<PAGE> 1
Securities and Exchange Commission
Washington, DC 20549
Form 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended June 30, 1998
or
( )Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Transition Period From _____To _____
Commission File Number: 000-21621
KEVCO, INC.
(Exact name of registrant as specified in its charter)
Texas 75-2666013
----- ----------
(State or other jurisdiction of (IRS Employer ID No.)
incorporation or organization)
University Centre I
1300 S. University Drive
Suite 200
Fort Worth, Texas
----------------- 76107
(Address of principal -----
executive offices) (Zip Code)
(817-332-2758)
-------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------- -------
Indicate the number of shares outstanding for each of the issuer's classes or
common stock, as of the latest practicable date.
Common Stock, par value $.01 per share 6,851,439 shares
- -------------------------------------- ----------------
(Class) (Outstanding as of August 6, 1998)
<PAGE> 2
KEVCO, INC.
INDEX TO FORM 10-Q
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
<TABLE>
<S> <C>
Consolidated Balance Sheets as of June 30, 1998 (unaudited)
and December 31, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Income for the three-month and six-month
periods ended June 30, 1998 and 1997 (unaudited) . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows for the six-month
periods ended June 30, 1998 and 1997 (unaudited) . . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 6
ITEM 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
PART II - OTHER INFORMATION
ITEM 6 - Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . 14
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Exhibit index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
KEVCO, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
----------- ------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 218 $ 271
Trade accounts receivable, less allowance for doubtful
accounts of $615 and $641 in 1998 and 1997, respectively 59,215 41,006
Inventories, less reserve for obsolete inventory of $2,568
and $2,692 in 1998 and 1997, respectively 94,752 83,540
Assets held for sale 28 3,032
Other current assets 4,497 4,981
--------- ---------
Total current assets 158,710 132,830
Property and equipment, net 45,272 42,442
Intangible assets, net 118,937 120,190
Deferred tax asset 4,339 4,339
Other assets 8,935 8,393
--------- ---------
Total assets $ 336,193 $ 308,194
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 4,459 $ 2,932
Trade accounts payable 64,303 47,007
Accrued liabilities 14,121 24,496
Other current liabilities 2,011 950
--------- ---------
Total current liabilities 84,894 75,385
Long-term debt, less current portion 204,393 191,288
Deferred compensation obligation 728 874
--------- ---------
Total liabilities 290,015 267,547
--------- ---------
Stockholders' equity:
Common stock, $.01 par value; 100,000 shares authorized; 6,848 and
6,828 shares issued and outstanding in 1998 and 1997, respectively 68 68
Additional paid-in capital 33,236 33,020
Retained earnings 12,874 7,559
--------- ---------
Total stockholders' equity 46,178 40,647
--------- ---------
Total liabilities and stockholders' equity $ 336,193 $ 308,194
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
KEVCO, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------- ----------------------
June 30, June 30,
---------------------- ----------------------
1998 1997 1998 1997
--------- ---------- -------- --------
<S> <C> <C> <C> <C>
Net sales $231,967 $101,305 $444,018 $173,404
Cost of sales 200,016 87,434 383,124 149,410
-------- -------- -------- --------
Gross profit 31,951 13,871 60,894 23,994
Commission income 1,846 1,628 3,700 2,907
-------- -------- -------- --------
33,797 15,499 64,594 26,901
Selling, general and administrative expenses 22,968 10,097 44,836 17,778
-------- -------- -------- --------
Operating income 10,829 5,402 19,758 9,123
Interest expense 5,138 968 10,206 1,496
-------- -------- -------- --------
Income before income taxes 5,691 4,434 9,552 7,627
Income taxes 2,504 1,773 4,237 3,050
-------- -------- -------- --------
Net income $ 3,187 $ 2,661 $ 5,315 $ 4,577
======== ======== ======== ========
Earnings per share - basic $ 0.47 $ 0.39 $ 0.78 $ 0.67
======== ======== ======== ========
Earnings per share - diluted $ 0.46 $ 0.39 $ 0.76 $ 0.66
======== ======== ======== ========
Weighted average shares outstanding - basic 6,843 6,809 6,837 6,809
======== ======== ======== ========
Weighted average shares outstanding - diluted 6,957 6,910 6,953 6,927
======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
KEVCO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------
1998 1997
--------- ----------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 5,315 $ 4,577
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,983 1,386
Gain on sale of assets
Deferred compensation obligation (146) 76
Changes in assets and liabilities (21,751) (3,221)
-------- --------
Net cash provided (used) by operating activities (12,599) 2,818
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired -- (32,498)
Purchase of equipment (5,679) (747)
Proceeds from sale of assets 709 813
Proceeds from assets held for sale 2,968 --
Decrease in other assets (227) (394)
-------- --------
Net cash used by investing activities (2,229) (32,826)
Cash flows from financing activities:
Proceeds (payments) on line of credit, net 7,418 (1,771)
Proceeds from long-term debt 10,000 30,000
Payments of long-term debt (2,786) (219)
Stock options exercised 216 --
Other (73) --
-------- --------
Net cash provided by financing activities 14,775 28,010
-------- --------
Net decrease in cash and cash equivalents (53) (1,998)
Beginning cash and cash equivalents 271 2,078
-------- --------
Ending cash and cash equivalents $ 218 $ 80
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
KEVCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. ACCOUNTING POLICIES AND BASIS OF PRESENTATION
The Annual Report on Form 10-K for the year ended December 31, 1997,
for Kevco, Inc. includes a summary of significant accounting policies and should
be read in conjunction with this Form 10-Q. The accompanying consolidated
financial statements of Kevco, Inc. and its wholly-owned subsidiaries ("Kevco"
or the "Company") have been prepared pursuant to the rules and regulations of
the Securities and Exchange Commission ("SEC"). Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles ("GAAP") for complete financial statements. All significant
intercompany transactions and accounts have been eliminated.
In the opinion of management, the consolidated financial statements
contain all adjustments, consisting only of normal recurring adjustments,
considered necessary for a fair statement of the balance sheets as of June 30,
1998 and December 31, 1997, the statements of income for the three-month and
six-month periods ended June 30, 1998 and 1997 and the statements of cash flows
for the six-month periods ended June 30, 1998 and 1997. The results of
operations for the three-month and six-month periods ended June 30, 1998 are not
necessarily indicative of the results of operations for the entire fiscal year
ending December 31, 1998.
2. ACQUISITIONS
In December 1997, the Company acquired Shelter Components Corporation
(the "Shelter Acquisition") and the inventory and certain distribution rights
from Shepherd Products Company (the "Shepherd Acquisition"), for total purchase
prices approximating $144.8 million and $8.0 million, respectively. The
acquisitions were made utilizing borrowings under the Company's amended and
restated credit facility and, in the case of the Shelter Acquisition, net
proceeds from the issuance of $105 million of 10 3/8% senior subordinated notes
due 2007. Each of the acquisitions was accounted for as a purchase and the
results of operations of the acquired companies were included in the
consolidated results of operations of the Company from their respective
acquisition dates. As a result of such acquisitions, approximately $87.6 million
of goodwill was recorded by the Company, which reflects the adjustments
necessary to allocate the individual purchase prices to the fair value of assets
acquired, liabilities assumed and additional purchase liabilities recorded.
Additional purchase liabilities included approximately $1.2 million for
severance and related costs associated primarily with the elimination of certain
administrative and corporate positions recorded in connection with the Shelter
Acquisition in December, $0.8 million of which is outstanding at June 30, 1998.
The Company expects to complete its termination of employees during 1998.
6
<PAGE> 7
KEVCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
3. INVENTORIES
Inventories are comprised of the following (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
------------ ------------
<S> <C> <C>
Raw materials $ 24,479 $ 17,006
Work-in process 1,431 1,317
Finished goods 7,271 3,760
Goods held for resale 61,571 61,457
------------ ------------
$ 94,752 $ 83,540
============ ============
</TABLE>
4. CREDIT AGREEMENT
In December 1997, Kevco and its lender entered into the second amended
and restated credit agreement, which was subsequently amended on February 12,
1998 (the "Credit Agreement") at closing of the Shelter Acquisition (see Note 2)
to allow for aggregate senior borrowings of up to $125 million comprised of a
revolving credit facility of $45 million and a term loan facility of $80
million. The revolving credit facility and $40 million of the term loan facility
mature in 2003 with the remaining term loan facility maturing in 2004. The term
loan and revolving credit facilities are collateralized by substantially all of
the assets of the Company and its subsidiaries as well as the capital stock of
such subsidiaries.
In addition to funds available under the Credit Agreement, the Company
issued $105 million of 10 3/8% senior subordinated notes due 2007 (the "Notes")
under the indenture dated as of December 1, 1997, as supplemented (the
"Indenture"), to complete the acquisition of Shelter. Interest is payable on
June 1 and December 1 of each year commencing June 1, 1998. The Notes are
redeemable, in whole or in part, at the option of the Company, at any time on or
after December 1, 2002, at the redemption prices set forth in the Indenture. In
addition, at any time on or before December 1, 2000, the Company may redeem up
to 35% of the original aggregate principal amount of the Notes with the net
proceeds of a public equity offering at a redemption price equal to 110.375% of
the principal amount thereof, plus accrued and unpaid interest and liquidated
damages, if any, thereon to the date of redemption.
The Credit Agreement and Indenture contain certain restrictions and
conditions that include cash flow and various financial ratio requirements, and
limitations on incurrence of debt or liens, acquisitions of property and
equipment, distributions to stockholders and certain events constituting a
Change of Control (as defined in the agreements).
7
<PAGE> 8
KEVCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
5. EARNINGS PER SHARE
Basic earnings per share excludes dilution, and diluted earnings per
share reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised and converted into common stock.
The reconciliation between basic and diluted weighted average shares
outstanding, follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
------------- ----------- ------------ -----------
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Weighted average shares - basic 6,843 6,809 6,837 6,809
Plus shares applicable to stock
option plans 114 101 116 118
============= =========== ============ ===========
Weighted average shares - diluted 6,957 6,910 6,953 6,927
============= =========== ============ ===========
</TABLE>
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following discussion includes the operations of Kevco for each of
the periods discussed. This discussion and analysis should be read in
conjunction with the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
The Company recognizes revenues from product sales at the time of
shipment (or the time of product receipt, in the case of direct shipments from
suppliers to customers). In some cases the Company sells on a commission basis.
Commissions are recognized when earned and represent amounts earned in selling,
warehousing and delivering products for certain manufacturers of building
products with whom the Company has distribution agreements. Commission
arrangements do not require inventory investments or receivable financing, and
therefore are significantly less expensive to the Company than traditional
sales. To the extent the volume of items warehoused and shipped under commission
arrangements increases faster or slower than the volume of items related to
traditional sales, changes in net sales may not be representative of actual
increases or decreases in shipment volume.
ACQUISITIONS
Effective December 1, 1997, the Company acquired approximately 95.5% of
the common stock of Shelter through a tender offer for a purchase price of
$17.50 per share of common stock of Shelter; the Company acquired the remaining
untendered shares through a subsequent merger for a like price. The Shelter
Acquisition was accounted for as a purchase and, accordingly, the operating
results have been included in the operating results of the Company since
December 1, 1997. As a result of the Shelter Acquisition, approximately $81.6
million of goodwill was recorded by the Company, which reflects the acquisition
costs in excess of the fair value of net assets acquired. On June 27, 1997,
prior to the acquisition of Shelter by Kevco, Shelter acquired the net assets of
Plastic Solutions, Inc., a manufacturer of injection molded plastic parts, for
approximately $0.9 million in cash and $3.5 million in notes payable to the
sellers.
On December 12, 1997, the Company consummated the acquisition of the
inventory and certain distribution rights of certain building products
distributed by the manufactured housing and recreational vehicle division of
Shepherd Products Company for a cash purchase price of $6.0 million, with an
additional $2.0 million payable over a five year period following the
acquisition and an additional $2.0 million payable over a period of up to seven
years upon the satisfaction of certain conditions.
9
<PAGE> 10
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain
Consolidated Statements of Income data as a percentage of the Company's net
sales.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------- -----------------
1998 1997 1998 1997
------ ------ ------ -----
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 86.2 86.3 86.3 86.2
----- ----- ----- -----
Gross profit 13.8 13.7 13.7 13.8
Commission income 0.8 1.6 0.8 1.7
----- ----- ----- -----
14.6 15.3 14.5 15.5
Selling, general and
administrative expenses 9.9 10.0 10.1 10.3
----- ----- ----- -----
Operating income 4.7 5.3 4.4 5.2
Interest expense, net 2.2 0.9 2.3 0.8
----- ----- ----- -----
Income before income taxes 2.5% 4.4% 2.1% 4.4%
===== ===== ===== =====
</TABLE>
COMPARISON OF THREE MONTHS ENDED JUNE 30, 1998 AND 1997
Net sales increased by $130.7 million, or 129.0%, to $232.0 million for
the three month period ended June 30, 1998 from $101.3 million for the
comparable 1997 period. The net sales increase primarily resulted from the
effect of the Shelter Acquisition in December 1997.
Gross profit increased by $18.1 million, or 130.2%, to $32.0 million
for the three month period ended June 30, 1998 from $13.9 million for the
comparable 1997 period due primarily to the Shelter Acquisition. Gross profit,
as a percent of net sales, increased to 13.8% for the three month period ended
June 30, 1998 from 13.7% for the comparable 1997 period. The slight increase in
gross profit, as a percent of net sales, was related primarily to the effect of
high margin manufacturing operations acquired through the Shelter Acquisition,
offset by wood products margins which, affected by lower than historical lumber
prices, continued to be lower than historical levels and start-up costs related
to the opening of two wood products plants in Arizona and North Carolina (such
wood products represent approximately 19% of net sales).
Selling, general and administrative expenses increased by $12.9
million, or 127.7%, to $23.0 million for the three month period ended June 30,
1998 from $10.1 million for the comparable 1997 period. The increase was
primarily due to increased sales volume related to the Shelter Acquisition.
Selling, general and administrative expenses, as a percent of net sales,
decreased to 9.9% for 1998 from 10.0% for the comparable 1997 period primarily
reflecting economies of scale and cost synergies from the Shelter Acquisition.
Interest expense increased by $4.1 million to $5.1 million for the
three months ended June 30, 1998 from $1.0 million for the comparable 1997
period principally due to borrowings related to the acquisitions of Shelter and
Shepherd.
10
<PAGE> 11
Net income increased by $0.5 million, or 18.5%, to $3.2 million for the
three months ended June 30, 1998 from $2.7 million for the comparable 1997
period. The increase is attributable primarily to increased sales volume due to
the Shelter Acquisition offset by increased interest expense as described above.
COMPARISON OF SIX MONTHS ENDED JUNE 30, 1998 AND 1997
Net sales increased by $270.6 million, or 156.0%, to $444.0 million for
the six month period ended June 30, 1998 from $173.4 million for the comparable
1997 period. The net sales increase primarily resulted from the effect of the
Shelter Acquisition in December 1997 as well as a reported manufactured housing
shipment increase of 3.4% from January through May 1998, as compared to the
prior period. Sales to the manufactured housing industry represented
approximately 80% of net sales for the six months ended June 30, 1998.
Gross profit increased by $36.9 million, or 153.8%, to $60.9 million
for the six month period ended June 30, 1998 from $24.0 million for the
comparable 1997 period due primarily to the Shelter Acquisition. Gross profit,
as a percent of net sales, decreased to 13.7% for the six month period ended
June 30, 1998 from 13.8% for the comparable 1997 period. The slight decrease in
gross profit, as a percent of net sales, was related primarily to the fact that
wood products margins, affected by lower than historical lumber prices,
continued to be lower than historical levels, to start-up costs related to the
opening of two wood products plants in Arizona and North Carolina (such wood
products represent approximately 18% of year to date net sales) and to some
initial margin pressure in the first quarter of 1998 related to the Shelter
Acquisition, offset by the effect of high margin manufacturing operations
acquired through the Shelter Acquisition.
Selling, general and administrative expenses increased by $27.0
million, or 151.7%, to $44.8 million for the six month period ended June 30,
1998 from $17.8 million for the comparable 1997 period. The increase was
primarily due to increased sales volume related to the Shelter Acquisition.
Selling, general and administrative expenses, as a percent of net sales,
decreased to 10.1% for 1998 from 10.3% for the comparable 1997 period primarily
reflecting economies of scale and cost synergies from the Shelter Acquisition.
Interest expense increased by $8.7 million to $10.2 million for the six
months ended June 30, 1998 from $1.5 million for the comparable 1997 period
principally due to borrowings related to the acquisitions of Shelter and
Shepherd.
Net income increased by $0.7 million, or 15.2%, to $5.3 million for the
six months ended June 30, 1998 from $4.6 million for the comparable 1997 period.
The increase is due primarily to increased sales volume due to the Shelter
Acquisition offset by increased interest expense as described above.
LIQUIDITY AND CAPITAL RESOURCES
The Company's growth has been financed through cash flow from
operations, borrowings under its bank credit facilities, proceeds from the
November 1996 initial public offering, proceeds from the issuance of the Notes
and the expansion of trade credit. Net cash used by operating activities was
$12.6 million and capital expenditures were $5.7 million for the
11
<PAGE> 12
six months ended June 30, 1998. Kevco is obliged to make payments on various
capital leases in varying amounts, maturing through 2007 as well as payments
under various noncompete and consulting agreements, related to recent
acquisitions, in varying amounts, through 2002.
In December 1997, the Company acquired Shelter for an aggregate
purchase price of approximately $144.8 million. In connection with the
acquisition of Shelter, the Company entered into the Credit Agreement, which
increased the aggregate borrowings available under the existing credit facility
to $125.0 million consisting of an $80.0 million term loan facility and a $45.0
million revolving credit facility. The revolving credit facility and a portion
of the term loan matures in 2003 with the remaining term loan portion maturing
in 2004.
Borrowings under the term loan and revolving credit facilities require
monthly, bi-monthly or quarterly interest payments (depending on whether
interest accrues based on prime rate or LIBOR) calculated as a blend of the
bank's prime rate and LIBOR based on pricing options selected by the Company
plus a margin determined by operating statistics of the Company. The term loan
and revolving credit facilities are collateralized by substantially all of the
assets of the Company and its subsidiaries as well as the capital stock of such
subsidiaries. The Credit Agreement contains certain restrictions and conditions
that include cash flow and various financial ratio requirements, and limitations
on incurrence of debt or liens, acquisitions of property and equipment,
distributions to stockholders and certain events constituting a Change of
Control (as defined in the credit agreement).
In addition to the funds available under the amended credit facility,
the Company issued $105.0 million of the Notes under the Indenture to complete
the acquisition of the outstanding shares of Shelter. The Indenture contains
certain covenants that include, but are not limited to, restrictions or
limitations on the following: the incurrence of additional debt or liens, the
payment of dividends by the Company, the payment of dividends by restricted
subsidiaries to the Company, the sale of certain assets, the ability to
consolidate with or merge into another person, the entering into certain
transactions with affiliates and the engagement in certain lines of business.
ASSET MANAGEMENT
The Company actively manages its assets and liabilities through
compensating its corporate and facility managers for receivable collection,
inventory control and profits in relation to these and other net assets
employed.
For the six months ended June 30, 1998, days sales in average
receivables was approximately 24 days, days sales in average inventory was
approximately 40 days and days sales in average payables was approximately 26
days.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this quarterly report that are not
historical facts are forward-looking statements that involve risks and
uncertainties, including, but not limited to, the Company's substantial
leverage; risks associated with the integration of two companies that have
previously operated independently; the impact of competitors' pricing, product
quality and
12
<PAGE> 13
related features; the cyclical nature and seasonality of the manufactured
housing and recreational vehicle markets; the dependence of the Company on its
principal customers and key suppliers; and other risks detailed in the Company's
Securities and Exchange Commission filings, including those set forth in the
Company's Annual Report on Form 10-K.
13
<PAGE> 14
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<S> <C>
2.1 - Merger Agreement, dated June 6, 1995 by and among Kevco, Inc. and
Service Supply Systems, Inc., joined by a wholly-owned subsidiary of
Kevco, Inc.(1)
2.2 - Form of Plan and Agreement of Merger between Kevco Texas, Inc. and
Kevco Delaware, Inc.(1)
2.3 - Form of Bill of Sale and General Assignment from Kevco Delaware,
Inc., as Assignor, to Sunbelt Wood Components, Inc., as Assignee.(1)
2.4 - Form of Assumption Agreement between Kevco Delaware, Inc. and Sunbelt
Wood Components, Inc.(1)
2.5 - Asset Purchase Agreement by and among Consolidated Forest Products,
Inc., Consolidated Forest Products, L.L.C. and the members of
Consolidated Forest Products, L.L.C.(2)
2.6 - Stock Purchase Agreement by and among Kevco Delaware, Inc. and the
shareholders of Bowen Supply, Inc.(2)
2.7 - Agreement and Plan of Merger, dated as of October 21, 1997, between
Kevco, Inc., SCC Acquisition Corp. and Shelter Components
Corporation.(6)
3.1 - Articles of Incorporation of Kevco, Inc., as amended.(1)
3.2 - Bylaws of Kevco, Inc.(1)
4.1 - Form of certificate evidencing ownership of the Common Stock of
Kevco, Inc.(1)
10.1 - Amendment No. 2 to 1995 Stock Option Plan (Amended and Restated 1995
Stock Option Plan of Kevco, Inc.) and Supplementary Letter.(1)
10.2 - 1996 Stock Option Plan of Kevco, Inc., as amended, and Supplementary
Letter.(1)
10.3 - Form of Amended and Restated Employment Agreement between Gerald E.
Kimmel and Kevco, Inc., joined therein by Kevco Delaware, Inc. and
Sunbelt Wood Components, Inc.(1)
10.4 - Employment Agreement between C. Lee Denham and Kevco, Inc. dated
June 30, 1995.(1)
10.5 - Lease between K & E Land & Leasing and Kevco, Inc. dated December 1,
1977.(1)
10.6 - Amendment No. 1 to Lease, by and between K & E Land & Leasing and
Kevco, Inc. dated March , 1982.(1)
10.7 - Amendment No. 2 to Lease, by and between K & E Land & Leasing and
Kevco, Inc. dated May 30, 1983.(1)
10.8 - Amendment No. 3 to Lease, by and between K & E Land & Leasing and
Kevco, Inc. dated February 1, 1993.(1)
</TABLE>
14
<PAGE> 15
<TABLE>
<S> <C>
10.9 - Lease dated April 1, 1980 between City of Newton, Kansas and K & E
Land & Leasing.(1) 10.10 - Sublease and Lease Guarantee Agreement
dated April 1, 1980 between K & E Land & Leasing and Kevco, Inc.(1)
10.11 - Amendment No. 1 to Sublease and Lease Guaranty Agreement by and
between K & E Land & Leasing and Kevco, Inc. dated May 30, 1983.(1)
10.12 - Lease Agreement dated October 12, 1987 between 1741 Conant
Partnership & Kevco Inc.(1) 10.13 - Equipment Lease Agreement dated
January 1, 1991 between K & E Land & Leasing and Kevco, Inc.(1) 10.14
- Amendment No. 1 to Equipment Lease Agreement between K & E Land &
Leasing and Kevco, Inc. dated February 12, 1993.(1)
10.15 - Amendment No. 2 to Equipment Lease Agreement between K & E Land &
Leasing and Kevco, Inc. dated October 26, 1993.(1)
10.16 - Amendment No. 3 to Equipment Lease Agreement between K & E Land &
Leasing and Kevco, Inc. dated May 23, 1994.(1)
10.17 - Deferred Compensation Agreement between Kevco, Inc. and Clyde A.
Reed, Jr. dated May 24, 1977.(1)
10.18 - Amendment No. 1 to Deferred Compensation Agreement dated
May , 1980.(1)
10.19 - Amendment No. 2 to Deferred Compensation Agreement dated
March 10, 1992.(1)
10.20 - Amended and Restated Health and Accident Plan of Kevco, Inc.(1)
10.21 - Investment and Tax Advice Plan of Kevco, Inc.(1)
10.22 - Credit Agreement among Kevco, Inc., certain Lenders and NationsBank
of Texas, N.A., as Administrative Lender dated June 30, 1995.(1)
10.23 - First Amendment to Credit Agreement, dated as of September 1, 1995,
among Kevco, Inc., the banks listed on the signature pages thereof,
and NationsBank of Texas, N.A.(1)
10.24 - Second Amendment to Credit Agreement, dated as of November 29,
1995, among Kevco, Inc., the banks listed on the signature pages
thereof, and NationsBank of Texas, N.A.(1)
10.25 - Revolving Credit Note of Kevco, Inc. to NationsBank of Texas, N.A.
dated September 1, 1995 in the amount of $14,285,714.28.(1)
10.26 - Term Loan Note of Kevco, Inc. to NationsBank of Texas, N.A. dated
September 1, 1995 in the amount of $10,714,285.72.(1)
10.27 - Revolving Credit Note of Kevco, Inc. to The Sumitomo Bank, Ltd. dated
February 2, 1996 in the amount of $5,714,285.72.(1)
10.28 - Term Loan Note of Kevco, Inc. to The Sumitomo Bank, Ltd. dated
February 2, 1996 in the amount of $4,285,714.28.(1)
10.29 - PaineWebber Standardized 401(K) Profit-Sharing Adoption Agreement
(No. 005) (To be used with Basic Plan Document No. 03 Only) for
Kevco, Inc. dated May 24, 1996 and PaineWebber Defined Contribution
Plan.(1)
</TABLE>
15
<PAGE> 16
<TABLE>
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10.30 - Promissory Note of Gerald E. Kimmel to Kevco, Inc. dated October
26, 1993 in the amount of $5,000,000.(1)
10.31 - Amendment No. 4 to Lease dated December 1, 1977 by and between K&E
Land & Leasing and Kevco, Inc. dated October 26, 1993.(1)
10.32 - Assignment and Acceptance dated February 2, 1996 between The Daiwa
Bank, Limited and The Sumitomo Bank, Ltd., Chicago Branch.(1)
10.33 - Form of Tax Indemnification and Distribution Agreement.(1)
10.34 - Form of Promissory Note made by Kevco Texas, Inc. in the amount of
$3,733,000 (the Prior S Corporation Earnings Note).(1)
10.35 - Form of Promissory Note made by Kevco Texas, Inc. (the Future S
Corporation Earnings Note).(1)
10.36 - Form of Assignment of $5,000,000 Note made by Kevco, Inc.
(n/k/a Kevco Delaware, Inc.).(1)
10.37 - Form of Adoption Agreement by Kevco, Inc. and Kevco Texas, Inc.
(re: 1995 Stock Option Plan and 1996 Stock Option Plan).(1)
10.38 - Amendment No. 1 dated September 21, 1988, to Lease Agreement by
1741 Conant Partnership as lessor and Kevco, Inc. (n/k/a Kevco
Delaware, Inc.).(1)
10.39 - Letter Agreement dated June 22, 1982, between Kevco, Inc.
(n/k/a Kevco Delaware, Inc.) and K&E Land & Leasing. (re: lease
rentals).(1)
10.40 - Letter Agreement dated October 1, 1996 by Kevco, Inc., K&E Land &
Leasing, and 1741 Conant Partnership (re: lease rental).(1)
10.41 - Form of Parent Pledge Agreement.(1)
10.42 - Consent and Waiver, dated as of October 21, 1996, by and among
NationsBank of Texas, N.A., The Sumitomo Bank, Ltd. and Kevco Texas,
Inc.(1)
10.43 - Amended and Restated Credit Agreement, dated as of February 27, 1997,
by and among Kevco Delaware, Inc., certain lenders and NationsBank of
Texas, N.A.(4)
10.44 - Amendment No. 1 to Amended and Restated 1995 Stock Option Plan of
Kevco, Inc. (10)
10.45 - Senior Commitment Letter dated October 27, 1997 from NationsBank of
Texas, N.A. and NationsBanc Montgomery Securities, Inc.(6)
10.46 - First Amendment to Amended and Restated Credit Agreement dated as of
November 25, 1997 between Kevco Delaware, Inc., certain lenders and
NationsBank of Texas, N.A.(7)
10.47 - Second Amended and Restated Credit Agreement dated December 1, 1997
between Kevco, Inc., certain lenders and NationsBank of Texas,
N.A.(7)(8)
10.48 - Revolving Credit Note dated December 1, 1997 between Kevco, Inc. and
NationsBank of Texas, N.A. in the original principal amount of
$11,666,666.66.(7)
10.49 - Revolving Credit Note dated December 1, 1997 between Kevco, Inc. and
National City Bank of Kentucky in the original principal amount of
$8,166,666.67.(7)
10.50 - Revolving Credit Note dated December 1, 1997 between Kevco, Inc. and
Guaranty Federal Bank, F.S.B. in the original principal amount of
$7,000,000.00.(7)
10.51 - Revolving Credit Note dated December 1, 1997 between Kevco, Inc. and
The Sumitomo Bank, Limited in the
</TABLE>
16
<PAGE> 17
<TABLE>
<S> <C>
original principal amount of $8,166,666.67.(7)
10.52 - Facility A Term Loan Note dated December 1, 1997 between Kevco, Inc.
and NationsBank of Texas, N.A. in the original principal amount of
$13,333,333.34.(7)
10.53 - Facility A Term Loan Note dated December 1, 1997 between Kevco, Inc.
and National City Bank Kentucky in the original principal amount of
$9,333,333.33.(7)
10.54 - Facility A Term Loan Note dated December 1, 1997 between Kevco, Inc.
and Guaranty Federal Bank, F.S.B. in the original principal amount of
$8,000,000.00.(7)
10.55 - Facility A Term Loan Note dated December 1, 1997 between Kevco, Inc.
and The Sumitomo Bank, Limited in the original principal amount of
$9,333,333.33.(7)
10.56 - Facility B Term Loan Note dated December 1, 1997 between Kevco, Inc.
and NationsBank of Texas, N.A. in the original principal amount of
$50,000,000.00.(7)
10.57 - Security Agreement dated December 1, 1997 between Kevco, Inc. and
NationsBank of Texas, N.A. as Administrative Agent.(7)
10.58 - Registration Rights Agreement dated December 1, 1997 by and among
Kevco, Inc., as Issuer, the Subsidiaries of Kevco, Inc. identified
therein as Subsidiary Guarantors and Donaldson, Lufkin & Jenrette
Securities Corporation and NationsBanc Montgomery Securities, Inc.,
as Initial Purchasers.(9)
10.59 - Indenture dated December 1, 1997 among Kevco, Inc., SCC Acquisition
Corp., Kevco Delaware, Inc., Sunbelt Wood Components, Inc.,
Consolidated Forest Products, Inc., Bowen Supply, Inc. and Encore
Industries, Inc., as Subsidiary Guarantors and United States Trust
Company of New York, as Trustee.(9)
10.60 - Supplemental Indenture between Shelter Components Corporation, a
Subsidiary of Kevco, Inc., and United States Trust Company of New
York, as Trustee.(9)
10.61 - Supplemental Indenture dated as of December 1, 1997 between Shelter
Distribution, L.P., a Subsidiary of Kevco, Inc., and United States
Trust Company of New York, as Trustee.(9)
10.62 - Supplemental Indenture dated as of December 1, 1997 between DCM,
Inc., a Subsidiary of Kevco, Inc., and United States Trust Company of
New York, as Trustee.(9)
10.63 - Supplemental Indenture dated as of December 1, 1997 between
Duo-Form of Michigan, Inc., a Subsidiary of Kevco, Inc., and United
States Trust Company of New York, as Trustee.(9)
10.64 - Supplemental Indenture dated as of December 1, 1997 between Design
Components, Inc., a Subsidiary of Kevco, Inc., and United States
Trust Company of New York, as Trustee.(9)
10.65 - Supplemental Indenture dated as of December 1, 1997 between Shelter
Components of Indiana, Inc., a Subsidiary of Kevco, Inc., and United
States Trust Company of New York, as Trustee.(9)
10.66 - Supplemental Indenture dated as of December 1, 1997 between BPR
Holdings, Inc., a Subsidiary of Kevco, Inc., and United States Trust
Company of New York, as Trustee.(9)
10.67 - First Amendment to Credit Agreement dated February 12, 1998 between
Kevco, Inc., certain lenders and NationsBank of Texas, N.A.(10)
10.68 - Registered Global Note dated March 5, 1998 among Kevco, Inc., Kevco
Delaware, Inc., Sunbelt Wood Components, Inc., Bowen Supply, Inc.,
Encore Industries, Inc., Shelter
</TABLE>
17
<PAGE> 18
Components Corporation, BPR Holdings, Inc., Shelter Components of
Indiana, Inc., Design Components, Inc., Duo-Form of Michigan, Inc.,
DCM, Inc. and Shelter Distribution, L.P., as Subsidiary Guarantors
and United States Trust Company of New York, as Trustee.(11)
27.1 - Financial Data Schedule.(12)
- --------
(1) Previously filed as an exhibit to the Company's Registration Statement
on Form S-1 (No. 333-11173) and incorporated herein by reference.
(2) Previously filed as an exhibit to the Company's Current Report on Form
8-K dated February 27, 1997, and incorporated herein by reference.
(3) Previously filed as an exhibit to the Company's registration statement
on Form S-8 (No. 333-19959), and incorporated herein by reference.
(4) Previously filed as an exhibit to the Company's Quarterly Report on
Form 10-Q, for the quarter ended March 31, 1997 and incorporated herein
by reference.
(5) Previously filed as an exhibit to the Company's Quarterly Report on
Form 10-Q, for the quarter ended June 30, 1997 and incorporated herein
by reference.
(6) Previously filed as an exhibit to the Company's Tender Offer Statement
on Schedule 14D-1, filed October 28, 1997, and incorporated herein by
reference.
(7) Previously filed as an exhibit to the Company's Tender Offer Statement
on Schedule 14D-1/A, filed December 12, 1997, and incorporated herein
by reference.
(8) Schedules and similar attachments to this exhibit have not been
previously file herewith, but the nature of their contents is described
in the body of this exhibit. The Company agrees to furnish a copy of
any such omitted schedules and attachments to the Securities and
Exchange Commission upon request.
(9) Previously filed as an exhibit to the Company's registration statement
on Form S-4 (No. 333-43691), and incorporated herein by reference.
(10) Previously filed as an exhibit to the Company's Annual Report on Form
10-K, for the year ended December 31, 1997 and incorporated herein by
reference.
(11) Previously filed as an exhibit to the Company's Quarterly Report on
Form 10-Q, for the quarter ended March 31, 1998 and incorporated herein
by reference.
(12) Filed herewith.
(b) REPORTS ON FORM 8-K
None.
18
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Commission Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
KEVCO, INC.
Date: August 6, 1998
By: /s/ Jerry E. Kimmel
--------------------------------
Jerry E. Kimmel
Chairman of the Board, President
and Chief Executive Officer
Date: August 6, 1998
By: /s/ Ellis L. McKinley, Jr.
--------------------------------
Ellis L. McKinley, Jr.
Vice President, Chief Financial
Officer, Treasurer and Director
(Principal Financial Officer)
19
<PAGE> 20
KEVCO, INC.
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -------------
27.1 Financial Data Schedule.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF KEVCO, INC. FOR THE QUARTERLY PERIOD ENDED
JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 218
<SECURITIES> 0<F1>
<RECEIVABLES> 59,830<F2>
<ALLOWANCES> 615
<INVENTORY> 94,752
<CURRENT-ASSETS> 158,710
<PP&E> 53,749
<DEPRECIATION> 8,477
<TOTAL-ASSETS> 336,193
<CURRENT-LIABILITIES> 84,894
<BONDS> 0
0
0
<COMMON> 68
<OTHER-SE> 46,178
<TOTAL-LIABILITY-AND-EQUITY> 336,193
<SALES> 444,018
<TOTAL-REVENUES> 447,718
<CGS> 383,124
<TOTAL-COSTS> 427,960
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,206
<INCOME-PRETAX> 9,552
<INCOME-TAX> 4,237
<INCOME-CONTINUING> 5,315
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,315
<EPS-PRIMARY> 0.78
<EPS-DILUTED> 0.76
<FN>
<F1>AMOUNTS INAPPLICABLE OR NOT DISCLOSED AS A SEPARATE LINE ON THE STATEMENT
OF FINANCIAL POSITION OR RESULTS OR OPERATIONS ARE REPORTED AS 0 HEREIN.
<F2>NOTES AND ACCOUNTS RECEIVABLE-TRADE ARE REPORTED NET OF ALLOWANCES FOR
DOUBTFUL ACCOUNTS IN THE STATEMENT OF FINANCIAL POSITION.
</FN>
</TABLE>
