FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1994 Commission file no. 2-27393
NOLAND COMPANY
A Virginia Corporation IRS Identification #54-0320170
2700 Warwick Boulevard
Newport News, Virginia 23607
Telephone: (804) 928-9000
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 and (2) has been subject to such filing require-
ments for the past 90 days.
Yes __X__ No _____
Outstanding capital common stock, $10.00 par value at April 20, 1994, 3,700,876
shares.
[FN]
This report contains 11 pages.
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NOLAND COMPANY AND SUBSIDIARY
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets -
March 31, 1994 (Unaudited), and Dec. 31, 1993 (Audited).... 3
Unaudited Consolidated Statements of Income -
Three Months Ended March 31, 1994 and 1993................. 4
Unaudited Consolidated Statements of Retained Earnings -
Three Months Ended March 31, 1994 and 1993................. 5
Unaudited Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1994 and 1993................. 6
Notes to Unaudited Consolidated Financial Statements............. 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................... 8-9
PART II. OTHER INFORMATION
Items 1, 2, 3, 4, 5, and 6........................................ 10
SIGNATURES .................................................................. 11
<PAGE>
PART 1. FINANCIAL INFORMATION
NOLAND COMPANY AND SUBSIDIARY
Consolidated Balance Sheets
Item 1. Financial Statements
March 31, December 31,
1994 1993
(Unaudited) (Audited)
Assets
Current Assets:
Cash and cash equivalents $ 4,476,831 $ 2,191,153
Accounts receivable, net 44,384,162 46,829,595
Inventory, net 64,104,925 55,474,887
Deferred income taxes 1,763,065 1,763,065
Prepaid expenses 790,067 698,572
Total Current Assets 115,519,050 106,957,272
Property and Equipment, at cost:
Land 12,460,900 12,413,631
Buildings 62,123,852 62,006,032
Equipment and fixtures 46,513,179 46,097,163
Property excess to current needs 2,091,952 2,200,626
Total 123,189,883 122,717,452
Less accumulated depreciation 54,488,576 53,580,106
Property and Equipment, net 68,701,307 69,137,346
Assets Held for Resale 1,355,897 1,305,986
Prepaid Pension 11,805,599 11,705,599
Other Assets 1,983,147 2,273,348
$199,365,000 $191,379,551
Liabilities and Stockholders' Equity
Current Liabilities:
Notes payable, short-term borrowings $ 3,800,000 $ 7,000,000
Current maturity of long-term debt 2,105,000 1,980,000
Accounts payable 37,059,200 20,976,392
Employee compensation 2,975,053 3,972,603
Accruals and other liabilities 4,520,621 6,183,664
Federal and state income taxes 561,830 1,256,093
Total Current Liabilities 51,021,704 41,368,752
Long-term Debt 37,130,000 38,505,000
Deferred Income Taxes 8,403,742 8,403,742
Accrued Postretirement Benefits 179,281 505,517
Stockholders' Equity:
Capital common stock, par value $10;
authorized, 6,000,000 shares; issued,
3,880,888 shares 38,808,880 38,808,880
Retained earnings 64,357,143 64,323,410
Total 103,166,023 103,132,290
Less treasury stock, 180,012, at cost 535,750 535,750
Stockholders' Equity 102,630,273 102,596,540
$199,365,000 $191,379,551
[FN]
The accompanying notes are an integral part of the financial statements.
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<TABLE>
<CAPTION>
NOLAND COMPANY AND SUBSIDIARY
Unaudited Consolidated Statements of Income
Three Months Ended
March 31
1994 1993
<S> <C> <C>
Merchandise sales $ 97,051,251 $ 88,302,657
Cost of goods sold:
Purchases and freight-in 87,622,067 77,891,255
Inventory, beginning 55,474,886 50,865,543
Inventory, ending (64,104,926) (56,656,549)
Cost of goods sold 78,992,027 72,100,249
Gross profit on sales 18,059,224 16,202,408
Operating expenses 18,435,677 18,406,089
Operating loss (376,453) (2,203,681)
Other income:
Cash discounts, net 924,956 773,236
Service charges 330,042 357,940
Miscellaneous 107,381 119,805
Total other income 1,362,379 1,250,981
Interest expense 576,842 612,208
Income (loss) before income taxes 409,084 (1,564,908)
Income taxes 153,300 (588,900)
Net income (loss) $ 255,784 $ (976,008)
Earnings (loss) per share (based on
3,700,876 shares outstanding) $ .07 $ (.26)
Cash dividends per share $ .06 $ .06
</TABLE>
[FN]
The accompanying notes are an integral part of the financial statements.
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NOLAND COMPANY AND SUBSIDIARY
Unaudited Consolidated Statements of Retained Earnings
Three Months Ended
March 31
1994 1993
Retained earnings, January 1 $64,323,410 $61,916,132
Add (deduct) net income (loss) 255,784 (976,008)
Deduct cash dividends paid
($.06 per share) (222,051) (222,051)
Retained earnings, March 31 $64,357,143 $60,718,073
[FN]
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
NOLAND COMPANY AND SUBSIDIARY
Unaudited Consolidated Statements of Cash Flows
Three Months
Ended March 31
1994 1993
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 255,784 $ (976,008)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,550,524 1,568,417
Amortization of prepaid pension cost (100,000) (180,000)
Provision for doubtful accounts 344,250 569,625
Loss on sale of property 44,234 -
Change in operating assets and liabilities:
Decrease in accounts receivable 2,101,183 3,844,559
(Increase) in inventory (8,630,038) (5,791,006)
(Increase) in prepaid expenses (91,495) (64,229)
(Increase) decrease in assets held for resale (49,911) 43,275
Decrease in other assets 272,701 92,856
Increase in accounts payable 16,082,808 5,998,148
(Decrease) in employee compensation (997,550) (696,810)
(Decrease) in accruals and other liabilities (1,663,043) (2,588,045)
(Decrease) increase in federal and state income taxes (694,263) (1,327,875)
(Decrease) increase in postretirement benefits (326,236) 137,000
Total adjustments 7,843,164 1,605,915
Net cash provided by operating activities 8,098,948 629,907
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,378,949) (1,174,577)
Proceeds from sale of assets 237,730 107,806
Net cash used by investing activities (1,141,219) (1,066,771)
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term (payments) borrowings-net (3,200,000) (300,000)
Long-term debt repayments (1,250,000) (1,251,447)
Dividends paid (222,051) (222,051)
Net cash used by financing activities (4,672,051) (1,773,498)
CASH AND CASH EQUIVALENTS:
Increase (decrease) during first quarter 2,285,678 (2,210,362)
Beginning of year 2,191,153 2,538,167
End of first quarter $4,476,831 $ 327,805
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the first quarter for:
Interest $ 584,951 $ 627,359
Income taxes $ 847,563 $ 830,504
</TABLE>
[FN]
The accompanying notes are an integral part of the financial statements.
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NOLAND COMPANY AND SUBSIDIARY
Notes to Unaudited Consolidated Financial Statements
1. In the opinion of the Company, the accompanying unaudited consolidated
statements of income contain all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the results of
operations for the three months ended March 31, 1994 and 1993.
2. The Notes to Consolidated Financial Statements included in the Company's
December 31, 1993, Annual Report on Form 10-K are an integral part of
the interim unaudited financial statements and remain substantially
unchanged. The Company takes a physical inventory annually on December
31 of each year. Interim period cost of goods sold is determined by
costing sales as follows: stock items at current acquisition costs;
direct shipments from manufacturers to customers at identified cost.
Elements of cost that are finally determinable only at year-end have
been considered by management.
3. Due to the seasonal nature of the construction industry supplied by the
registrant, interim results of operations of each period are not
necessarily indicative of earnings for the year.
4. Accounts Receivable as of March 31, 1994 and 1993 are net of allowance
for doubtful accounts of $968,427 and $2,206,442, respectively.
Quarterly bad debt charges, net of recoveries, were $247,992 for 1994
and $494,805 for 1993.
5. The dollar amount of Noland Company's backlog of orders believed to be
firm was approximately $36,250,698 at March 31, 1994.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
The Company generally generates its cash needs through: (1) cash flow from
operations; (2) short-term borrowings; (3) bank lines of credit arrangements,
when needed; and (4) additional long-term debt.
The Company generated $2.2 million in cash from operations during the first
three months of 1994, compared to $630,000 for the same year-earlier period.
The cash was used for capital expenditures ($1.4 million), short and long-
term debt payments ($4.4 million) and dividend payments. Management believes
the Company has adequate financial resources to meet the needs of the
foreseeable future.
Results of Operations
For the first quarter of 1994 the Company had net income of $256,000 or seven
cents per share compared to a net loss of $976,000 or 26 cents per share for
the first quarter of 1993.
Sales for the first quarter of 1994 were up 9.9 percent compared to the first
quarter of 1993. The Company was pleased with this improvement in light of
the extremely harsh winter weather that hit many parts of the South in the
early part of this year. All four product departments contributed to the
sales increase. The Company's gross margin of profit continued to improve,
increasing three-tenths of a percentage point over the year-earlier period.
Operating expenses equaled the year-earlier period but were still higher than
gross profit, resulting in a $376,000 operating loss for the quarter. 1993's
first quarter operating loss was $2.2 million.
Interest expense declined by 5.8 percent, due to a $2.1 million reduction in
long-term debt versus a year ago.
The economic outlook remains bright, despite recent concerns about rising
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interest rates. Consumer confidence surged in March to the highest level in
nearly four years, prompting people to buy homes and other big-ticket items
they had been putting off. Homebuilding activity, in particular, continues
to be the engine driving this recovery, and the Company is fully
participating in that key market.
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PART II. OTHER INFORMATION
Item 1. None
Item 2. None
Item 3. None
Item 4. None
Item 5. None
Item 6. None
<PAGE>
SIGNATURES
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.
NOLAND COMPANY
April 27, 1994 Arthur P. Henderson, Jr.
Arthur P. Henderson, Jr.
Vice President-Finance
