7,470,433 6. (Amount Considered Uncollectible) 7. Accounts Receivable (Net) 17,545,859 15,536,486 7,470,433
AGING OF POST PETITION MONTH: MARCH-01 TAXES AND PAYABLES ---------------
0 - 30 31 - 60 61 - 90 91 + TAXES PAYABLE DAYS DAYS DAYS DAYS TOTAL ------------- ------ ------- ------- ----- ----- 1. Federal 2. State 3. Local 4. Other (See Below) 67,407 693,679 761,086 5. Total Taxes Payable 67,407 693,679 761,086 6. Accounts Payable 3,073,468 3,073,468
MONTH: MARCH-01 -------------- STATUS OF POST PETITION TAXES
BEGINNING TAX AMOUNT WITHHELD ENDING TAX FEDERAL LIABILITY AND/OR ACCRUED (AMOUNT PAID) LIABILITY ------- ------------- -------------- ------------- --------- 1. Withholding ** 399,266 (399,266) 2. FICA - Employee ** 217,223 (217,223) 3. FICA - Employer ** 217,223 (217,223) 4. Unemployment 6,834 (6,834) 5. Income 6. Other (Attach List) 7. Total Federal Taxes 840,546 (840,546) STATE AND LOCAL 8. Withholding 97,835 (97,835) 9. Sales (FOOTNOTE) 8,627 3,466 12,093 10. Excise 11. Unemployment 14,598 (14,598) 12. Real Property (FOOTNOTE) 685,052 63,940 748,992 13. Personal Property 14. Other (Attach List) 15. Total State And Local 693,679 179,840 (112,433) 761,086 16. Total Taxes 693,679 1,020,386 (952,979) 761,086
* 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 X does does not have related footnotes on Footnotes Supplement. --- --- 9 CASE NAME: KEVCO DISTRIBUTION, LP ACCRUAL BASIS - 5 CASE NUMBER: 401-40789-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: MARCH-01 ------------------
BANK RECONCILIATIONS Account # 1 Account # 2 -------------------- ----------- ----------- A. BANK: B. ACCOUNT NUMBER: Other Accounts C. PURPOSE (TYPE): (Attach List) TOTAL 1. Balance Per Bank Statement 2. Add: Total Deposits Not Credited 3. Subtract: Outstanding Checks 4. Other Reconciling Items 5. Month End Balance Per Books 6. Number of Last Check Written
INVESTMENT ACCOUNTS
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 1,483 13. Total Cash - End of Month 1,483
This form does x does not have related footnotes on Footnotes Supplement. --- --- 10 CASE NAME: KEVCO DISTRIBUTION, LP ACCRUAL BASIS - 6 CASE NUMBER: 401-40789-BJH-11 MONTH: MARCH-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
TYPE OF AMOUNT TOTAL PAID NAME PAYMENT PAID TO DATE ---- ------- ------ ---------- 1. Martin, Steve Payroll 14,884 29,769 2. Martin, Steve Exp. Reimb. 708 708 3. 4. 5. (Attach List) 6. Total Payments To Insiders 15,592 30,477
PROFESSIONALS
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
* Include all fees incurred, both approved and unapproved POST PETITION STATUS OF SECURED NOTES, LEASES PAYABLE AND ADEQUATE PROTECTION PAYMENTS
SCHEDULED AMOUNTS TOTAL MONTHLY PAID UNPAID PAYMENTS DURING POST NAME OF CREDITOR DUE MONTH PETITION ---------------- --------- ------- -------- 1. Bank of America (FOOTNOTE) 63,113,388 2. Leases Payable (FOOTNOTE) Not Available 3. 4. 5. (Attach List) 6. TOTAL 63,113,388
This form x does does not have related footnotes on Footnotes Supplement. --- --- 11 CASE NAME: KEVCO DISTRIBUTION, LP ACCRUAL BASIS - 7 CASE NUMBER: 401-40789-BJH-11 MONTH: MARCH-01 -------------- QUESTIONNAIRE
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
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
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.
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
TYPE OF POLICY CARRIER PERIOD COVERED PAYMENT AMOUNT & FREQUENCY -------------- ------- -------------- -------------------------- Property Lexington, Allianz 5/29/00-5/29/01 Annual $286,600 Group Health Blue Cross/Blue Shield Self Insured Annual $1,504,861 Auto Liberty Mutual 9/1/00-9/1/01 Annual $250,245 General Liability Liberty Mutual 9/1/00-9/1/01 Annual $313,520 Umbrella National Union 6/1/00-9/1/01 Annual $103,349 Workers Compensation Liberty Mutual 9/1/00-9/1/01 Annual $944,320 Marine Cargo Firemans Fund 9/1/00-9/1/01 Annual $6,000
This form x does does not have related footnotes on Footnotes Supplement. --- --- 12 CASE NAME: KEVCO DISTRIBUTION, LP CASE NUMBER: 401-40789-BJH-11 MONTH: MARCH 31, 2001 ----------------- FOOTNOTES SUPPLEMENT ACCRUAL BASIS
ACCRUAL BASIS FORM LINE NUMBER NUMBER FOOTNOTE/EXPLANATION ------ ------ -------------------- 1 1 Pursuant to the February 12, 2001 Order (1) Authorizing Continued Use of 3 1 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-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. Debtor does maintain several small petty cash accounts for use by its operating divisions. These petty cash accounts are included in the cash supplement schedule. 1 14C Debtor has capitalized certain long-term property leases in accordance with 1 22B Generally Accepted Accounting Principles. The asset "Capitalized Lease" was inadvertently omitted from Debtor's Schedules. The liabilities were not included in Debtor's Schedules although the leases were included in Schedule G. 1 15A Intercompany receivables/payables are from/to co-debtors Kevco Management Co. 1 27A (Case No. 401-40788-BJH-11), Kevco Manufacturing, LP (Case No. 7 3 401-40784-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 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."
13 PAGE 2
ACCRUAL BASIS FORM LINE NUMBER NUMBER FOOTNOTE/EXPLANATION ------ ------ -------------------- 1 24 Pursuant to an Asset Purchase Agreement approved by the Court on February 23, 6 1 2001 and effective as of the same date among Kevco, Inc., Kevco Manufacturing, LP, Wingate Management Co. II, LP and Adorn, LLC, certain assets and liabilities of Design Components, a division of Kevco Manufacturing, were transferred to Adorn, LLC. At the effective date of purchase, Buyer assumed certain executory contracts, approximately $1.6 million of Kevco Manufacturing's unsecured pre-petition liabilities. $3.5 million of accounts receivable, $5 million of inventory and $2.2 million (book value) of property and equipment. Payment was made directly to Bank of America, the secured lender, thereby reducing pre-petition secured debt. 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 1,15A); therefore, the secured debt is reflected as a liability on all of the Kevco entities. Kevco, Inc.'s report reflects the transaction detail. 1 25 Pursuant to Order dated February 12, 2001 and Supplemental Order dated March 14, 2001, debtors were authorized to pay pre-petition 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 32 The direct charge to equity is due to the secured debt reduction pursuant to the sale of Design Components (see Footnote 1,24). 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 1,15A); therefore it is reflected as a liability on all of the Kevco entities. The charge to equity is simply an adjustment to the balance sheet. See Kevco, Inc.'s Monthly Operating Report for details of the transaction. 4 9 Sales tax owing is an accrual only and not yet due. Some of the property taxes 4 12 payable may be pre-petition. Once they are identified, the monthly operating report will be adjusted. 6 2 The Debtor is the lessee on hundreds of real and personal property leases, the vast majority of which have been or will soon be rejected. The Debtor does not isolate monthly payments due or paid on account of such leases. Instead, all lease payments are reflected in the Debtor's accounts payable system. To separately identify monthly accruals and payments on leases would require an enormous outlay of the Debtor's accounting personnel and professionals. The Debtor simply does not have available to it the resources that would be required to provide the detail requested. If any party-in-interest desires specific information about any specific lease, the Debtor will provide such information upon request.