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, 1995 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
requirements for the past 90 days.
Yes __X__ No _____
Outstanding capital common stock, $10.00 par value at April 25, 1995,
3,700,876 shares.
[FN]
This report contains 11 pages.
<PAGE>
NOLAND COMPANY AND SUBSIDIARY
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets -
March 31, 1995 (Unaudited) and Dec. 31, 1994 (Audited).... 3
Unaudited Consolidated Statements of Income -
Three Months Ended March 31, 1995 and 1994................. 4
Unaudited Consolidated Statements of Retained Earnings -
Three Months Ended March 31, 1995 and 1994................ 5
Unaudited Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1995 and 1994................ 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,
1995 1994
(Unaudited) (Audited)
Assets
Current Assets:
Cash and cash equivalents $ 4,019,061 $ 1,428,702
Accounts receivable, net 51,902,921 52,457,892
Inventory, net 72,559,443 64,458,250
Deferred income taxes 2,000,981 2,000,981
Prepaid expenses 332,266 231,018
Total Current Assets 130,814,672 120,576,843
Property and Equipment, at cost:
Land 13,057,798 13,293,104
Buildings 67,488,767 66,040,313
Equipment and fixtures 49,820,411 49,001,851
Property excess to current needs 1,927,822 1,927,822
Total 132,294,798 130,263,090
Less accumulated depreciation 58,399,718 57,277,794
Property and Equipment, net 73,895,080 72,985,296
Assets Held for Resale 1,355,897 1,355,898
Prepaid Pension 12,240,230 12,240,230
Other Assets 1,518,036 1,464,603
$219,823,915 $208,622,870
Liabilities and Stockholders' Equity
Current Liabilities:
Notes payable, short-term borrowings $ 16,600,000 $ 14,100,000
Current maturity of long-term debt 741,250 2,116,250
Accounts payable 38,807,920 23,743,496
Employee compensation 2,935,505 4,695,592
Accruals and other liabilities 4,731,935 8,633,887
Federal and state income taxes 1,484,145 1,712,473
Total Current Liabilities 65,300,755 55,001,698
Long-term Debt 36,910,937 36,913,750
Deferred Income Taxes 8,638,193 8,638,193
Accrued Postretirement Benefits 242,169 204,424
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 70,522,808 69,661,726
Total 109,331,688 108,470,606
Less treasury stock, 180,012, at cost 535,750 535,750
Less restricted stock 64,077 70,051
Stockholders' Equity 108,731,861 107,864,805
$219,823,915 $208,622,870
[FN]
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
NOLAND COMPANY AND SUBSIDIARY
Unaudited Consolidated Statements of Income
Three Months Ended
March 31,
1995 1994
<S> <C> <C>
Merchandise sales $111,736,325 $ 97,051,251
Cost of goods sold:
Purchases and freight-in 98,340,722 87,622,067
Inventory, beginning 64,458,250 55,474,886
Inventory, ending (72,559,444) (64,104,926)
Cost of goods sold 90,239,528 78,992,027
Gross profit on sales 21,496,797 18,059,224
Operating expenses 20,500,789 18,435,677
Operating profit (loss) 996,008 (376,453)
Other income:
Cash discounts, net 1,069,019 924,956
Service charges 341,187 330,042
Miscellaneous 80,497 107,381
Total other income 1,490,703 1,362,379
Interest expense 750,176 576,842
Income before income taxes 1,736,535 409,084
Income taxes 653,400 153,300
Net income $ 1,083,135 $ 255,784
Earnings per share (based on
3,700,876 shares outstanding) $ .29 $ .07
Cash dividends per share $ .06 $ .06
</TABLE>
[FN]
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOLAND COMPANY AND SUBSIDIARY
Unaudited Consolidated Statements of Retained Earnings
Three Months Ended
March 31,
1995 1994
Retained earnings, January 1 $69,661,726 $64,323,410
Add net income 1,083,135 255,784
Deduct cash dividends paid
($.06 per share) (222,053) (222,051)
Retained earnings, March 31 $70,522,808 $64,357,143
[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
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,083,135 $ 255,784
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,635,594 1,550,524
Amortization of prepaid pension cost - (100,000)
Provision for doubtful accounts 290,190 344,250
Amortization of unearned compensation-restricted stock 5,974 -
Loss on sale of property - 44,234
Change in operating assets and liabilities:
Decrease in accounts receivable 264,781 2,101,183
(Increase) in inventory (8,101,193) (8,630,038)
(Increase) in prepaid expenses (101,248) (91,495)
Decrease (increase) in assets held for resale 1 (49,911)
(Increase) decrease in other assets (68,433) 272,701
Increase in accounts payable 15,064,424 16,082,808
(Decrease) in employee compensation (1,760,087) (997,550)
(Decrease) in accruals and other liabilities (3,901,952) (1,663,043)
(Decrease) in federal and state income taxes (228,328) (694,263)
Increase (decrease) in accrued post retirement benefits 37,745 (326,236)
Total adjustments 3,137,468 7,843,164
Net cash provided by operating activities 4,220,603 8,098,948
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,608,936) (1,378,949)
Proceeds from sale of assets 78,558 237,730
Net cash used by investing activities (2,530,378) (1,141,219)
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term (payments) borrowings-net 2,500,000 (3,200,000)
Long-term debt repayments (1,377,813) (1,250,000)
Dividends paid (222,053) (222,051)
Net cash provided (used) by financing activities 900,134) (4,672,051)
CASH AND CASH EQUIVALENTS:
Increase during first quarter 2,590,359 2,285,678
Beginning of year 1,428,702 2,191,153
End of first quarter $4,019,061 $4,476,831
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the first quarter for:
Interest $ 763,174 $ 584,951
Income taxes $ 881,728 $ 847,563
</TABLE>
[FN]
The accompanying notes are an integral part of the financial statements.
<PAGE>
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, 1995 and 1994.
2. The Notes to Consolidated Financial Statements included in the
Company's December 31, 1994, 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 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, 1995 and 1994 are net of
allowance for doubtful accounts of $968,427 and $968,427,
respectively. Quarterly bad debt charges, net of recoveries,
were $214,563 for 1995 and $247,992 for 1994.
5. The dollar amount of Noland Company's backlog of orders
believed to be firm was approximately $44,581,173 at March 31,
1995.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
The Company maintains its short and long-term liquidity through: (1)
cash flow from operations; (2) short-term borrowings; (3) bank lines
of credit arrangements, when needed; and (4) additional long-term
debt, when needed.
The Company generated $4.2 million in cash from operations during
the first three months of 1995, compared to $8.1 million for the
same year-earlier period. The cash was used primarily for capital
expenditures totaling $2.6 million. Principal changes in financial
condition from December 31, 1994 to March 31, 1995 include an
increase in inventory of $8.1 million and an increase in accounts
payable of $15.1 million. The main reason for the increases in
inventory and accounts payable from year-end 1994 to March 31, 1995
is due to the normally reduced level of inventory buying in
December, the low point of the Company's operating cycle and to the
steadily increased inventory purchasing as the business cycle moves
into the spring and summer busy seasons. Management believes the
Company has adequate financial resources to meet the needs of
foreseeable future.
Results of Operations
For the first-quarter of 1995 the Company had net income of $1.1
million, or 29 cents per share, compared to net income of $256,000,
or seven cents per share for, the first quarter of 1994.
Sales for the first quarter of 1995 were up 15.1 percent compared
to the first quarter of 1994 to a total of $111.7 million. The
$111.7 million in sales was a record for any first quarter. Healthy
economic conditions in construction and manufacturing, along with
five more branches and milder winter weather than a year ago,
contributed to the improved sales total. Excluding the new
branches, sales increased 11 percent. The Company's gross margin
of profit increased six-tenths of a percentage point over the year-
earlier period. This increase is primarily due to management
refining its quarterly inventory adjustments. Operating expenses
increased 11.2 percent over first quarter 1994 mainly due to new
operations and increased personnel cost.
<PAGE>
Interest expense increased by 30 percent, due to higher interest
rates and larger accounts receivable and inventory investments.
The Company remains optimistic about 1995, despite indications
economic growth is slowing. Orders for future delivery are up 23
percent over a year ago, and the economy appears conducive to
continued strong demand for our products and services.
<PAGE>
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
May 2, 1995 Arthur P. Henderson,Jr.
Arthur P. Henderson,Jr.
Vice President-Finance
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 4,019,061
<SECURITIES> 0
<RECEIVABLES> 52,871,348
<ALLOWANCES> 968,427
<INVENTORY> 72,559,443
<CURRENT-ASSETS> 130,814,672
<PP&E> 132,294,798
<DEPRECIATION> 58,399,718
<TOTAL-ASSETS> 219,823,915
<CURRENT-LIABILITIES> 65,300,755
<BONDS> 0
0
0
<COMMON> 38,808,880
<OTHER-SE> 69,922,981
<TOTAL-LIABILITY-AND-EQUITY> 219,823,915
<SALES> 111,736,325
<TOTAL-REVENUES> 111,736,325
<CGS> 90,239,528
<TOTAL-COSTS> 20,286,226
<OTHER-EXPENSES> 1,490,703
<LOSS-PROVISION> 214,563
<INTEREST-EXPENSE> 750,176
<INCOME-PRETAX> 736,535
<INCOME-TAX> 653,400
<INCOME-CONTINUING> 1,083,135
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,083,135
<EPS-PRIMARY> .29
<EPS-DILUTED> .29
</TABLE>
