Item 1	 Business
A Virginia corporation founded in 1915, Noland Company is a distributor of Plumbing, Air Conditioning and Electrical/Industrial supplies, with branch facilities in thirteen states.
While most of its sales are wholesale, the Company plays a modest retail role through product showrooms and other marketing efforts of certain items. It handles products of over 2,000 vendors and sells to thousands of customers, largely in the industrial and construction sectors of the Southern United States. There have been no significant changes in the Company's methods of operation during the last five years. Noland Company disposed of its fifty percent interest in joint ventures in Spain and Panama in 2001. The Company continues to sell air conditioning equipment to customers in Panama and several South American countries.
The Company operates in only one industry segment, the distribution of mechanical equipment and supplies. Markets for these products include contractors, industrial plants, utilities and others.
During the last five years, the Company has continued to serve essentially the same markets described above. Current plans call for the continuation of this policy. The Company does not manufacture any products.
Total sales of each class of similar products for the last five years are as follows:
Plumbing
$268,610
$279,524
$264,768
$252,835
$250,327
Air Conditioning
124,029
115,514
119,331
114,043
112,013
Electrical/Industrial
85,272
93,676
98,731
98,601
102,625
$477,911
$488,714
$482,830
$465,479
$464,965
Not all branches have all three departments. If a product department does not exist in a particular branch, any sales of that department's products are attributed to the department that makes the sale.
The Company continues to market new products introduced by its suppliers/manufacturers. None will require the investment of a material amount of the assets of the Company.
The Company does not use or market raw materials.
The Company holds several sales franchises and has produced a variety of copyrighted materials and systems used in the normal conduct of its business. It is virtually impossible to dollar-quantify their significance. None are reflected as assets in the Company's Balance Sheet. The Company has no patents.
The business in general is seasonal to the extent of the construction industry it supplies.
It is the practice of the Company to carry a full line of inventory items for rapid delivery to customers. At times, advance buying is necessary to ensure the availability of products for sale. The Company also extends credit, and this and the necessity for an adequate supply of merchandise ordinarily absorbs most of the Company's working capital.
The dollar amount of the Company's backlog of orders believed to be firm was approximately $30,069,411 at December 31, 2001 and $33,664,236 at December 31, 2000.
The portion of the Company's business with the Government and subject to renegotiation is not considered material.
The wholesale distribution of all products in which the Company is engaged is highly competitive. Competition results primarily from price, service and the availability of goods. Industry statistics indicate that Noland Company is one of the larger companies in its field.
Company-sponsored research and development activities expenditures in 2001, 2000 and 1999 were immaterial.
The Company believes it is in compliance with Federal, State and local provisions that have been enacted or adopted regulating the discharge of materials into the environment. The effects of compliance are not material with respect to capital expenditures, earnings and competitive position of the Company. No material capital expenditures are anticipated for environmental control facilities during the remainder of the current year and the succeeding year.
	As of December 31, 2001, the Company employed 1,415 persons.
	The Company operates principally in the Southern United States.
Item 2
Item 2	 Properties
The main properties of the Company consist of 103 facilities, including warehouses, offices, showrooms, paved outside storage areas and covered pipe storage sheds. These are located in the following states: Alabama, Arkansas, Florida, Georgia, Kentucky, Maryland, Mississippi, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia and West Virginia. Sixteen are leased and the remaining eighty-seven are Company owned. The executive office of the Company is located at 80 29th Street, Newport News, Virginia 23607.
In the opinion of management, the aforementioned facilities are suitable for the purposes for which they are used, are adequate for the needs of the business and are in continuous use in the day-to-day course of operations. The Company's policy is to maintain, repair and renovate its properties on a continuing basis, replacing older structures with new buildings and yard facilities as the need for such replacement arises. In addition, reference is made to Note 2 (d), page 16 of the Annual Report to Stockholders filed as an exhibit hereto, with respect to property in excess of current needs.
Item 3
Item 3	 Legal Proceeding
	None of material consequence.
Item 4
Item 4	 Submission of Matters to a Vote of Security Holders
	None
Additional Item
Executive Officers of the Registrant
Name
Age
Positions and Offices Held with Registrant
Business Experience During the
Past Five Years
Lloyd U. Noland, III
Chairman of the Board, President and Director. Officer since 1981
Chief Executive Officer of the Registrant.
Arthur P. Henderson
, Jr.
Vice President-Finance. Officer since 1983
Chief Financial Officer of the Registrant.
Kenneth C. King
Vice President-Marketing and Branch Operations. Officer since 1998
Responsible for the Registrant's Marketing.
John E. Gullett
Vice President-Corporate Communications. Officer since 1982
Responsible for the Registrant's Corporate Communications Department.
Jean F. Preston
Vice President-Corporate Data. Officer since 1999
Responsible for the Registrant's Corporate Data Department. Previously manager of Corporate Data Department.
James E. Sykes, Jr.
Treasurer/Secretary. Officer since 1982
Responsible for Registrant's treasury and accounting functions and secretarial duties.
All executive officers were elected for a term of one year beginning May 1, 2001 and/or until their successors are elected and qualified. None of the executive officers are related by blood, marriage or adoption. Service has been continuous since the date elected to their present positions. There are no arrangements or understandings between any officer and any other person pursuant to which he was elected an officer.
PART II
Item 5
Item 5	 Market for the Registrant's Common Equity and Related Stockholder Matters
The information set forth on the inside back cover of the Annual Report to Stockholders contains information concerning the market price of Noland Company's common stock for the past two years, the number of holders thereof and the dividend record with respect thereto for the past two years. This information is incorporated herein by reference.
Item 6
Item 6 Selected Financial Data
The information set forth under the caption "Ten-Year Review of Selected Financial Data" relating to sales, net income, total assets, long-term debt, net income per share and dividends per share for the years 1992 through 2001 is incorporated herein by reference from pages 20 and 21 of the enclosed Noland Company Annual Report to Stockholders for the year ended December 31, 2001.
Item 7
Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations
The information set forth under the above caption is incorporated herein by reference from pages 9 and 10 of the enclosed Noland Company Annual Report to Stockholders for the year ended December 31, 2001.
Item 7A
Item 7A Quantitative and Qualitative Disclosures About Market Risk
The information set forth under the above caption is incorporated herein by reference from page 10 of the enclosed Noland Company Annual Report to Stockholders for the year ended December 31, 2001.
Item 8
Item 8 Financial Statements and Supplementary Data
The following consolidated financial statements of Noland Company, included in the Annual Report to Stockholders for the year ended December 31, 2001, are incorporated herein by reference:
Annual Report to Stockholders (page)
Independent Auditors' Report
Consolidated Statement of Income--
Years ended December 31, 2001, 2000, and 1999
Consolidated Balance Sheet--December 31, 2001, 2000, 1999
Consolidated Statement of Cash Flows--
Years ended December 31, 2001, 2000, 1999
Consolidated Statement of Stockholders' Equity
and Comprehensive Income -- Years ended
December 31, 2001, 2000, and 1999
Notes to Consolidated Financial Statements
15-19
	 --Years ended December 31, 2001, 2000, and 1999
Item 9
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
The Company dismissed PricewaterhouseCoopers LLP as its independent accountants in October 2001 and appointed KPMG LLP as the new independent accountants. As required by the Securities and Exchange Commission Form 8-K was filed on October 12, 2001 to report the change. There have been no disagreements with KPMG LLP or its predecessor, PricewaterhouseCoopers LLP.
PART III
Item 10
Item 10 Directors and Executive Officers of the Registrant
Data relating to Directors is incorporated herein by reference from pages 3, 4 and 5 of the 2002 Noland Company Proxy Statement for the April 18, 2002 Annual Meeting of Stockholders.
	Data relating to Executive Officers is included in Part I of this report.
Item 11
Item 11 Executive Compensation
The information set forth under the caption "Compensation of Executive Officers" on page 6 of the 2002 Noland Company Proxy Statement for the April 18, 2002, Annual Meeting of Stockholders is incorporated herein by reference.
Item 12
Item 12 Security Ownership of Certain Beneficial Owners and Management
The information set forth under the captions "Voting Securities and Principal Holders Thereof" and "Nominees for Director" on pages 2, 4 and 5 of the 2002 Noland Company Proxy Statement for the April 18, 2002, Annual Meeting of Stockholders is incorporated herein by reference.
Item 13
Item 13 Certain Relationships and Related Transactions
(a)	The Company is in the sixth year of a ten-year agreement to lease an existing office building for its corporate headquarters. The building is owned by Basic, Inc. Basic, Inc. owns 893,967 shares of Noland Company stock. The majority of Basic, Inc. stock is owned by The L.U. Noland 1982 Trust whose trustees are Mr. Lloyd U. Noland, Jr.'s wife, Jane K. Noland, and his three children: Lloyd U. Noland III, Susan C. Noland and Anne N. Edwards. The Company pays an annual rental fee of approximately $260,000 per year and bears the direct costs of utilities and real estate taxes. The terms of the lease were based on an evaluation by an independent real estate firm.
(b)	Not applicable.
(c)	Not applicable.
(d)	Not applicable.
PART IV
Item 14
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)	Consolidated Financial Statements included in PART II, Item 8 of this report:
Independent Auditors' Report
Consolidated Statement of Income'Years ended December 31, 2001, 2000, and 1999
Consolidated Balance Sheet'December 31, 2001, 2000, and 1999
Consolidated Statement of Stockholders' Equity and Comprehensive Income--Years ended December 31, 2001, 2000, 1999
Consolidated Statement of Cash Flows'Years ended December 31, 2001, 2000, and 1999
Notes to Consolidated Financial Statements-Years ended December 31, 2001, 2000, and 1999
With the exception of the aforementioned information incorporated by reference and the information in the 2001 Annual Report to Stockholders on the inside back cover and pages 9, 10, 20 and 21 incorporated in response to Items 5, 6 and 7 in this Form 10-K Annual Report, the 2001 Annual Report to Stockholders is not to be deemed "filed" as part of this report. The individual financial statements of the registrant have not been filed because consolidated financial statements are filed. The registrant is an operating company and the subsidiary is wholly owned.
	Financial Statement Schedule included in PART IV of this report:
For the three years ended December 31, 2001
Form 10-K Page(s)
Schedule II Valuation and
		 Qualifying Accounts	 8
Other financial statement schedules are omitted because of the absence of conditions under which they are required or because the required information is given in the consolidated financial statements or notes thereto.
Independent Auditors' Report
	on Consolidated Financial
	Statement Schedule			 10
The exhibits are listed in the Index of Exhibits required by Item 601 of Regulation S-K at item (c) below.
(b)	Reports on Form 8-K ' An 8-K was filed on October 12, 2001 to report the dismissal of PricewaterhouseCoopers LLP as the registrant's independent accountants and the appointment of KPMG LLP as the new independent accountants. PricewaterhouseCoopers LLP was dismissed after selling its Virginia Beach, Virginia office that historically had performed auditing services for the Company. The Audit Committee of the Company's board of directors approved the change.
(c)	The Index of Exhibits and any required Exhibits are included beginning at page 11 of this report.
(d)	Financial Statement Schedule II
SCHEDULE II
Noland Company and Subsidiary
Valuation and Qualifying Accounts
(1) Net of recoveries on bad debts of $670,734 for 2001, $474,796 for 2000, and $781,028 for 1999.
(2) Represents charges for which reserve was previously provided.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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.
							NOLAND COMPANY
					 Lloyd U. Noland, III
March 22, 2002				By 
							Chairman of the Board and President
Pursuant to the requirements of the Securities Exchange Act of 1934, the following persons on behalf of the Registrant and in the capacities and on the dates indicated have signed this report below.
Lloyd U. Noland, III

Chairman of the Board,
President and Director
March 22,2002
Lloyd U. Noland, III
Arthur P. Henderson, Jr.

Vice President-Finance,
(chief financial officer)
and Director
March 22,2002
Arthur P. Henderson, Jr.
Kenneth C. King

Vice President-Marketing and
Branch Operations
and Director
March 22,2002
Kenneth C. King
James E. Sykes, Jr.

Treasurer/Secretary
(chief accounting officer)
March 22,2002
James E. Sykes, Jr.
Allen C. Goolsby, III
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Director
March 22,2002
Allen C. Goolsby, III
INDEPENDENT AUDITORS' REPORT
ON CONSOLIDATED FINANCIAL STATEMENT SCHEDULE

To the Board of Directors and Stockholders of Noland Company:
	Under date of February 22, 2002, we reported on the consolidated balance sheet of Noland Company and subsidiary (the Company) as of December 31, 2001, and the related consolidated statements of income, stockholders' equity and comprehensive income, and cash flows for the year ended December 31, 2001, as contained in the 2001 annual report to stockholders. These consolidated financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the year 2001. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related consolidated financial statement schedule listed in item 14 (a) 2 of this form 10-K. This 2001 financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement schedule based on our audit.
	In our opinion the 2001 financial statement schedule when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
KPMG LLP
Norfolk, Virginia
February 22, 2002
EXHIBIT INDEX
Exhibit Number
Exhibit
Page
(2)
Plan of acquisition, reorganization, liquidation or succession
Not Applicable
(3)
Articles of Incorporation and Bylaws
Previously Filed
(4)
Instruments defining the rights of Security holders, including indentures
Not Applicable
(9)
Voting Trust Agreement
Not Applicable
(10)
(1) Restricted Stock Plan
Previously Filed
(ii) 1999 Outside Directors Stock Plan
Previously Filed
(iii) Noland Company Common Stock Benefit Trust
Previously Filed
(11)
Statement regarding computation of per share earnings'clearly determinable
Not Applicable
(12)
Statement regarding computation of ratios
Not Applicable
(13)
Portions of Annual Report to Stockholders
(16)
Letter regarding change in a certifying accountant
Not Applicable
(18)
Letter regarding change in accounting principles
Not Applicable
(21)
Subsidiary of the registrant
Previously Filed
(22)
Published report regarding matters submitted to vote of security holders
Not Applicable
(23)
Consents of experts and counsel
Not Applicable
(24)
Power of Attorney
Not Applicable
(28)
Information from reports furnished to state insurance regulatory authority
Not Applicable
(99)	 Opinion of Former Independent Accountants 38
	As to any security holder requesting a copy of the Form 10-K, the Company will furnish any exhibit indicated in the above list as filed with the Form 10-K upon payment to it of its expenses in furnishing such exhibit.
EXHIBIT 13
INDEX
Page
Management's Discussion
13-16
Independent Auditors'Report
Quarterly Financial Data
Consolidated Statement of Income
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Consolidated Statement of Stockholders'
Equity and Comprehensive Income
Notes to Consolidated Financial Statements
23-33
Ten Year Review
34-35
Inside Back Cover
36-37
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
	The following discussion focuses on the consolidated results of operations, financial condition and cash flows of Noland Company. This section should be read in conjunction with the consolidated financial statements and notes.
Forward-Looking Statements
	Management's discussion and analysis and other sections of this Annual Report contain "forward-looking statements" under the securities laws. Such statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated in the statements. Such risks and uncertainties include, but are not limited to, general business conditions, climatic conditions, competitive pricing pressures, and product availability.
Results of Operations
	Sales for 2001 totaled $477.9 million, 2.2 percent less than 2000 sales of $488.7 million. Sales for 1999 were $482.8 million. Sluggish economic conditions in many parts of the Company's 13-state territory adversely affected sales, despite pockets of strength in residential construction. In addition, deflation in pricing on key plumbing commodities had a negative impact on plumbing sales, which decreased 3.9 percent. Electrical/industrial sales declined 9.0 percent as a result of continued weakness in manufacturing. Air conditioning sales increased 7.4 percent. A significant part of this increase came from sales in several new Florida branches, but same store sales also rose modestly.
	The gross profit margin was 20.5 percent for 2001 compared to 20.2 percent for 2000, and 20.1 percent for 1999. The gross profit margin for 2001 was affected by the LIFO inventory adjustment, which decreased cost of goods sold by $4.2 million. The LIFO adjustment increased cost of goods sold by $374,000 and $1.4 million in 2000 and 1999, respectively. Inventory quantity reductions contributed to the positive effect of LIFO for 2001. Excluding the LIFO adjustment, margins declined in 2001 as a result of competitive pricing conditions and an aggressive strategy to dispose of unproductive inventory.
	Operating expenses increased $3.0 million from 2000's $88.4 million to $91.4 million in 2001. 1999's operating expenses were $88.1 million. Higher personnel-related costs, non-cash charges of $847,000 related to accounts receivable valuation reserves and a decline in non-cash pension income, which reduces operating expense, account for much of the increase. Operating expenses benefited in 2001, 2000, and 1999 from non-cash pension credits of $2.8 million, $4.4 million, and $3.8 million, respectively as a result of the Company having an over-funded pension plan.
	The combination of lower sales and higher operating expenses resulted in a 34.1 percent decline in operating profits compared to 2000. Operating profits for 2000 were 17.2 percent higher than 1999. Other non-operating income for 2001 declined 19.9 percent compared to 2000. Other income in 2000 benefited from non-recurring gains of $817,000 on the sale of a Company aircraft and real estate. Interest expense decreased 36.5 percent to $1.7 million in 2001 from $2.7 million in 2000. Lower interest rates and reduced borrowings accounted for the decline. Interest expense for 1999 was $2.8 million.
	The effective tax rate was 39.3 percent, 39.5 percent, and 38.8 percent in 2001, 2000, and 1999, respectively.
Liquidity and Capital Resources
	The Company maintains its short and long-term liquidity
through: (1) cash flow from operations; (2) short-term financings; (3) bank line of credit borrowings, when needed; and (4) additional long-term debt, when needed.
	In 2001 net cash provided by operating activities was $21.1 million compared to $12.9 million in 2000 and $23.4 million in 1999. Cash from operations in 2001 was used to reduce long-term debt by $7.5 million, for capital expenditures of $8.4 million, to pay dividends, and to repurchase and retire 29,172 shares of the Company's outstanding common stock for $669,000. Working capital decreased $1.8 million, but the current ratio increased to 2.4 from 2.3. Management believes the Company's liquidity, working capital and capital resources are sufficient to meet the working capital and capital expenditure needs of the foreseeable future.
	The Company continued its progress on the inventory front in 2001. Inventory turns improved, unproductive inventory was reduced, and the total investment in inventory declined $7.4 million after a $4.7 million reduction in 2000.
Quantitative and Qualitative Disclosure About Market Risk
The Company's market risk exposure comes from changes in interest rates and inflationary pressures. Reported results, for the most part, reflect the impact of inflation/deflation because of the Company's use of the LIFO (last in, first out) inventory method. This method tends to remove artificial profits induced by inflation and presents operating results in truer, more absolute terms. The objective in managing the Company's exposure to interest rate changes is to limit the impact of rate changes on earnings, cash flow, and to lower overall borrowing cost. The Company entered into two separate interest rate swaps to manage it's exposure to interest rate changes on it's borrowings. These swaps are with financial institutions that have investment grade credit ratings, minimizing the risk of credit loss. Both swaps are non-trading.
At December 31, 2001, the Company had two swap agreements at an aggregate notional amount of $20,075,000 to manage interest rate changes related to the Company's industrial revenue bonds and a portion of its revolving credit agreement. The swaps effectively convert the variable rate borrowings (LIBOR and BMA Municipal Swap Index) into fixed rate borrowings with fixed rates of 5.36% and 4.22%.
Statement of Financial Accounting Standards (SFAS) No. 133 "Accounting for Certain Derivative Instruments and Certain Hedging Activities," as amended by SFAS No. 138, requires all derivatives to be recorded as an asset or liability on the balance sheet at face value. For a derivative designated as a cash flow hedge, the effective portion of the change in the fair value of the derivative is recorded in other comprehensive income ("OCI") and recognized in the income statement when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash flow hedges are recognized in earnings. Other comprehensive income was reduced by $303,000, net of tax benefit of $185,000 as of December 31, 2001.
In addition, the Company's pension plan is over-funded, resulting in a prepaid pension asset. The prepaid pension asset is subject to change based on the performance of the plan investments and the discount rate. Changes in the investment performance and discount rate may cause the amount of pension income to increase or decrease from year to year. The discount rate for calculating 2002 pension credits is expected to decline resulting in a lower credit than 2001 and 2000.
Recent Accounting Pronouncements
The Financial Accounting Standards Board ("FASB") has issued SFAS No. 141 "Business Combinations," SFAS No. 142 "Goodwill and Other Intangible Assets," and SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" that are effective for years beginning after December 15, 2001 and SFAS No. 143 "Accounting for Asset Retirement Obligations" that is effective for years beginning after June 15, 2002. Adoption of these statements is not expected to have a material impact on the Company's financial statements.
INDEPENDENT AUDITORS' REPORT
KPMG
To the Board of Directors and Stockholders of Noland Company:
We have audited the accompanying consolidated balance sheet of Noland Company and Subsidiary (the Company) as of December 31, 2001, and the related consolidated statements of income, stockholders' equity and comprehensive income, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. The accompanying consolidated financial statements of the Company as of December 31, 2000 and 1999 were audited by other auditors whose report thereon dated February 22, 2001, expressed unqualified opinions on those consolidated statements.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 2001 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Noland Company as of December 31, 2001, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
KPMG LLP
Norfolk, Virginia
February 22, 2002
Selected Quarterly Financial Data (unaudited)
(In thousands, except per share amounts)
First Quarter Second Quarter Third Quarter Fourth Quarter
Sales
$114,931
$120,994
$127,470
$129,131
$122,337
$124,284
$113,173
$ 114,305
$477,911
$488,714
Gross Profit
$ 23,003
$ 23,875
$ 25,053
$ 24,700
$ 23,664
$ 24,184
$ 26,449
$ 25,977
$ 98,169
$ 98,736
Net Income
$ 1,212
$ 2,365
$ 1,895
$ 2,564
$ 1,132
$ 1,991
$ 2,630(A)
$ 2,388(A)
$ 6,869
$ 9,308
Basic Earnings
$ .34
$ .65
& .54
$ .70
$ .32
$ .56
$ .74(A)
$ .67(A)
$ 1.94
$ 2.57
Per Share
Diluted Earnings
Per Share
$ .34
$ .64
$ .53
$ .69
$ .32
$ .55
$ .74(A)
$ .67(A)
$ 1.92
$ 2.55
(A)	The Company uses estimated gross profit rates to determine cost of goods sold during interim periods. Year-end inventory adjustments to reflect actual inventory levels are made in the fourth quarter. These adjustments had the effect of increasing net income for the fourth quarter of 2001 and 2000 by approximately $2,500,000 ($.71 per share) and $1,632,000 ($.46 per share), respectively.
CONSOLIDATED STATEMENT OF INCOME
Noland Company and Subsidiary
For the years ended December 31, 2001, 2000 and 1999
(In thousands, except per share amounts)		 2001	 2000	 1999
Sales
$ 477,911
$488,714
$482,830
Cost of Goods Sold:
Purchases and freight in
372,364
385,260
385,161
Inventory, January 1
65,121
69,839
70,570
Inventory, December 31
(57,743)
(65,121)
(69,839)
Cost of Goods Sold
379,742
389,978
385,892
Gross Profit on Sales
98,169
98,736
96,938
Operating Expenses
91,357
88,399
88,115
Operating Profit
6,812
10,337
8,823
Other Income:
Cash Discounts, net
4,373
4,660
4,719
Service charges
1,182
1,412
1,440
Miscellaneous
1,699
1,149
Total Other Income
6,226
7,771
7,308
Interest Expense
1,723
2,715
2,819
Income Before Income Taxes
11,315
15,393
13,312
Income Taxes
4,446
6,085
5,165
Net Income
$ 6,869
$ 9,308
$ 8,147
Basic Earnings Per Share
$ 1.94
$ 2.57
$ 2.22
Diluted Earnings Per Share
$ 1.92
$ 2.55
$ 2.20
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED BALANCE SHEET
Noland Company and Subsidiary
December 31, 2001, 2000, and 1999
(In thousands)
Assets
Current Assets:
Cash and cash equivalents
$ 3,606
$ 3,349
$ 2,528
Accounts receivable (net of allowance for doubtful accounts)
56,694
56,585
55,704
Inventory (net of reduction to LIFO)
57,743
65,121
69,839
Deferred income taxes
-
1,023
1,147
Other current assets
Total Current Assets
118,722
126,514
129,454
Property and Equipment, at cost:
Land
13,721
13,397
13,407
Buildings
86,958
85,829
83,414
Equipment and fixtures
66,746
64,898
64,620
Property in excess of current needs
1,540
1,453
1,699
Total
168,965
165,577
163,140
Less accumulated depreciation
89,550
84,478
79,599
Total Property and Equipment, net
79,415
81,099
83,541
Assets Held for Resale
1,021
1,021
Prepaid Pension
25,804
22,983
18,618
Other Assets
1,046
$ 225,434
$232,594
$ 233,619
Liabilities and Stockholders' Equity
Current Liabilities:
Notes payable, short-term borrowings
$ 4,000
$ 8,475
$ 7,800
Current maturity of long-term debt
1,465
3,022
4,398
Book overdrafts
6,485
6,680
8,403
Accounts payable
23,670
22,459
26,895
Other accruals and liabilities
13,011
13,389
13,177
Federal and state income taxes
1,029
Total Current Liabilities
48,999
54,972
61,702
Long-term Debt
20,675
26,637
28,015
Deferred Income Taxes
10,666
10,937
10,197
Accrued Postretirement Benefits
2,090
1,824
1,543
Stockholders' Equity:
Capital common stock, par value, $10;
authorized, 6,000,000 shares;
issued 3,557,829, 3,584,758, and
3,700,876 shares
35,578
35,848
37,009
Retained earnings
108,088
102,741
95,524
Accumulated other comprehensive loss, net of tax
(303)
-
-
Unearned compensation, stock plans
(359)
(365)
(371)
Stockholders' Equity
143,004
138,224
132,162
$ 225,434
$ 232,594
$ 233,619
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
Noland Company and Subsidiary
For the years ended December 31, 2001, 2000, and 1999
(In thousands)
Cash Flows From Operating Activities:
Net Income
$ 6,869
$ 9,308
$ 8,147
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization
8,168
8,222
8,450
Amortization of prepaid pension cost
(2,821)
(4,365)
(3,771)
Deferred income taxes
1,876
Gain on sale of property
(231)
(817)
-
Provision for doubtful accounts
2,531
1,644
1,928
(Decrease) increase in LIFO reserve
(4,181)
1,391
Other non-cash adjustments
Change in operating assets and liabilities:
(Increase) in accounts receivable
(2,640)
(2,525)
(2,181)
Decrease (increase) in inventory
11,559
4,344
(660)
(Increase) decrease in other current assets
(243)
(200)
Decrease in assets held for resale
-
-
(Increase) decrease in other assets
(159)
(89)
Increase (decrease) in accounts payable
1,211
(4,436)
5,005
(Decrease) increase in other accruals and liabilities
(378)
2,180
(Decrease) increase in federal and state income taxes
(579)
(82)
Increase in postretirement benefits
Total adjustments
14,230
3,620
15,302
Net cash provided by operating activities
21,099
12,928
23,449
Cash Flows From Investing Activities:
Capital expenditures
(8,405)
(6,715)
(7,018)
Proceeds from sale of assets
2,242
1,849
Net cash used by investing activities
(6,163)
(4,866)
(6,124)
Cash Flows From Financing Activities:
Decrease in book overdrafts
(195)
(1,723)
(2,122)
Short-term debt, net (payments) borrowings
(4,475)
Long-term debt borrowings
12,500
7,644
7,500
Long-term debt repayments
(20,507)
(10,398)
(22,372)
Dividends paid
(1,145)
(1,168)
(1,184)
Purchase and retirement of common stock
(669)
(2,103)
-
Purchase of restricted stock
(188)
(168)
(238)
Net cash used by financing activities
(14,679)
(7,241)
(18,116)
Cash and Cash Equivalents:
Increase (decrease) during year
(791)
Beginning of year
3,349
2,528
3,319
End of year
$ 3,606
$ 3,349
$ 2,528
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest
$ 1,847
$ 2,646
$ 2,847
Cash paid for income taxes
$ 3,972
$ 6,018
$ 3,208
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
Noland Company and Subsidiary
For the years ended December 31, 2001, 2000 and 1999
(In thousands, except share amounts)
COMMON STOCK
Shares Amount
Retained
Earnings
Unearned
Compensation
Accumulated Other Comprehensive Loss
Total
Balance, December 31, 1998
3,700,876 $ 37,009
$ 88,561
$ (337)
$ -
$ 125,233
Net income
8,147
8,147
Cash dividends
($.32 per share)
(1,184)
(1,184)
Purchase of restricted stock
(238)
(238)
Amortization of unearned
compensation
Other
(86)
(86)
Balance, December 31, 1999
3,700,876 37,009
95,524
(371)
132,162
Net income
9,308
9,308
Cash dividends
(.32 per share)
(1,168)
(1,168)
Purchase of restricted stock
(168)
(168)
Amortization of unearned
compensation
Purchase and retirement of
common stock
(117,966) (1,180)
(923)
(2,103)
Other
1,848 19
Balance, December 31, 2000
3,584,758 35,848
102,741
(365)
138,224
Net income
6,869
6,869
Loss on derivative
instruments, net of
income taxes
(303)
(303)
Comprehensive income
6,566
Cash dividends
(.32 per share)
(1,145)
(1,145)
Purchase of restricted stock
(188)
(188)
Amortization of unearned
compensation
Purchase and retirement of
common stock
(29,172) (292)
(377)
(669)
Other
2,243 22
Balance, December 31, 2001
3,557,829 $ 35,578
$ 108,088
$ (359)
$ (303)
$ 143,004
The accompanying notes are an integral part of the consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Noland Company and Subsidiary
1.	Principal Business of the Company
	Noland Company is a wholesale distributor of mechanical equipment and supplies. These products are categorized under plumbing, air conditioning, and electrical/industrial.
	Markets for these products include contractors, industrial plants, utilities and others. The Company operates in only one segment of business.
2.	Summary of Significant Accounting Policies
a.	Principles of Consolidation
	The consolidated financial statements include the accounts of Noland Company and its wholly owned subsidiary. All material intercompany transactions have been eliminated.
	The Company disposed of its fifty percent interest in two foreign joint ventures in 2001. Prior to the sale, the equity method of accounting was used for both entities. The aggregate investment in and results of operations from both joint ventures are not material.
b.	Estimates
	The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are susceptible to changes in the near term are the allowance for doubtful accounts, last-in, first-out (LIFO) reserve, and pension plan assumptions.
c.	Inventory
	Inventory is stated at the lower of cost or market. The cost of inventory has been principally determined by the LIFO method since 1974.
d.	Property and Equipment
	Property and equipment are valued at cost less accumulated depreciation.
	Depreciation is computed by the straight-line method based on estimated useful lives of 20 to 40 years for buildings and 3 to 10 years for equipment and fixtures.
	Expenditures for maintenance and repairs are charged to earnings as incurred. Upon disposition, the cost and related accumulated depreciation are removed and the resulting gain or loss is reflected in income for the period.
	The Company reevaluates property, plant, and equipment whenever significant events or changes occur which might impair recovery of recorded costs. Impaired assets, if any, are written down to fair value.
	Property in excess of current needs consists primarily of land held for possible future expansion.
e.	Income Taxes
	A deferred tax asset or liability is recognized for the deferred tax consequences of all temporary differences.
f. Cash and Cash Equivalents
	The Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Due to the short maturity period of cash and cash equivalents, the carrying amount approximates the fair value.
	Cash is maintained in bank deposit accounts which, at times,
may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents. There are no requirements for compensating balances.
g. Derivative Financial Instruments
	The Company uses interest rate swap agreements to reduce its exposure to market risks from changing interest rates. Two swap agreements are outstanding at December 31, 2001. The agreements are accounted for in accordance with Statement of Financial Accounting Standards (SFAS) No. 133 "Accounting for Certain Derivative Instruments and Certain Hedging Activities," as amended by SFAS No. 138, which became effective
January 1, 2001. SFAS No. 133 established accounting and reporting standards that require all derivative instruments be recorded in the balance sheet as an asset or liability measured at its fair value. Changes in a derivative's fair value must be recognized currently in earnings unless specific hedge accounting criteria are met.
Special accounting for qualifying hedges allows a derivative instrument's gains and losses to be recorded in the statement of stockholders equity as a component of other comprehensive income for cash flow hedges, and requires that the Company formally document, designate, and assess the effectiveness of transactions that receive hedge
accounting. The Company does not hold or issue financial instruments for trading purposes.
h.	Extra Compensation
	All employees with at least one year of service participate in one or more of the Company's extra compensation plans, which are based on earnings before income taxes and certain adjustments. The cost of these plans was $1,793,000 in 2001, $2,140,000 in 2000 and $2,150,000 in 1999.
i.	Unearned Compensation - Stock Plans
	The Company provides a restricted stock plan for certain executives of the Company. Under the Plan, 100,000 shares in the aggregate, limited to 10,000 shares per year, may be granted as restricted stock. Participants may not dispose or otherwise transfer stock granted for three years from date of grant. Restrictions lapse on 20 percent of the stock per year beginning at the end of the third year. Upon issuance of stock under the plan, unearned compensation equivalent to the market value at the date of grant is recorded in a contra-equity account and amortized over seven years. Shares granted for 2001, 2000, and 1999 were 9,900, 10,000, and 9,700 with a fair value of $188,000, $168,000, and $238,000, respectively. The amount amortized to compensation expense in 2001, 2000, and 1999 was $154,000, $136,000, and
$118,000, respectively. In addition, 500, 900, and 1,500 shares were forfeited in 2001, 2000, and 1999, respectively.
	Effective July 1, 1999 the Company adopted the 1999 Outside Directors Stock Plan (the Plan) to provide incentive and award to the Company's Outside Directors. The Common Stock Benefit Trust (the Trust), a grantor trust, was established to provide a source of funds to meet the obligations of the Plan. The Trust is consolidated with the Company. The cost of purchased shares or par value of issued shares held by the Trust, net of the deferred compensation expense, is shown as a reduction of stockholders' equity. In 2001, 2000, and 1999, $22,000, $20,000, and $44,000 was charged against stockholders' equity, and $51,000, $38,000, and $23,000 recorded as director compensation, respectively.
j.	Earnings Per Share
	Basic earnings per share for 2001, 2000, and 1999 is calculated based on 3,540,212, 3,614,951, and 3,676,276 shares, respectively. Diluted earnings per share for 2001, 2000, and 1999 is based on 3,576,630, 3,646,517 and 3,700,876 shares, respectively. The dilutive potential shares consist of restricted stock.
k.	Professional Standards
	The Financial Accounting Standards Board has issued the following Statements of Financial Accounting Standards: SFAS No. 141 "Business Combinations," SFAS No. 142 "Goodwill and Other Intangible Assets," SFAS No. 143 "Accounting for Asset Retirement Obligations," and SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets." Adoption of these Statements is not expected to have a material impact on the Company's financial statements.
l.	Revenue Recognition
	Revenue from product sales is recognized when goods are received by the customer or the risks and rewards of ownership transfer to the customer.
m.	Reclassifications
	Certain amounts in prior years' financial statements have been reclassified to conform to the 2001 presentation.
3.	Accounts Receivable
	Accounts receivable are net of an allowance for doubtful accounts of $2,312,000, $1,464,000, and $1,008,000 as of December 31, 2001, 2000, and 1999, respectively. Bad debt charges, net of recoveries, were $1,860,000 for 2001, $1,169,000 for 2000 and $1,147,000 for 1999.
4.	Inventory
	Comparative year-end inventories are as follows:
(Th (In thousands)
InventInventory at FIFO
$ 88,203
$ 99,762
$ 104,106
Reduction to LIFO
30,460
34,641
34,267
Inventory at LIFO
$ 57,743
$ 65,121
$ 69,839
	Liquidation of certain inventory layers carried at the lower costs which prevailed in prior years as compared with the costs of 2001, 2000, and 1999 purchases had the effect of increasing 2001, 2000, and 1999 net income $2,085,000 ($.58 per share), $232,000 ($.06 per share), and $47,000 ($.01 per share), respectively.
5.	Debt
a.	Short-term Borrowings:
	Amounts payable to banks at December 31, 2001, 2000, and 1999 were $4,000,000, $8,475,000, and $7,800,000, respectively. The average interest rate, which is based on existing Federal Funds rates, was 2.2 percent at December 31, 2001, 7.1 percent at December 31, 2000, and 5.4 percent at December 31, 1999. The carrying amount of these short-term borrowings approximates fair value because of the short maturity.
	The Company had unused lines of credit totaling $43.5 million at December 31, 2001.
b. Long-term Debt:
(In thousands)
Promissory note, 9.6% interest payable
quarterly, $1,950 paid June 2001 (1)
$ -
$ 1,950
$ 3,800
Promissory note, 6.6% interest
plus $83 principal payable
monthly through 2002. (1)
1,000
2,000
3,000
Promissory note, variable interest
payable monthly (2.37% at December
31, 2001), principal due August
2003. (1) (2)
10,000
15,000
15,000
Industrial revenue financings, variable
interest payable quarterly (1.9% at
December 31, 2001) with varying
maturities from 2005 to 2009. (1) (3)
10,075
10,075
10,075
Other
1,065
22,140
29,659
32,413
Less current maturities
1,465
3,022
4,398
$ 20,675
$26,637
$28,015
(1)	Subject to agreements that require the Company to maintain not less than $55,000,000 in working capital and not less than a 1.75-to-1 year-end current ratio. Cash dividends cannot exceed 50 percent of earnings, excluding net gains on disposition of capital assets, reckoned accumulatively from January 1, 1986. Earnings retained since that date not restricted under this provision amount to $20,480,000.
(2)	The Company has an unsecured term revolver loan with a committed amount of $15,000,000. The Company may pay down and reborrow within the committed amount
without penalty except for a non-usage fee if the average usage for a 90 day period is less than 50 percent.
(3)	Industrial Development Revenue Refunding Bonds are callable at the option of the bondholders upon giving seven days notice to the Trustee. The maturity date of these bonds was extended for five years in 2000. To ensure payment of the long-term refunding bonds the Company has caused to be delivered to the Trustee an irrevocable, direct pay letter of credit in favor of the Trustee in the amount of $10,440,000. The contract amount of the letter of credit is a reasonable estimate of its fair value as the rate is fixed over the life of the commitment. No material loss is anticipated due to nonperformance by the counterparties to those agreements.
	Annual maturities of long-term debt for the five years subsequent to December 31, 2001, are as follows: 2002, $1,465,000; 2003, $10,024,000; 2004, $24,000; 2005, $1,524,000; 2006, $1,040,000.		
	Late in the second quarter of 2001 the Company entered into two interest rate swap agreements. Under the agreements the Company agreed to exchange, at specified intervals, the difference between fixed and variable interest amounts that are calculated by reference to notional amounts of $10,000,000 and $10,075,000. The swaps effectively convert the variable rate borrowings (LIBOR and BMA Municipal Swap Index) into fixed rate borrowings with fixed rates of 5.36% and 4.22% and maturity dates of May 2006 and February 2009. Any difference between interest paid and received on the swap is recognized as interest expense over the life of each swap, thereby adjusting the effective interest rate on the underlying obligations.
	Accounting for the swaps in accordance with SFAS No. 133, as amended by SFAS No. 138, resulted in a loss of $303,000, net of an income tax benefit of $185,000, in other comprehensive income for changes in fair value of the cash flow hedges for the year ended December 31, 2001. Included in other debt is $488,000, which is the fair value of the derivatives.
6.	Postretirement Health and Life Benefits
	The following tables reconcile the plan's change in benefit obligation and show the plan's funded status at December 31, 2001, 2000, and 1999.
(In th(In thousands)
Change in benefit obligation
Benefit obligation at the end
of the prior year
$ 4,486
$ 4,348
$ 4,869
Service cost
Interest cost
Plan participants' contributions
Actuarial (gain) loss
(64)
(602)
Benefit payments
(308)
(365)
(361)
Benefit obligation at year end
$4,486
$ 4,486
$ 4,348
Reconciliation of funded status
Funded status
$(4,486)
$(4,486)
$(4,348)
Unrecognized net actuarial loss
Unrecognized transition obligation
2,239
2,442
2,645
Accrued cost
$(2,090)
$(1,824)
$(1,543)
	The discount rate used to calculate the benefit obligation was 7.25 percent for 2001, 7.60 percent for 2000, and 8.00 percent for 1999. There are no plan assets. Employer paid benefits are limited to a fixed reimbursement allowance based on years of service at retirement. No health care cost trend assumption is necessary.
	The components of the provision for net periodic postretirement benefit costs are:
(In thousands)
ServiService cost
$ 43
$ 47
$ 55
Interest cost
$ 303
$ 331
$ 316
Net amortization
$ 203
$ 203
$ 222
Net postretirement benefit cost
$ 549
$ 581
$ 593
7.	Retirement Plan
	The following tables reconcile the plan's change in benefit obligation and change in plan assets and show the funded status at December 31, 2001, 2000, and 1999.
(In thousands)
Change in benefit obligation
Benefit obligation at the end
of the prior year
$ 41,220
$ 37,518
$ 42,903
Service cost
1,222
Interest cost
2,958
2,853
2,755
Actuarial loss (gain)
1,160
(6,556)
Benefit payments
(2,591)
(1,173)
(2,806)
Benefit obligation at year end
$ 43,165
$ 41,220
$ 37,518
Change in plan assets
Fair value of plan assets at
beginning of year
$ 77,492
$ 79,798
$ 77,153
Actual return on plan assets
(3,745)
(1,133)
5,451
Benefits paid
(2,591)
(1,173)
(2,086)
Fair value of plan assets at year end
$ 71,156
$ 77,492
$ 79,798
Reconciliation of funded status
Funded status
$ 27,991
$ 36,270
$ 42,280
Unrecognized net actuarial gain
(2,187)
(13,287)
(23,662)
Prepaid benefit
$ 25,804
$ 22,983
$ 18,618
Weighted-average assumptions as of the end of the year were:
Discount rate
7.25%
7.60%
8.0%
Rate of compensation increase
4.0%
4.0%
4.0%
Expected return on plan assets
7.75%
7.75%
8.25%
	The components of the net pension benefit are:
(In thousands)
Service cost
$ 954
$ 862
$ 1,222
Interest cost
2,958
2,853
2,755
Expected return on plan assets
(5,915)
(6,095)
(6,266)
Amortization of net
actuarial gain
(818)
(1,985)
(1,482)
Net pension benefit
$(2,821)
$(4,365)
$(3,771)
8. Income Taxes
The components of income tax expense are as follows:
(In th(In thousands)
Federal:
Current
$ 2,755
$ 4,372
$ 3,368
Deferred
1,027
1,017
State:
Current
Deferred
Total
$ 4,446
$ 6,085
$ 5,165
	The components of the net deferred tax liability are:
(In thousands)
Current deferred (assets) liabilities
Accounts receivable
$ (398)
$ (287)
$ (190)
Inventory
1,302
(103)
(338)
Accrued vacation
(624)
(633)
(619)
Total net current deferred
(asset) liability
(1,023)
(1,147)
Noncurrent deferred (assets) liabilities
Property and equipment
3,438
3,913
4,349
Pension asset
9,778
8,709
7,006
Postretirement benefit liability
(792)
(691)
(581)
Other
(1,758)
(994)
(577)
Total net non-current deferred
liability
10,666
10,937
10,197
Net deferred liability
$ 10,946
$ 9,914
$ 9,050
The reasons for the difference between total tax expense and the amount computed by applying the statutory federal income tax rate to income before income taxes are as follows:
(In thousands)
Statutory rate applied to
pretax income
$ 3,847
$ 5,288
$ 4,526
State income taxes, net
of federal tax benefit
Other
Total tax expense
$ 4,446
$ 6,085
$ 5,165
9.
Lease Commitments/Related Parties The Company leases some of the warehouse and office facilities used in its business. These leases have varying expiration dates and often include renewal and purchase options. Certain leases require the Company to pay escalations in cost over base amounts for taxes, insurance, or other operating expenses incurred by lessor. The corporate office is leased from a related party for an annual rent of $260,000.
Rental expense under operating leases for 2001, 2000, and 1999 was $1,797,000, $1,528,000, and $1,558,000, respectively.
Minimum payments due for years after 2001 under noncancelable operating leases are $1,728,000 in 2002, $1,548,000 in 2003, $1,119,000 in 2004, $1,018,000 in 2005, $803,000 in 2006, and $343,000 thereafter.
10.	Common Stock
	The Board of Directors authorized the repurchase and retirement of up to 250,000 shares of the Company's outstanding common stock. Shares retired were 29,172 in 2001 and 117,996 shares in 2000, at a cost of $669,000 and $2,103,000, respectively.
11.	Concentration of Credit Risk
	The Company sells its products to all major areas of construction and manufacturing markets throughout the Southern United States. When the Company grants credit, it is primarily to customers whose ability to pay is dependent upon the construction and manufacturing industry economics prevailing in the Southern United States; however, concentrations of credit risk with respect to trade accounts receivable are limited due to the large number of customers comprising the Company's customer base. The Company performs ongoing credit evaluations of its customers and in certain situations requires collateral. The Company maintains allowances for potential credit losses, and such losses have been within management's expectations.
12.	Contingencies
The Company is a defendant in various lawsuits arising in the normal course of business. In the opinion of management, the outcome of these lawsuits will not have material adverse effect on the Company's financial position or results of operations.
TEN-YEAR REVIEW OF SELECTED FINANCIAL DATA (Unaudited)
Noland Company and Subsidiary
(Dollar amounts in thousands, except per share data)
Income Statement Data
Sales
$477,911
$488,714
$482,830
Gross Profit
98,169
98,736
96,938
Operating Expenses
91,357
88,399
88,115
Operating Profit
6,812
10,337
8,823
Interest Expense
1,723
2,715
2,819
Interest Expense as Percent of Total Assets
.8
1.2
1.2
Income Before Income Taxes
11,315
15,393
13,312
Pretax Profit as Percent of Sales
2.4
3.1
2.8
Income Tax Expense
4,446
6,085
5,165
Effective Tax Rate
39.3
39.5
38.8
Net Income
6,869
9,308
8,147
Income Paid to Stockholders (Cash Dividends)
1,145
1,168
1,184
Income Reinvested
5,724
8,140
6,963
Property and Equipment Expenditures
8,405
6,715
7,018
Depreciation and Amortization
8,168
8,222
8,450
Balance Sheet Data
Stockholders' Equity
143,004
138,224
132,162
Working Capital
69,723
71,542
67,752
Current Ratio
2.4
2.3
2.1
Total Assets
225,434
232,594
233,619
Long-term Debt
20,675
26,637
28,015
Borrowed Funds
26,140
38,134
40,213
Borrowed Funds as Percent of Total Assets
11.6
16.4
17.2
Total Liabilities as Percent of Total Assets
36.6
40.6
43.4
Per Share Data
Diluted Earnings
1.92
2.55
2.20
Cash Dividends Paid to Stockholders
.32
.32
.32
Stockholders' Equity (Book Value)
40.19
38.56
35.71
Return on Average Stockholders' Equity
4.9
6.9
6.3
Stock Price Range:
Average High
26.21
19.09
22.95
Average Low
18.90
14.98
18.25
Number of Employees at December 31
1,415
1,492
1,512
Number of Branches at December 31
Supplemental Information
The Company elected the LIFO method of inventory valuation in 1974.
The above information (i.e., gross profit, income and taxes) is stated on that basis.
Had the Company used the FIFO method, the results would have been:
Gross Profit
93,988
99,122
98,329
Income Before Income Taxes
7,135
15,767
14,703
Income Tax Expense
2,804
6,228
5,705
Net Income
4,331
9,539
8,998
Net Income Per Share
1.21
2.62
2.43
Stockholders' Equity (Book Value) Per Share
45.64
43.67
39.71
Return on Average Stockholders' Equity
2.7
6.3
6.3
$465,479
$464,965
$465,705
$469,512
$440,202
$402,941
$412,086
93,446
93,753
90,789
89,087
86,166
77,306
77,265
87,927
87,659
84,383
83,389
78,259
74,692
73,227
5,519
6,094
6,406
5,698
7,907
2,614
4,038
3,498
3,078
2,828
3,239
2,626
2,422
3,058
1.5
1.4
1.3
1.5
1.2
1.2
1,7
9,191
8,884
9,657
8,237
10,568
5,291
6,610
2.0
1.9
2.1
1.8
2.4
1.3
1.6
3,321
3,341
3,794
3,290
4,341
1,996
2,518
36.1
37.6
39.3
39.9
41.1
37.7
38.1
5,870
5,543
5,863
4,947
6,227
3,295
4,092
1,184
1,184
1,184
1,036
4,686
4,359
4,679
3,911
5,339
2,407
3,204
14,751
9,339
10,890
9,735
10,858
7,611
6,191
7,977
6,890
6,868
6,655
6,232
6,178
6,365
125,233
120,767
116,292
111,688
107,865
102,596
100,189
65,268
75,845
77,379
71,889
65,575
65,203
65,509
2.0
2.6
2.6
2.4
2.0
2.3
2.8
234,328
218,448
219,885
213,520
217,085
201,029
185,372
32,413
39,784
45,039
41,611
36,914
38,505
40,511
54,785
48,430
54,267
45,332
53,130
47,485
46,097
23.4
22.2
24.7
21.2
24.5
23.6
24.9
46.6
44.7
47.1
47.7
50.3
48.9
46.0
1.59
1.50
1.58
1.34
1.68
.89
1.11
.32
.32
.32
.28
.24
.24
.24
33.84
33.63
31.42
30.18
29.15
27.72
27.07
4.8
4.7
5.1
4.5
5.9
3.2
4.2
27.17
24.59
21.81
21.31
20.94
18.13
16.13
22.27
21.72
18.89
18.38
17.56
15.06
13.91
1,554
1,606
1,692
1,655
1,741
1,683
1,720
93,827
92,713
90,582
91,187
86,404
77,318
76,541
9,572
7,844
9,450
10,337
10,806
5,303
5,886
3,455
2,949
3,714
4,124
4,441
2,000
2,226
6,117
4,895
5,736
6,213
6,365
3,303
3,660
1.65
1.32
1.55
1.68
1.72
.89
.99
37.99
37.32
36.32
34.39
33.69
32.21
31.19
4.3
3.6
4.4
4.9
5.2
2.8
3.2
Inside Back Cover Information
Corporate and Shareholder Information
Corporate Information
Corporate Headquarters:
Noland Company
80 29th Street
Newport News, Virginia 23607
(757) 928-9000
Wholly Owned Subsidiary:
Noland Properties, Inc.
400 Wachovia Bank Building
2700 Washington Avenue
Newport News, Virginia 23607
(757) 247-8200
Investor Inquiries or Request for Form 10-K:
Richard L. Welborn
Assistant Vice President-Finance and Tax Administrator
80 29th Street
Newport News, Virginia 23607
(757) 928-9000
Auditors:
KPMG LLP
2100 Dominion Tower
999 Waterside Drive
Norfolk, Virginia 23510
Legal Counsel:
Hunton & Williams
P.O. Box 1535
Richmond, Virginia 23212
Noland on the Internet:
For the latest financial news, career opportunities and other Company information, visit us on the Internet at: www.noland.com
Stock Information
The Company's common stock is traded over the counter as part of NASDAQ's National Market System (symbol: NOLD). On March 15, 2002, the approximate number of holders of record of the Company's common stock was 1019.
Market Prices:
The following table sets forth the reported high and low prices for the common stock on the NASDAQ system:
High Low
Qtr. 4		 $32.00	 $19.80
Qtr. 3		 $25.60	 $20.80
Qtr. 2		 $24.00	 $19.50
	Qtr. 1		 $23.25	 $15.50
Qtr. 4		 $18.75	 $17.25
Qtr. 3		 $20.13	 $16.50
Qtr. 2		 $19.00	 $13.50
Qtr. 1		 $18.50	 $12.69
P/E Ratio:*
High Low
2001		 14		 10
2000		 7	 	 6
*Based on final, full-year diluted earnings
Dividend Policy:
Noland has paid regular cash dividends for 69 consecutive years; and, while there can be no assurance as to future dividends because they are dependent on earnings, capital requirements and financial condition, the Company intends to continue that policy. Dividend payments are subject to the restrictions described in the Notes to the Consolidated Financial Statements.
Dividends Paid:
The Company paid quarterly dividends of $.08 per share in each quarter of 2001 and 2000.
Registrar:
Noland Company
Transfer Agent:
Continental Stock Transfer and Trust Company
2 Broadway
New York, New York 10004
(212) 509-4000
Annual Meeting:
April 18, 2002, 10:00 a.m.
Noland's Corporate Headquarters
Newport News, Virginia
EXHIBIT 99 ' Report of Former Independent Accountants
Report of Independent Accountants
To the Board of Directors and Stockholders of Noland Company:
In our opinion, the consolidated balance sheet as of December 31, 2000 and the related consolidated statements of income, of cash flows and of stockholders' equity and comprehensive income for each of the two years in the period ended December 31, 2000 listed in the accompanying index present fairly, in all material respects, the financial position, results of operations and cash flows of Noland Company and its subsidiary at December 31, 2000 and for each of the two years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index for each of the two years in the period ended December 31, 2000 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
Richmond, Virginia
February 22, 2001