<PAGE>   1
                       Securities and Exchange Commission
                              Washington, DC 20549

                                    Form 10-Q

    (Mark One)

     [X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934

          For the Quarterly Period Ended September 30, 1999

                                       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                                  76107-5734
        ---------------------                                ----------
        (Address of principal                                (Zip Code)
          executive offices)

                                 (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 of
common stock, as of the latest practicable date.

<TABLE>
<S>                                                                                     <C>
   Common Stock, par value $0.01 per share                                                        9,563,487 shares
   ---------------------------------------                                                        ----------------
                    (Class)                                                             (Outstanding as of October 29, 1999)
</TABLE>



<PAGE>   2



                                   KEVCO, INC.
                               INDEX TO FORM 10-Q



<TABLE>
<S>                                                                                        <C>
PART  I - FINANCIAL INFORMATION

ITEM  1 - Financial Statements

Consolidated Balance Sheets as of September 30, 1999 (unaudited)
and December 31, 1998...............................................................         3

Consolidated Statements of Operations for the three-month and nine-month
periods ended September 30, 1999 and 1998 (unaudited)...............................         4

Consolidated Statements of Cash Flows for the nine-month
periods ended September 30, 1999 and 1998 (unaudited)...............................         5

Notes to Consolidated Financial Statements (unaudited)..............................         6

ITEM 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations...........................................................        10

ITEM 3 - Quantitative and Qualitative Disclosures About Market Risk.................        16

PART II - OTHER INFORMATION

ITEM 2 - Changes in Securities and Use of Proceeds..................................        16


ITEM 6 - Exhibits and Reports on Form 8-K...........................................        18

Signatures..........................................................................        23

Exhibit Index.......................................................................        24
</TABLE>






                                       2
<PAGE>   3

                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

                                   KEVCO, INC.
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                 September 30,       December 31,
                                                                                     1999                1998
                                                                                 -------------       ------------
                                   ASSETS                                         (unaudited)
<S>                                                                              <C>                <C>
Current assets:
  Cash and cash equivalents                                                       $      5,965       $        799
  Trade accounts receivable, less allowance for doubtful
        accounts of $903 and $740 in 1999 and 1998, respectively                        59,084             51,367
  Inventories, less reserve for obsolete inventory of $5,957
        and $2,781 in 1999 and 1998, respectively                                       79,466             95,999
  Assets held for sale                                                                   3,865              1,065
  Other current assets                                                                   7,595              8,458
                                                                                  ------------       ------------
       Total current assets                                                            155,975            157,688
Property and equipment, net                                                             43,170             44,994
Intangible assets, net                                                                 113,810            119,590
Other assets                                                                             8,272              9,563
                                                                                  ------------       ------------
        Total assets                                                              $    321,227       $    331,835
                                                                                  ============       ============

                    LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current portion of long-term debt                                               $      5,579       $      7,209
  Trade accounts payable                                                                55,314             61,569
  Accrued interest                                                                       4,616              1,534
  Other accrued liabilities                                                             22,852             13,999
  Other current liabilities                                                               --                  243
                                                                                  ------------       ------------
       Total current liabilities                                                        88,361             84,554
Long-term debt, less current portion                                                   201,182            203,370
Deferred compensation obligation                                                           833              1,024
                                                                                  ------------       ------------
       Total liabilities                                                               290,376            288,948
                                                                                  ------------       ------------

Stockholders' equity:
  Common stock, $.01 par value; 100,000 shares authorized; 9,563 and
       6,856 shares issued and outstanding in 1999 and 1998, respectively                   96                 69
  Additional paid-in capital                                                            49,270             33,392
  Retained earnings (deficit)                                                          (18,515)             9,426
                                                                                  ------------       ------------
       Total stockholders' equity                                                       30,851             42,887
                                                                                  ------------       ------------
        Total liabilities and stockholders' equity                                $    321,227       $    331,835
                                                                                  ============       ============
</TABLE>


          See accompanying notes to consolidated financial statements.






                                       3
<PAGE>   4


                                   KEVCO, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                              Three Months Ended                Nine Months Ended
                                                          ---------------------------      ---------------------------
                                                                 September 30,                    September 30,
                                                          ---------------------------      ---------------------------
                                                             1999             1998            1999             1998
                                                          ----------       ----------      ----------       ----------

<S>                                                       <C>              <C>             <C>              <C>
Net sales                                                 $  208,682       $  234,625      $  663,244       $  678,643
Cost of sales                                                190,421          204,481         588,661          587,605
                                                          ----------       ----------      ----------       ----------

     Gross profit                                             18,261           30,144          74,583           91,038
Commission income                                              1,353            1,850           4,853            5,550
                                                          ----------       ----------      ----------       ----------

     Gross margin                                             19,614           31,994          79,436           96,588

Selling, general and administrative expenses                  26,319           25,507          77,288           70,343
Impairment and other special charges                           6,807             --             6,807             --
                                                          ----------       ----------      ----------       ----------

     Operating income (loss)                                 (13,512)           6,487          (4,659)          26,245
Interest expense                                               6,187            5,443          17,796           15,649
Debt transaction costs                                         6,272             --             6,272             --
                                                          ----------       ----------      ----------       ----------

     Income (loss) before income taxes                       (25,971)           1,044         (28,727)          10,596
Income tax expense (benefit)                                    --                531            (786)           4,768
                                                          ----------       ----------      ----------       ----------

     Net income (loss)                                    $  (25,971)      $      513      $  (27,941)      $    5,828
                                                          ==========       ==========      ==========       ==========

Earnings (loss) per share - basic                         $    (2.94)      $     0.07      $    (3.71)      $     0.85
                                                          ==========       ==========      ==========       ==========
Earnings (loss) per share - diluted                       $    (2.94)      $     0.07      $    (3.71)      $     0.84
                                                          ==========       ==========      ==========       ==========
Weighted average shares outstanding - basic                    8,828            6,850           7,523            6,841
                                                          ==========       ==========      ==========       ==========
Weighted average shares outstanding - diluted                  8,828            6,944           7,523            6,942
                                                          ==========       ==========      ==========       ==========
</TABLE>



          See accompanying notes to consolidated financial statements.





                                       4
<PAGE>   5

                                   KEVCO, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                         Nine Months Ended
                                                                    ---------------------------
                                                                           September 30,
                                                                    ---------------------------
                                                                       1999             1998
                                                                    ----------       ----------
<S>                                                                 <C>              <C>
Cash flows from operating activities:
    Net income (loss)                                               $  (27,941)      $    5,828
    Adjustments to reconcile net income to net cash
      provided by operating activities:
       Depreciation and amortization                                     6,343            5,989
       Amortization of other debt issue costs                            1,754              628
       Gain on sale of assets                                           (1,617)            --
       Deferred compensation obligation                                   (191)            (181)
       Impairment and other special charges                              6,807             --
       Debt transaction costs                                            6,272             --
       Changes in assets and liabilities                                 9,648          (26,222)
                                                                    ----------       ----------
       Net cash provided by (used in) operating activities               1,075          (13,958)

Cash flows from investing activities:
    Purchase of equipment                                               (6,920)          (8,943)
    Proceeds from sale of assets                                         5,093              817
    Proceeds from assets held for sale                                     880            2,968
    Increase (decrease) in other assets                                   (693)             302
                                                                    ----------       ----------
       Net cash used in investing activities                            (1,640)          (4,856)

Cash flows from financing activities:
    Proceeds from (payment of) line of credit, net                     (20,400)          11,418
    Proceeds from long-term debt                                        23,500           10,000
    Payments of long-term debt                                          (5,539)          (2,998)
    Loan origination costs                                              (1,015)            --
    Equity proceeds, net of transaction costs                            9,126             --
    Stock options exercised                                                 59              281
    Other                                                                 --                (73)
                                                                    ----------       ----------
       Net cash provided by financing activities                         5,731           18,628
                                                                    ----------       ----------
Net increase (decrease) in cash and cash equivalents                     5,166             (186)
Beginning cash and cash equivalents                                        799              271
                                                                    ----------       ----------
Ending cash and cash equivalents                                    $    5,965       $       85
                                                                    ==========       ==========
</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 to Shareholders filed with the Securities and Exchange
Commission ("Commission") on October 8, 1999 ("Annual Report"), 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
Commission. 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 of normal recurring adjustments and adjustments
related to the transaction described in Note 4 and other charges described in
Note 6, considered necessary for a fair statement of the balance sheet as of
September 30, 1999, the statements of operations for the three-month and
nine-month periods ended September 30, 1999 and 1998, and the statements of cash
flows for the nine-month periods ended September 30, 1999 and 1998. The results
of operations for the three-month and nine-month periods ended September 30,
1999 are not necessarily indicative of the results of operations for the entire
fiscal year ending December 31, 1999. Certain amounts included in the December
31, 1998 balance sheet were reclassified to conform with the September 30, 1999
presentation.

2. ACQUISITIONS

    During the year ended December 31, 1997, Kevco acquired Shelter Components
Corporation on December 1, 1997 (the "Shelter Acquisition"), the inventory and
certain distribution rights from Shepherd Products Company on December 12, 1997
(the "Shepherd Acquisition"), Bowen Supply, Inc. on February 28, 1997 (the
"Bowen Acquisition") and Consolidated Forest Products, L.L.C. on February 27,
1997 (the "Consolidated Forest Acquisition") for total purchase prices
approximating $144.8 million, $8.0 million, $20.2 million and $14.1 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 $105.0 million of 10 3/8% Senior
Subordinated Notes due 2007 ("Senior Notes"). 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 the acquisitions, the
Company recorded approximately $115.1 million of goodwill, 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
$1.8 million for severance and related costs associated primarily with the
elimination of certain administrative and corporate positions, which were
recorded in connection with the Shelter Acquisition.

3. INVENTORIES

    Inventories are comprised of the following (in thousands):


<TABLE>
<CAPTION>
                                               September 30,      December 31,
                                                   1999               1998
                                               -------------      ------------

<S>                                             <C>               <C>
Raw materials                                   $     20,370      $     23,535
Work in process                                        1,247             1,055
Finished goods                                         8,661             6,961
Goods held for resale                                 49,188            64,448
                                                ------------      ------------
                                                $     79,466      $     95,999
                                                ============      ============
</TABLE>




                                       6
<PAGE>   7

4. CREDIT AGREEMENT AND EQUITY INVESTMENT

     In December 1997, the Company issued $105.0 million of Senior Notes under
the indenture dated as of December 1, 1997, as supplemented (the "Indenture"),
to complete the Shelter Acquisition. Interest is payable on June 1 and December
1 of each year commencing June 1, 1998. The Senior 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 35.0% of
the original aggregate principal amount of the Senior 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, if any, thereon
to the date of redemption.

    Concurrently with the execution and delivery of the Indenture, the Company
and its lenders entered into the second amended and restated credit agreement at
closing of the Shelter Acquisition to allow for aggregate senior borrowings of
up to $125.0 million comprised of a revolving credit facility of $45.0 million
and two term loan facilities aggregating $80.0 million requiring quarterly
installments. The term loans and credit facility were collateralized by
substantially all of the assets of the Company and its subsidiaries, including
the capital stock or equity interests of such subsidiaries.

    In February 1999, the Company and its lenders entered into a third amendment
and waiver to the second amended and restated credit agreement, which allowed
for an incremental commitment of $5.0 million due March 31, 1999 and pursuant to
which the Company's lenders waived any event of default due to the Company's
violation of certain financial covenants contained in the credit agreement
through March 31, 1999. In March 1999, the Company requested and obtained from
its lenders an additional $5.0 million incremental commitment and an extension
of the maturity date on the aggregate $10.0 million incremental commitment (the
"Incremental Commitment") and a waiver of any events of default to April 15,
1999.

    In April 1999, the Company and its lenders entered into a fourth amendment
and waiver to the second amended and restated credit agreement. This amendment
contained revised financial covenants effective for the quarters ended March 31,
1999 through June 30, 2000 and waived certain events of default. Under this
amendment, the Incremental Commitment would have matured on June 30, 1999.

    In July 1999, the Company and its lenders entered into the third amended and
restated credit agreement, which restructured the terms and conditions in regard
to applicable rates, covenants and maturity. Under the third amended and
restated credit agreement, the Company may borrow under either a base rate or
LIBOR rate with the cost determined based upon certain compliance ratios in the
covenants. The $45.0 million revolving credit facility matures in December 2003,
the term A Facility for $36.9 million matures in December 2003, and the term B
Facility for $38.8 million matures in December 2004. The Company may also be
required to repay amounts earlier than scheduled as a result of asset sales,
excess cash flow from operations, issuance of new debt or issuance of new
equity. Interest payments on the revolving credit facility and base rate
denominated term loans are payable quarterly. Interest payments on LIBOR based
loans are due at the end of the contracted term. The term loans require
quarterly payments which increase over the life of each respective term. The
term loans and revolving credit facility are collateralized by substantially all
of the assets of the Company and its subsidiaries, including the capital stock
or equity interests of such subsidiaries.

    In October 1999, the Company and its lenders entered into a first amendment
to the third amended and restated credit agreement pursuant to which the initial
principal payment of the facility A term loan was deferred from March 31, 2000
to June 30, 2000.

    The third amended and restated credit agreement includes leverage ratio,
fixed charge coverage ratio and minimum net worth covenants. In addition, each
of the third amended and restated credit agreement and the Indenture contain
certain covenants that include, but are not limited to, restrictions or
limitations on the following: the incurrence of additional debt or liens; the
sale of certain assets; the ability to consolidate or merge with another entity;
the entering into certain transactions with affiliates; and the engagement in
certain lines of business. The third amended and restated credit agreement and
the Indenture also generally prohibit the payment of dividends by the Company on
its common stock. The Company does not anticipate paying cash dividends on its
common stock in the foreseeable future and intends to retain its earnings to
support operations and repay indebtedness.

    In July 1999, the Company completed a transaction as a result of which The
Kevco Partners Investment Trust, a Delaware business trust (the "Trust"),
acquired an aggregate of $37.0 million in value comprised of 2,700,000 newly
issued shares of the Company's common stock for a purchase price of $5.00 per
share which resulted in net proceeds to the Company of $9.1 million after
transaction



                                       7
<PAGE>   8

costs; $23.5 million in principal amount of Senior Subordinated Convertible
Notes ("Subordinated Notes") and five-year warrants to acquire an aggregate of
1,743,182 shares of the new class of non-voting common stock of the Company. As
a result of the transaction, the Trust now owns approximately 28% of the
Company's outstanding voting stock. Assuming full conversion of the convertible
debt and exercise of the warrants, the Trust would own approximately 46% of the
voting common stock and all of the non-voting common stock of the Company. See
Part II, Item 2 - "Changes in Securities and Use of Proceeds," for additional
information concerning the securities issued in connection with such
transaction.

    The conversion feature in the Subordinated Notes is considered to be a
beneficial conversion feature to the holder given that the quoted market price
of the Company's common stock at the date the Subordinated Notes were issued was
in excess of the conversion price. As a result, the Company allocated $5.3
million of the proceeds of the Subordinated Notes to additional paid-in capital
as a discount to the Subordinated Notes. The Company is required to amortize the
discount over the period for which the Subordinated Notes first become
convertible. As the Subordinated Notes were immediately convertible upon
issuance, the Company recognized the entire discount as a non-cash charge to
debt transaction costs during the three months and nine months ended September
30, 1999.

    The Company has included costs incurred as part of the amendment to the
credit facilities as described above and the charge of $5.3 million related to
the beneficial conversion feature included in the Subordinated Notes in debt
transaction costs as reported in the statement of operations for the three and
nine months ended September 30, 1999.

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 voting common stock were exercised and converted into voting
common stock. The reconciliation between basic and diluted weighted average
shares outstanding, follows:


<TABLE>
<CAPTION>
                                                  Three Months Ended          Nine Months Ended
                                                    September 30,               September 30,
                                                  1999          1998          1999          1998
                                                --------      --------      --------      --------
                                                    (in thousands)              (in thousands)
<S>                                                <C>           <C>           <C>           <C>
Weighted average shares - basic                    8,828         6,850         7,523         6,841
Plus shares applicable to stock
  option plans                                        --            94            --           101
                                                --------      --------      --------      --------
Weighted average shares - diluted                  8,828         6,944         7,523         6,942
                                                --------      --------      --------      --------
</TABLE>


    For the three and nine-month periods ended September 30, 1999, options,
warrants and convertible securities are not included in the computation of
diluted loss per share as the effects would be antidilutive.



                                       8
<PAGE>   9

6. IMPAIRMENT AND OTHER SPECIAL CHARGES

     During the third quarter of 1999, the Company's new management team
implemented a number of cost improvement initiatives which included the decision
to dispose of the Plastic Solutions operation, an injection plastics
manufacturing division, which operations were no longer in alignment with the
Company's core business strategy. The planned sale of Plastic Solutions is
expected to occur within the next six months following quarter end. The Company
has recorded an impairment loss of $3.8 million (including a write-off of
approximately $3.3 million of goodwill) to adjust the carrying amount of Plastic
Solutions assets to their estimated sales value, net of related costs to sell,
and has classified such assets as held for sale on the balance sheet.

         Other special charges of approximately $3.0 million were recognized in
the third quarter of 1999 relating to accruals for severance costs of certain
executives and miscellaneous write-offs of other individually insignificant
non-core assets no longer being utilized.

7. INCOME TAXES

     During the third quarter of 1999, the Company reviewed its net deferred tax
assets under the provisions set forth in Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes". In light of the general
slowdown in the manufactured housing industry and the Company's near term
outlook for future earnings, the Company did not recognize any income tax
benefit in the third quarter and will in the future continue to evaluate the
potential realization of its net deferred tax asset.

8. SEGMENT REPORTING

    The Company identifies its business segments based upon management
responsibility within the United States. The Company operates in three business
segments: Distribution, Manufacturing and Wood Products. The Distribution
segment primarily distributes plumbing products, building products, electrical
components and hardware supplies to the manufactured housing and recreational
vehicle industries; the Manufacturing segment primarily manufactures and
distributes thermoformed products, laminated wallboard products and plastic
injection molded products primarily to the manufactured housing and recreational
vehicle industries; and the Wood Products segment primarily manufactures roof
trusses and lumber cut to customer specifications for use in manufactured homes.
During 1998, the Wood Products segment opened two new facilities which may
result in period-to-period comparisons not being indicative of future results.

    The Company measures segment performance based upon revenue and operating
income results. The information in the Corporate/Other category consists
primarily of intercompany eliminations of Manufacturing sales to Distribution
and corporate operating expenses, and is utilized to reconcile to the
consolidated results of the Company. Amounts are presented for the three-month
and nine-month periods ended September 30, 1999 and 1998. Interest expense and
debt transaction costs are not included in amounts reported below.

<TABLE>
<CAPTION>
                                                                                                                          TOTAL
   THREE MONTHS ENDED:                   DISTRIBUTION      MANUFACTURING     WOOD PRODUCTS      CORPORATE/OTHER          COMPANY
   -------------------                   ------------      -------------     -------------      ---------------          -------
<S>                                      <C>               <C>               <C>                <C>                    <C>
September 30, 1999
   Net sales .........................    $  137,589        $   37,006        $   38,471         $   (4,384)(a)        $  208,682
   Operating
     Income (loss) ...................    $    1,173        $      143        $     (583)        $  (14,245)(b)        $  (13,512)

September 30, 1998
   Net sales .........................    $  158,693        $   36,470        $   44,369         $   (4,907)(a)        $  234,625
   Operating
     Income (loss) ...................    $    5,571        $    2,322        $    1,120         $   (2,526)(b)        $    6,487


                                                                                                                          TOTAL
   NINE MONTHS ENDED:                    DISTRIBUTION      MANUFACTURING     WOOD PRODUCTS      CORPORATE/OTHER          COMPANY
   ------------------                    ------------      -------------     -------------      ---------------          -------
September 30, 1999
   Net sales .........................    $  436,542        $  114,173        $  126,329         $  (13,800)(a)        $  663,244
   Operating
     Income (loss) ...................    $   16,427        $    4,498        $    2,084         $  (27,668)(b)        $   (4,659)

September 30, 1998
   Net sales .........................    $  459,508        $  106,234        $  124,614         $  (11,713)(a)        $  678,643
   Operating
     Income (loss) ...................    $   23,293        $    8,033        $    4,188         $   (9,269)(b)        $   26,245
</TABLE>

(a)  Consists primarily of intercompany eliminations of Manufacturing sales to
     Distribution.

(b)  Consists primarily of corporate operating expenses.




                                       9
<PAGE>   10

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

GENERAL

    The following discussion includes the operations of the Company for each of
the periods discussed. This discussion and analysis should be read in
conjunction with the Annual Report.

    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 receivables 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.

    The Company's sales in the third quarter of 1999 were adversely impacted by
the general slowdown in the manufactured housing industry that has resulted
from, among other things, excess retail inventory. Management expects that such
excess retail inventory will adversely affect the Company's performance for at
least the next several quarters.

    The Company acquired Shelter Components in December 1997. Since that time,
the Company has been integrating Shelter into Kevco by, among other things,
consolidating certain corporate functions, consolidating overlapping
distribution warehouses from 47 facilities to 27 shipping facilities and 5
storage only facilities and integrating multiple computer systems into one. The
integration efforts are expected to be substantially complete over the next 12
to 18 months. Higher than normal costs will continue to be incurred, reducing
operating income during the transition period.

CHARGES - THIRD QUARTER ENDED SEPTEMBER 30, 1999

    During the third quarter of 1999, the Company incurred charges and certain
adjustments of $21.5 million, including $15.2 million of non-cash items,
primarily related to the new management team's cost control initiatives or
ongoing review of the Company's business. The charges of $21.5 million consisted
principally of inventory reserve adjustments ($4.0 million), write-downs related
to the anticipated sale of non-core assets ($4.5 million, primarily goodwill),
adjustments to worker's compensation and health insurance reserves as costs have
increased over prior periods due to unfavorable claims experience ($2.5
million), severance costs ($1.5 million), and charges related to a third quarter
securities issuance ($6.3 million, of which $5.3 million is a non-cash charge
related to the beneficial conversion feature of the Subordinated Notes issued in
the third quarter). These charges have been reflected in the accompanying
financial statements as follows: $5.6 million in cost of sales; $2.8 million in
selling, general, and administrative expenses; $6.8 million in impairment and
other special charges; and $6.3 million in debt transaction costs.








                                       10
<PAGE>   11
RESULTS OF OPERATIONS

    The following table sets forth, for the periods indicated, certain
Consolidated Statements of Operations data as a percentage of the Company's net
sales.

<TABLE>
<CAPTION>
                                                  Three Months Ended             Nine Months Ended
                                                     September 30,                  September 30,
                                                ------------------------       ------------------------
                                                  1999            1998           1999            1998
                                                --------        --------       --------        --------
<S>                                             <C>             <C>            <C>             <C>
Net sales                                          100.0%          100.0%         100.0%          100.0%
Cost of sales                                       91.2            87.2           88.8            86.6
                                                --------        --------       --------        --------

     Gross profit                                    8.8            12.8           11.2            13.4
Commission income                                    0.6             0.8            0.7             0.8
                                                --------        --------       --------        --------

     Gross margin                                    9.4            13.6           11.9            14.2
Selling, general and
     administrative expenses                        12.6            10.9           11.6            10.4
Impairment and other special charges                 3.3              --            1.0              --
                                                --------        --------       --------        --------

     Operating income (loss)                        (6.5)            2.7           (0.7)            3.8

Interest expense, net                                2.9             2.3            2.6             2.3
Debt transaction costs                               3.0              --            0.9              --
                                                --------        --------       --------        --------

     Income (loss) before income taxes             (12.4)%           0.4%          (4.2)%           1.5%
                                                ========        ========       ========        ========
</TABLE>






COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998

    Net sales decreased by $25.9 million, or 11.0%, to $208.7 million for the
three months ended September 30, 1999 from $234.6 million for the comparable
1998 period. The Company's sales for the three months ended September 30, 1999
were adversely impacted by the general slowdown in the manufactured housing
industry that has resulted from, among other things, excess retail inventory.
Management expects that such excess retail inventory will adversely affect the
Company's performance for at least the next several quarters.

    Gross margin decreased by $12.4 million, or 38.8%, to $19.6 million for the
three months ended September 30, 1999 from $32.0 million for the comparable 1998
period, due primarily to decline in sales volume due to the manufactured housing
industry slowdown, third quarter charges for inventory reserve adjustments,
increases in worker's compensation and health insurance costs resulting from
unfavorable claims experience in the manufacturing and wood businesses, and
pricing pressures as a result of the general market slowdown. Gross margin, as a
percent of net sales, decreased to 9.4% for the three months ended September 30,
1999 from 13.6% for the comparable 1998 period.

    Selling, general and administrative expenses increased by $0.8 million, or
3.1%, to $26.3 million for the three months ended September 30, 1999 from $25.5
million for the comparable 1998 period. The increase was due primarily to
increases in worker's compensation and health insurance costs resulting from
unfavorable claims experience, costs incurred for upgrading information systems
for the distribution business and additional professional service fees. Selling,
general and administrative expenses, as a percentage of net sales, increased to
12.6% for the three months ended September 30, 1999 from 10.9% for the
comparable 1998 period.

    During the third quarter of 1999, impairment and other special charges of
$6.8 million were incurred as part of cost improvement initiatives implemented
by the Company's new management team. Such initiatives included the planned
disposition of the Plastic



                                       11
<PAGE>   12
Solutions operation, an injection plastics manufacturing division, which
operations were no longer in alignment with the Company's core business
strategy, severance costs of certain executives and write-offs of other
individually insignificant non-core assets.

    Net interest expense increased by $0.8 million to $6.2 million for the three
months ended September 30, 1999 from $5.4 million for the comparable 1998
period. The increase in net interest expense was due to higher loan amortization
costs through July 26, 1999 when the third amended and restated credit agreement
was put in place and to a higher level of borrowing in the current year.

    Debt transaction costs of $6.3 million were incurred in the third quarter
ended September 30, 1999. The Company incurred a charge of $5.3 million for the
beneficial conversion feature related to the issuance of $23.5 million of
Subordinated Notes in the third quarter ended September 30, 1999. The conversion
feature in the Subordinated Notes is considered to be a beneficial conversion
feature to the holder given that the quoted market price of the Company's common
stock at the date the Subordinated Notes were issued was $6.75 per share, and
the conversion price was $5.50 per share. As a result, the Company allocated
$5.3 million of the proceeds of the Subordinated Notes to additional paid-in
capital as a discount to the Subordinated Notes. The Company is required to
amortize the Subordinated Notes' discount over the period for which the
Subordinated Notes first become convertible. As the Subordinated Notes were
immediately convertible upon issuance, the Company recognized the entire
discount as a non-cash charge to debt transaction costs in the third quarter
ended September 30, 1999. The remaining $1.0 million of debt transaction costs
are costs associated with the amendments of the credit facilities.

    During the third quarter of 1999, the Company reviewed its net deferred tax
assets under the provisions set forth in Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes". In light of the general
slowdown in the manufactured housing industry and the Company's near term
outlook for future earnings, the Company did not recognize any income tax
benefit in the third quarter and will in the future continue to evaluate the
potential realization of its net deferred tax asset.

COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998

    Net sales declined by $15.4 million, or 2.3%, to $663.2 million for the nine
months ended September 30, 1999 from $678.6 million for the comparable 1998
period. The Company's sales for the nine months ended September 30, 1999 were
lower due to the decline in third quarter sales as a result of the general
slowdown in the manufactured housing industry that has resulted from, among
other things, excess retail inventory.

    Gross margin decreased by $17.2 million, or 17.8%, to $79.4 million for the
nine months ended September 30, 1999 from $96.6 million for the comparable 1998
period, due primarily to the decline in sales volume due to the manufactured
housing industry slowdown, third quarter charges for inventory reserve
adjustments, increases in worker's compensation and health insurance costs
resulting from unfavorable claims experience in the manufacturing and wood
businesses and pricing pressures as a result of the general market slowdown.
Gross margin, as a percent of net sales, decreased to 11.9% for the nine months
ended September 30, 1999 from 14.2% for the comparable 1998 period.

    Selling, general and administrative expenses increased by $7.0 million, or
9.9%, to $77.3 million for the nine months ended September 30, 1999 from $70.3
million for the comparable 1998 period. The increase was due primarily to
upgrading of information systems for the distribution business, professional
service fees and increases in worker's compensation and health insurance costs
resulting from unfavorable claims experience. Selling, general and
administrative expenses, as a percentage of net sales, increased to 11.6% for
the nine months ended September 30, 1999 compared to 10.4% for the comparable
1998 period. Impairment and other special charges of $6.8 million were incurred
as part of cost improvement initiatives implemented by the Company's new
management team as previously discussed.

    Net interest expense increased by $2.2 million to $17.8 million for the nine
months ended September 30, 1999 from $15.6 million for the comparable 1998
period. The increase in net interest expense is due to higher loan amortization
costs through July 26, 1999 when the third amended and restated credit agreement
was put in place and to a higher level of borrowing in the current year.

    Debt transaction costs of $6.3 million were incurred in the third quarter
ended September 30, 1999. The Company incurred a charge of $5.3 million for the
beneficial conversion feature on the issuance of $23.5 million of Subordinated
Notes in the third quarter ended September 30, 1999. The conversion feature in
the Subordinated Notes is considered to be a beneficial conversion feature to
the holder given that the quoted market price of the Company's common stock at
the date of the issuance of the Subordinated Notes was $6.75 per share, and the
conversion price was $5.50 per share. As a result, the Company allocated $5.3
million of the proceeds of the Subordinated Note to additional paid-in capital
as a discount to the Subordinated Notes. The Company is required to amortize the
Subordinated Notes' discount over the period for which the Subordinated Notes
first become convertible. As the Subordinated Notes



                                       12
<PAGE>   13

were immediately convertible upon issuance, the Company recorded the entire
discount as a non-cash charge to debt transaction costs in the third quarter
ended September 30, 1999. The remaining $1.0 million of debt transaction costs
are costs associated with the amendments of the credit facilities.

LIQUIDITY AND CAPITAL RESOURCES

    The Company has been financed through cash flow from operations, borrowings
under its bank credit facilities, proceeds from its November 1996 initial public
offering, net proceeds of $32.6 million related to the investment made by the
Trust in July 1999, and proceeds from the issuance of $105.0 million of Senior
Notes.

    Net cash generated by operating activities was $1.1 million and capital
expenditures were $6.9 million for the nine months ended September 30, 1999.
Capital expenditures for the nine months included $4.1 million for the
replacement of the Duo-Form operation destroyed by fire in 1998. In addition,
the Company received proceeds of approximately $6.0 million from the sale of its
airplane and other property and equipment. The Company is obligated to make
payments on various capital leases in varying amounts, maturing through 2007 as
well as payments, in varying amounts, under various noncompete and consulting
agreements, that are related to recent acquisitions, maturing through 2002.

    In December 1997, the Company issued $105.0 million of Senior Notes under
the Indenture to complete the Shelter Acquisition. Interest is payable on June 1
and December 1 of each year commencing June 1, 1998. The Senior 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 35.0% of the original aggregate principal amount of the Senior 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, if any,
thereon to the date of redemption.

    Concurrently with the execution and delivery of the Indenture, the Company
and its lenders entered into the second amended and restated credit agreement at
the closing of the Shelter Acquisition to allow for aggregate senior borrowings
of up to $125.0 million comprised of a revolving credit facility of $45.0
million and two term loan facilities aggregating $80.0 million requiring
quarterly installments. The term loans and revolving credit facility were
collateralized by substantially all of the assets of the Company and its
subsidiaries, including the capital stock or equity interests of such
subsidiaries.

    In February 1999, the Company and its lenders entered into a third amendment
and waiver to the second amended and restated credit agreement, which provided
for an incremental commitment of $5.0 million due March 31, 1999 and pursuant to
which the Company's lenders waived any event of default due to the Company's
violation of the leverage ratio covenant and fixed charge coverage ratio
covenant of such credit agreement through March 31, 1999. In March 1999, the
Company requested and obtained from its lenders an additional $5.0 million
incremental commitment and an extension of the maturity date on the aggregate
$10.0 million in incremental commitment (the "Incremental Commitment") and a
waiver of any events of default to April 15, 1999.

    In April 1999, the Company and its lenders entered into a fourth amendment
and waiver to the second amended and restated credit agreement. This amendment
contained revised financial covenants effective for the quarters ended March 31,
1999 through June 30, 2000 and a waiver of certain events of default. Under this
amendment, the Incremental Commitment would have matured on June 30, 1999.

    In July 1999, the Company and its lenders entered into the third amended and
restated credit agreement, which restructured the terms and conditions in regard
to applicable rates, covenants and maturity. Under the third amended and
restated credit agreement, the Company may borrow under either a base rate or
LIBOR rate with a cost determined based upon certain compliance ratios in the
covenants. The $45.0 million revolving credit facility matures in December 2003;
the term A Facility for $36.9 million matures in December 2003; and the term B
Facility for $38.8 million matures in December 2004. The Company may also be
required to repay amounts earlier than scheduled as a result of asset sales,
excess cash flow from operations, issuance of new debt or issuance of new
equity. Interest payments on the revolving credit facility and base rate
denominated term loans are payable quarterly. Interest payments on LIBOR based
loans are due at the end of the contracted term. The term loans require
quarterly payments which increase over the life of each respective term. The
term loans and revolving credit facility are collateralized by substantially all
of the assets of the Company and its subsidiaries, including the capital stock
or equity interests of such subsidiaries.


    In October 1999, the Company and its lenders entered into a first amendment
to the third amended and restated credit agreement pursuant to which the initial
principal payment of the facility A term loan was deferred from March 31, 2000
to June 30, 2000.



                                       13
<PAGE>   14

    The third amended and restated credit agreement includes leverage ratio,
fixed charge coverage ratio and net worth minimum covenants. In addition, each
of the third amended and restated credit agreement and the Indenture contain
certain covenants that include, but are not limited to, restrictions or
limitations on the following: the incurrence of additional debt or liens; the
sale of certain assets; the ability to consolidate or merge with another entity;
the entering into certain transactions with affiliates; and the engagement in
certain lines of business. The third amended and restated credit agreement and
the Indenture also generally prohibit the payment of dividends by the Company on
its common stock. The Company does not anticipate paying cash dividends on its
common stock in the foreseeable future and intends to retain its earnings to
support operations and repay indebtedness.

    In July 1999, the Company completed a transaction as a result of which the
Trust acquired an aggregate of $37.0 million in value of the Company's common
stock, Subordinated Notes and warrants. As a result of the transaction, the
Trust now owns approximately 28% of the Company's outstanding voting stock.
Assuming full conversion of the Subordinated Notes and exercise of the warrants,
the Trust would own approximately 46% of the voting common stock and all of the
non-voting common stock of the Company. See Part II, Item 2 - "Changes in
Securities and Use of Proceeds," for additional information concerning the
securities issued in connection with such transaction.

    For the nine months ended September 30, 1999, average days sales in
receivables were 25 compared to 25 for the prior year comparable period, average
days sales in inventory were 43 compared to 41 for the prior year comparable
period and average days sales in payables were 27 compared to 27 for the prior
year comparable period.

    A prolonged deterioration in industry conditions could have a material
adverse impact on the Company's liquidity and access to capital. In such event,
there can be no assurance that the Company would be able to access alternative
capital sources, or that such sources would not be at a cost in excess of the
Company's current cost of capital.

YEAR 2000

    BACKGROUND. Many computer systems and equipment with embedded computer chips
in use today were designed and developed using two digits, rather than four, to
specify the year. As a result, such systems and equipment may recognize a date
using "00" as the year 1900 rather than the year 2000. This could result in a
system failure or miscalculation causing disruptions of operations.

    STATE OF READINESS. During 1998, the Company began its assessment of Year
2000 issues and established a Year 2000 project plan with the Chief Information
Officer as the project leader and engaged third-party consultants to assist in
the evaluation of systems and issues. The plan can be described in the following
phases:

Phase I -- identification and assessment of the Year 2000 issues for the
Company's various internal systems and equipment;

Phase II -- remediation, including modification, upgrading and replacement of
hardware and software; and

Phase III -- testing to ensure Year 2000 compliance.

    The Company is applying all aspects of this plan, with the assistance of
third-party consultants, to both its information technology ("IT") systems and
non-IT systems. The Company's computer equipment and software that is considered
an IT or business system includes systems used to manage customer orders,
inventory, manufacturing, accounting functions, and telecommunications. Non-IT
systems include manufacturing equipment, alarm systems, security devices, HVAC
units, fax machines and other miscellaneous systems.

    The Company believes that it has identified and assessed the internal
business systems that are susceptible to system failures or processing errors as
a result of the Year 2000 issue. Those systems considered most critical to
continuing operations have received the highest priority. The Company has six
primary business systems that support operations. A majority of the remediation
efforts for these systems will consist of the Company performing an upgrade.
Five of these systems have been upgraded to Year 2000 compliant versions,
thoroughly tested using appropriate Year 2000 scenarios, and successfully placed
into production. Remediation is complete for the one remaining business system,
with testing scheduled for completion in the fourth quarter 1999.

    In addition to the remediation of the information systems, the Company is
currently addressing its non-IT systems. During 1998, an assessment of the
Company's manufacturing equipment was performed. The results of the assessment
revealed no date sensitive



                                       14
<PAGE>   15

manufacturing equipment, thus decreasing the risk of any Year 2000 related
manufacturing problems. During 1999, an assessment of other miscellaneous non-IT
equipment was performed. This assessment revealed no significant Year 2000
issues.

    The following chart is for summary purposes only and is qualified in its
entirety by reference to the discussion above.

<TABLE>
<CAPTION>
          ===================================================================================================================
                                       PROGRAM AREA                                       STATE OF READINESS STATUS
          ===================================================================================================================

                                                -----------------------------------------------------------------------------
<S>                                             <C>                                <C>
          INTERNAL IT SYSTEMS                   5 systems                          Phase III Complete
                                                -----------------------------------------------------------------------------
                                                1 system                           Phase II completed and Phase III estimated
                                                                                   to be completed Q4 1999
                                                -----------------------------------------------------------------------------
          NON-IT SYSTEMS                        Manufacturing                      Not Applicable -- Phase I revealed no date
                                                                                   sensitive equipment
                                                -----------------------------------------------------------------------------
                                                Other                              Not Applicable -- Phase I revealed no date
                                                                                   sensitive equipment
          ===================================================================================================================
</TABLE>

    THIRD PARTIES. The Company is reviewing, and has initiated formal
communications with critical third parties that provide or purchase services or
goods that are essential to the Company's operations. This is being done in
order to determine the extent to which the Company is vulnerable to any failure
by such third parties to remediate their respective Year 2000 problems, and to
resolve such problems to the extent practicable. In connection with this
assessment, the Company is reviewing all significant contractual and other
obligations with third parties to ensure compliance in the event of a Year 2000
problem. The assessment of these business partners will be ongoing, but all
significant third-party communications and the related risk assessments were
completed during the third quarter of 1999. The uncertainty associated with
third-party readiness, however, cannot be eliminated as the accuracy and
availability of third-party representations is outside the Company's control. In
the event that the Company is unable to obtain satisfactory assurance that a
critical third-party provider/customer has successfully and timely achieved Year
2000 compliance, and the Company is unable to replace such a provider/customer
with an alternative provider/customer, the Company's operations could be
materially adversely impacted. Currently, there is no known contractual
liability to any third party if all or a portion of the Company's IT or non-IT
systems are not Year 2000 compliant.

    COSTS. The Company currently estimates that its total Year 2000 project
expensed costs will be approximately $1.3 million. Through September 30, 1999,
the Company has spent approximately $1.2 million on Year 2000 project costs. The
Company has funded, and expects to continue to fund, the expenditures related to
its Year 2000 initiatives either through cash generated from operations and
current working capital, or if required, its existing revolving credit
facilities.

    RISKS. Based on the progress it has made in addressing its Year 2000 issues
and its plan and timetable to complete its compliance program, the Company does
not currently foresee significant risks associated with its Year 2000 issues.
However, management believes that it is not possible to determine with complete
certainty that all Year 2000 problems affecting the Company have been identified
or will be corrected. Likewise, because of its progress in addressing the
various Year 2000 issues, the Company has not yet determined the most likely
worst case scenario relating to Year 2000 problems. Nevertheless, management
expects that the Company could likely suffer the following consequences: (1) a
significant number of operational inconveniences and inefficiencies for the
Company and its customers that could divert management's time and attention and
financial and human resources from its ordinary business activities; and (2) a
lesser number of serious system and/or operational failures that may require
significant efforts by the Company to prevent or alleviate material business
disruptions.

    CONTINGENCY PLANNING. The Company has not yet completed a comprehensive
contingency plan with respect to the Year 2000 issue, but intends to have a plan
developed and implemented during the fourth quarter of 1999. The contingency
planning process is an ongoing one that will require further modifications as
the Company obtains additional information regarding the Company's progress on
the remediation phases of its IT and non-IT systems, and on the status of
third-party Year 2000 readiness. The Company's core business processes, as
currently managed by the IT systems, can, if necessary, operate for a limited
time period on a manual, non-computerized basis. If the Company is required to
implement any of these contingency plans, the implementation could have a
material adverse effect on the Company's financial condition and results of
operations.

FORWARD-LOOKING STATEMENTS

    This report contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements can be identified by the use of forward-looking terminology, such as
"may," "intend," "will," "expect," "anticipate," "estimate" or "continue" or the
negative thereof or other variations thereon or comparable terminology. Similar
statements herein that describe the Company's business strategy, outlook,
objectives, plans, intentions or goals are also forward-



                                       15
<PAGE>   16

looking statements. Although the Company believes that the expectations in such
forward-looking statements are reasonable, there can be no assurance that such
expectations will prove to have been correct. All such forward-looking
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those in forward-looking statements.
These risks and uncertainties are beyond the ability of the Company to control,
and in many cases, the Company cannot predict all the risks and uncertainties
that could cause its actual results to differ materially from those indicated by
the forward-looking statements. Important factors that could cause actual
results to differ materially from the Company's expectations include, but are
not limited to, the Company's substantial leverage and its effects on the
Company's ability to obtain additional capital as needed, the Company's ability
to integrate its operations and successfully implement new management
information systems, the Company's success in addressing and remediating Year
2000 related issues, the Company's ability to operate its new manufacturing
facilities, customer demand for manufactured housing and recreational vehicles,
the effect of economic conditions including inflation and sensitivity to
interest rates, the impact of raw materials prices, volatility within the
manufactured housing industry, the Company's ability to maintain profitability
in the event of the loss of a significant customer and other risks detailed from
time to time in the reports filed by the Company with the Commission, including
the Company's Annual Report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

    The Company is subject to interest rate risk on its term loans and revolving
credit facility. Interest rates are fixed on the Senior Notes, Subordinated
Notes and Capitalized Lease Obligations. At September 30, 1999, the Company's
exposure to these risk factors was not significant and had not materially
changed from December 31, 1998.

                          PART II -- OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

    On July 26, 1999, the Company completed a transaction as a result of which
the Trust acquired an aggregate of $37.0 million in value of the following
securities (the "Transaction):

    (i)   2,700,000 newly issued shares of the Company's common stock ("Common
          Stock") for a purchase price of $5.00 per share;

    (ii)  five-year warrants (the "Warrants") to acquire an aggregate of
          1,743,182 shares of a new class of non-voting common stock of the
          Company (the "Non-Voting Stock") for a purchase price of $5.50 per
          share; and

    (iii) $23.5 million in principal amount of senior subordinated convertible
          notes of the Company divided into two tranches - Tranche A in the
          principal amount of $17.0 million (the "Tranche A Notes") and Tranche
          B in the principal amount of $6.5 million (the "Tranche B Notes" and
          with the Tranche A Notes, the "Subordinated Notes").

    The Tranche A Notes will be exchangeable at the holders' option for
3,090,909 shares of a newly-created series of preferred stock of the Company --
Series A 10-3/8% Convertible Pay-in-Kind Voting Preferred Stock ("Voting
Preferred Stock") -- or directly into 3,090,909 shares of Common Stock, in each
case at an initial exchange ratio of $5.50 per share. Shares of Voting Preferred
Stock, when and if issued in exchange for Tranche A Notes, will be entitled to
vote together with the Common Stock on an as converted basis. The Voting
Preferred Stock will be convertible on a share-for-share basis into Common
Stock. The Tranche B Notes will be exchangeable at the holders' option for
1,181,818 shares of a second newly-created series of preferred stock of the
Company -- Series B 10-3/8% Convertible Pay-in-Kind Non-Voting Preferred Stock
("Non-Voting Preferred Stock" and with the Voting Preferred Stock, the
"Preferred Stock") -- or directly into 1,181,818 shares of Non-Voting Stock, in
each case at an initial exchange ratio of $5.50 per share. Shares of Non-Voting
Preferred Stock will have no voting rights. The Non-Voting Preferred Stock will
itself be convertible into an equal number of shares of Non-Voting Stock.
Interest on the Subordinated Notes may be paid in cash or, at the Company's
option, continue to accrue unpaid in which case a holder of the Subordinated
Notes may elect to have all accrued interest paid in shares of Non-Voting
Preferred Stock. Dividends on the Preferred Stock may, at the Company's option,
be paid either in cash or in additional shares of Non-Voting Preferred Stock.
The Subordinated Notes and any Preferred Stock that may be issued in exchange
for Subordinated Notes will be callable by the Company beginning July 26, 2002.
On November 2, 1999, the Company filed a definitive proxy statement with the
Commission relating to the Annual Meeting of Shareholders to be held November
22, 1999. At this meeting, the shareholders of the Company will vote upon the
amendment to the Articles of Incorporation necessary to provide for the creation
of the Non-Voting Stock and the Preferred Stock. The convertible securities
contain standard antidilution provisions.

    In addition to the 2,700,000 shares of Common Stock, if the Subordinated
Notes and Warrants were fully converted and exercised, the Company would issue
an additional 6,015,909 shares of Common Stock and Non-Voting Stock - making an
aggregate of



                                       16
<PAGE>   17

8,715,909 shares potentially issuable in connection with the Transaction
(excluding shares potentially issuable as interest or dividends on the
Subordinated Notes and Preferred Stock).

    Since the Transaction did not involve any public offering, securities issued
by the Company pursuant to the Transaction are exempt from registration in
accordance with section 4(2) of the Securities Act of 1933, as amended.







                                       17
<PAGE>   18
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(a) EXHIBITS

                EXHIBIT
                NUMBER                      DESCRIPTION OF EXHIBITS

                  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             - 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)

                  2.3             - Stock Purchase Agreement by and among
                                    Kevco Delaware, Inc. and the shareholders of
                                    Bowen Supply, Inc.(2)

                  2.4             - Agreement and Plan of Merger, dated as of
                                    October 21, 1997, between Kevco, Inc., SCC
                                    Acquisition Corp. and Shelter Components
                                    Corporation.(3)

                  3.1             - Articles of Incorporation of Kevco, Inc.,
                                    as amended.(1)

                  3.2             - Bylaws of Kevco, Inc.(1)

                  3.3             - First Amendment to Bylaws of Kevco, Inc.,
                                    as amended.(12)

                  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            - Lease between K & E Land & Leasing and
                                    Kevco, Inc. dated December 1, 1977.(1)

                  10.4            - Amendment No. 1 to Lease, by and between
                                    K & E Land & Leasing and Kevco, Inc. dated
                                    March, 1982.(1)

                  10.5            - Amendment No. 2 to Lease, by and between
                                    K & E Land & Leasing and Kevco, Inc. dated
                                    May 30, 1983.(1)

                  10.6            - Amendment No. 3 to Lease, by and between
                                    K & E Land & Leasing and Kevco, Inc. dated
                                    February 1, 1993.(1)

                  10.7            - Lease dated April 1, 1980 between City of
                                    Newton, Kansas and K & E Land & Leasing.(1)

                  10.8            - Sublease and Lease Guarantee Agreement
                                    dated April 1, 1980 between K & E Land &
                                    Leasing and Kevco, Inc.(1)

                  10.9            - Amendment No. 1 to Sublease and Lease
                                    Guaranty Agreement by and between K & E Land
                                    & Leasing and Kevco, Inc. dated May 30,
                                    1983.(1)

                  10.10           - Lease Agreement dated October 12, 1987
                                    between 1741 Conant Partnership & Kevco
                                    Inc.(1)

                  10.11           - Equipment Lease Agreement dated January 1,
                                    1991 between K & E Land & Leasing and Kevco,
                                    Inc.(1)

                  10.12           - Amendment No. 1 to Equipment Lease
                                    Agreement between K & E Land & Leasing and
                                    Kevco, Inc. dated February 12, 1993.(1)

                  10.13           - Amendment No. 2 to Equipment Lease
                                    Agreement between K & E Land & Leasing and
                                    Kevco, Inc. dated October 26, 1993.(1)

                  10.14           - Amendment No. 3 to Equipment Lease
                                    Agreement between K & E Land & Leasing and
                                    Kevco, Inc. dated May 23, 1994.(1)

                  10.15           - Deferred Compensation Agreement between
                                    Kevco, Inc. and Clyde A. Reed, Jr. dated May
                                    24, 1977.(1)*

                  10.16           - Amendment No. 1 to Deferred Compensation
                                    Agreement dated May, 1980.(1)*

                                       18
<PAGE>   19
                EXHIBIT
                NUMBER                      DESCRIPTION OF EXHIBITS

                  10.17           - Amendment No. 2 to Deferred Compensation
                                    Agreement dated March 10, 1992.(1)*

                  10.18           - Amended and Restated Health and Accident
                                    Plan of Kevco, Inc.(1)*

                  10.19           - Investment and Tax Advice Plan of Kevco,
                                    Inc.(1)*

                  10.20           - 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)

                  10.21           - Amendment No. 4 to Lease dated December 1,
                                    1977 by and between K&E Land & Leasing and
                                    Kevco, Inc. dated October 26, 1993.(1)

                  10.22           - Form of Tax Indemnification and
                                    Distribution Agreement.(1)

                  10.23           - Form of Assignment of $5,000,000 Note made
                                    by Kevco, Inc. (n/k/a Kevco Delaware,
                                    Inc.).(1)

                  10.24           - Form of Adoption Agreement by Kevco, Inc.
                                    and Kevco Texas, Inc. (re: 1995 Stock Option
                                    Plan and 1996 Stock Option Plan).(1)

                  10.25           - 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)

                  10.26           - Letter Agreement dated June 22, 1982,
                                    between Kevco, Inc. (n/k/a Kevco Delaware,
                                    Inc.) and K&E Land & Leasing. (re: lease
                                    rentals). (1)

                  10.27           - Letter Agreement dated October 1, 1996 by
                                    Kevco, Inc., K&E Land & Leasing, and 1741
                                    Conant Partnership (re: lease rental).(1)

                  10.28           - Form of Parent Pledge Agreement.(1)

                  10.29           - Amendment No. 1 to Amended and Restated
                                    1995 Stock Option Plan of Kevco, Inc. (7)

                  10.30           - Senior Commitment Letter dated October 27,
                                    1997 from NationsBank of Texas, N.A. and
                                    NationsBanc Montgomery Securities, Inc.(3)

                  10.31           - 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.(4)

                  10.32           - Second Amended and Restated Credit
                                    Agreement dated December 1, 1997 between
                                    Kevco, Inc., certain lenders and NationsBank
                                    of Texas, N.A.(4)(5)

                  10.33           - 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.(4)

                  10.34           - 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.(4)

                  10.35           - 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.(4)

                  10.36           - Revolving Credit Note dated December 1,
                                    1997 between Kevco, Inc. and The Sumitomo
                                    Bank, Limited in the original principal
                                    amount of $8,166,666.67.(4)

                  10.37           - 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.(4)

                  10.38           - 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.(4)

                                       19
<PAGE>   20
                EXHIBIT
                NUMBER                      DESCRIPTION OF EXHIBITS

                  10.39           - 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.(4)

                  10.40           - 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.(4)

                  10.41           - 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.(4)

                  10.42           - Security Agreement dated December 1, 1997
                                    between Kevco, Inc. and NationsBank of
                                    Texas, N.A. as Administrative Agent.(4)

                  10.43           - 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.(6)

                  10.44           - Supplemental Indenture between Shelter
                                    Components Corporation, a Subsidiary of
                                    Kevco, Inc., and United States Trust Company
                                    of New York, as Trustee.(6)

                  10.45           - 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.(6)

                  10.46           - 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.(6)

                  10.47           - 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.(6)

                  10.48           - 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.(6)

                  10.49           - 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.(6)

                  10.50           - 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.(6)

                  10.51           - First Amendment to Credit Agreement dated
                                    February 12, 1998 between Kevco, Inc.,
                                    certain lenders and NationsBank of Texas,
                                    N.A.(7)

                  10.52           - Registered Global Note dated March 5, 1998
                                    among Kevco, Inc., Kevco Delaware, Inc.,
                                    Sunbelt Wood Components, Inc., Bowen Supply,
                                    Inc., Encore Industries, Inc., Shelter
                                    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.(8)

                  10.53           - Second Amendment to Credit Agreement,
                                    dated as of October 27, 1998 (but effective
                                    as of September 30, 1998), entered into and
                                    among Kevco, Inc., a Texas corporation, the
                                    banks listed on the signature pages
                                    (collectively, the "Lenders"), and
                                    NationsBank, N.A. (successor by merger to
                                    NationsBank of Texas, N.A.), as the
                                    Administrative Agent.(9)

                                       20
<PAGE>   21
                EXHIBIT
                NUMBER                      DESCRIPTION OF EXHIBITS

                  10.54           - Waiver Entered Into As Of The 30th Day Of
                                    December 1998, By And Among The Banks Listed
                                    On The Signature Pages (The "Lenders"),
                                    Kevco, Inc., A Texas Corporation (The
                                    "Borrower"), And Nationsbank, N.A.
                                    (Successor By Merger To Nationsbank Of
                                    Texas, N.A.), As Administrative Agent For
                                    The Lenders To The Extent And In The Manner
                                    Provided For In The Credit Agreement.(9)

                  10.55           - Second Waiver entered into as of the 15th
                                    day of February, 1999, by and among the
                                    banks listed on the signature pages (the
                                    "Lenders"), Kevco, Inc., a Texas corporation
                                    (the "Borrower"), and NationsBank, N.A.
                                    (successor by merger to NationsBank of
                                    Texas, N.A.), as Administrative Agent for
                                    the Lenders to the extent and in the manner
                                    provided for in the Credit Agreement. (9)

                  10.56           - Third Amendment and Waiver entered into as
                                    of the 25th day of February, 1999, by and
                                    among the banks listed on the signature
                                    pages (the "Lenders"), Kevco, Inc., a Texas
                                    corporation, and NationsBank, N.A.
                                    (successor by merger to NationsBank of
                                    Texas, N.A.), as Administrative Agent for
                                    the Lenders to the extent and in the manner
                                    provided for in the Credit Agreement.(9)

                  10.57           - Letter agreement waiver extension, dated
                                    March 22, 1999, between Kevco, Inc.,
                                    NationsBank, N.A., as Administrative Agent
                                    and Lender, and the other parties
                                    thereto.(9)

                  10.58           - Fourth Amendment and Waiver entered into
                                    as of the 6th day of April, 1999, by and
                                    among the banks listed on the signature
                                    pages (the "Lenders"), Kevco, Inc., a Texas
                                    Corporation, and NationsBank, N.A., as
                                    Administrative Agent for the Lenders. (9)

                  10.59           - Securities Purchase Agreement dated as of
                                    July 14, 1999 between Wingate Partners II,
                                    L.P. and Kevco, Inc. (11)

                  10.60           - Third Amended and Restated Credit
                                    Agreement. (10)

                  10.61           - Tranche A Senior Subordinated Exchangeable
                                    Note, dated July 26, 1999(12)

                  10.62           - Tranche B senior Subordinated Exchangeable
                                    Note, dated July 26, 1999(12)

                  10.63           - Warrant, dated July 26, 1999, to purchase
                                    675,000 shares of Nonvoting Common Stock
                                    (12)

                  10.64           - Warrant, dated July 26, 1999, to purchase
                                    772,727 shares of Nonvoting Common Stock
                                    (12)

                  10.65           - Warrant, dated July 26, 1999, to purchase
                                    295,455 shares of Nonvoting Common Stock
                                    (12)

                  10.66           - Consulting Agreement, dated July 26, 1999,
                                    between Kevco, Inc., a Texas corporation and
                                    Mr. Gerald E. Kimmel (12)

                  10.67           - Financial Advisory Agreement, dated July
                                    26, 1999, among Kevco, Inc., a Texas
                                    corporation and Wingate Management Limited,
                                    L.L.C., a Delaware limited liability company
                                    (12)

                  10.68           - Monitoring and Oversight Agreement, dated
                                    July 26, 1999, among Kevco, Inc., a Texas
                                    corporation and Wingate Management Limited,
                                    L.L.C., a Delaware limited liability company
                                    (12)

                  10.69           - First Amendment to Credit Agreement dated
                                    October, 1999 by and among the Banks listed
                                    on the signature pages thereof ("the
                                    Lenders"), Kevco, Inc., and NationsBank,
                                    N.A. as Administrative Agent for the Lenders
                                    (13)

                  27.1            - Financial Data Schedule. (13)

----------

(1)   Previously filed as an exhibit to the Company's Registration Statement on
      Form S-1 (No. 333-11173) and incorporated herein by reference.

                                       21
<PAGE>   22

(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 Tender Offer Statement on
      Schedule 14D-1, filed October 28, 1997, and incorporated herein by
      reference.

(4)   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.

(5)   Schedules and similar attachments to this exhibit have not been previously
      filed 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 Commission upon request.

(6)   Previously filed as an exhibit to the Company's registration statement on
      Form S-4 (No. 333-43691), and incorporated herein by reference.

(7)   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.

(8)   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.

(9)   Previously filed as an exhibit to the Company's Annual Report on Form
      10-K, as amended by Form 10-K/A, for the year ended December 31, 1998 and
      incorporated herein by reference.

(10)  Previously filed as an exhibit to the Company's Quarterly Report on Form
      10-Q, for the quarter ended June 30, 1999 and incorporated herein by
      reference.

(11)  Previously filed as a Current Report on Form 8-K dated July 14, 1999 and
      incorporated herein by reference.

(12)  Previously filed as an exhibit to the Current Report on Form 8-K dated
      July 26, 1999 and incorporated herein by reference.

(13)  Filed herewith.

      *   Management contract or compensatory plan or arrangement.

(b)   REPORTS ON FORM 8-K

      The Company filed a Current Report on Form 8-K dated July 14, 1999,
      announcing that the Company had entered into a Securities Purchase
      Agreement with Wingate Partners II, L.P.

      The Company filed a Current Report on Form 8-K dated July 26, 1999,
      announcing consummation of the transactions contemplated by the Securities
      Purchase Agreement transaction.

      The Company filed a Current Report on Form 8-K dated August 3, 1999,
      announcing that the Company had dismissed PricewaterhouseCoopers LLP as,
      and engaged Ernst & Young, LLP as, the Company's independent accountants.





                                       22
<PAGE>   23

                                    SIGNATURE

    Pursuant to the requirements of the Securities Exchange 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:    November 15, 1999

                                               By: /s/ James A. Johnson
                                                   -----------------------------
                                                   James A. Johnson
                                                   Executive Vice President
                                                   (Principal Financial Officer)

                                       23
<PAGE>   24
                                   KEVCO, INC.

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
  EXHIBIT NO.        DESCRIPTION
<S>                  <C>
     10.69           First Amendment to Credit Agreement dated October, 1999
                     by and among the Banks listed on the signature pages
                     thereof (the "Lenders"), Kevco, Inc., and NationsBank,
                     N.A.

     27.1            Financial Date Schedule.
</TABLE>