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, 1996 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, 1996,
3,700,876 shares.
This report contains 10 pages.
<PAGE>
NOLAND COMPANY AND SUBSIDIARY
INDEX
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets -
March 31, 1996 (Unaudited) and Dec. 31, 1995 (Audited).... 3
Unaudited Consolidated Statements of Income -
Three Months Ended March 31, 1996 and 1995................. 4
Unaudited Consolidated Statements of Retained Earnings -
Three Months Ended March 31, 1996 and 1995................ 5
Unaudited Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1996 and 1995................ 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,
1996 1995
(Unaudited) (Audited)
Assets
Current Assets:
Cash and cash equivalents $ 4,731,116 $ 12,577,642
Accounts receivable, net 49,703,251 50,504,021
Inventory, net 61,373,232 58,072,335
Deferred income taxes 1,901,915 1,901,915
Prepaid expenses 421,716 275,755
Total Current Assets 118,131,230 123,331,668
Property and Equipment, at cost:
Land 13,295,650 13,288,151
Buildings 72,032,525 70,621,815
Equipment and fixtures 52,125,895 51,518,836
Property excess to current needs 2,054,040 2,054,040
Total 139,508,110 137,482,842
Less accumulated depreciation 62,895,146 61,818,967
Property and Equipment, net 76,612,964 75,663,875
Assets Held for Resale 1,290,775 1,290,775
Prepaid Pension 11,929,323 11,991,504
Other Assets 1,170,034 1,242,063
$209,134,326 $213,519,885
Liabilities and Stockholders' Equity
Current Liabilities:
Current maturity of long-term debt $ 3,721,108 $ 3,721,108
Bank overdrafts 8,425,680 11,967,714
Accounts payable 26,024,781 21,349,691
Other accruals and liabilities 7,789,390 14,236,217
Federal and state income taxes 816,291 167,787
Total Current Liabilities 46,777,250 51,442,517
Long-term Debt 41,589,740 41,611,267
Deferred Income Taxes 8,352,682 8,352,682
Accrued Postretirement Benefits 486,752 425,724
Stockholders' Equity:
Capital common stock, par value $10;
authorized, 6,000,000 shares; issued,
3,700,876 shares 37,008,760 37,008,760
Retained earnings 75,067,386 74,836,888
Total 112,076,146 111,845,648
Less restricted stock 148,244 157,953
Stockholders' Equity 111,927,902 111,687,695
$209,134,326 $213,519,885
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOLAND COMPANY AND SUBSIDIARY
Unaudited Consolidated Statements of Income
Three Months Ended
March 31,
1996 1995
Merchandise sales $106,239,797 $111,736,325
Cost of goods sold:
Purchases and freight-in 88,911,163 98,340,722
Inventory, beginning 58,072,334 64,458,250
Inventory, ending (61,373,232) (72,559,444)
Cost of goods sold 85,610,265 90,239,528
Gross profit on sales 20,629,532 21,496,797
Operating expenses 20,609,129 20,500,789
Operating profit 20,403 996,008
Other income:
Cash discounts, net 1,073,440 1,069,019
Service charges 384,550 341,187
Miscellaneous 50,563 80,497
Total other income 1,508,553 1,490,703
Interest expense 684,787 750,176
Income before income taxes 844,169 1,736,535
Income taxes 317,600 653,400
Net income $ 526,569 $1,083,135
Earnings per share (based on
3,700,876 shares outstanding) $ .14 $ .29
Cash dividends per share $ .08 $ .06
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,
1996 1995
Retained earnings, January 1 $74,836,888 $69,661,726
Add net income 526,569 1,083,135
Deduct cash dividends paid
($.08 and $.06 per share, respectfully) (296,071) (222,053)
Retained earnings, March 31 $75,067,386 $70,552,808
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOLAND COMPANY AND SUBSIDIARY
Unaudited Consolidated Statements of Cash Flows
Three Months
Ended March 31
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 526,569 $ 1,083,135
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,652,431 1,635,594
Amortization of prepaid pension cost 62,181 -
Provision for doubtful accounts 333,585 290,190
Amortization of unearned compensation-restricted stock 9,708 5,974
Change in operating assets and liabilities:
Decrease in accounts receivable 467,185 264,781
(Increase) in inventory (3,300,897) (8,101,193)
(Increase) in prepaid expenses (145,961) (101,248)
Decrease (increase) in assets held for resale - 1
Decrease (increase) in other assets 57,029 (68,433)
(Decrease) in bank overdrafts (3,542,034) (1,534,653)
Increase in accounts payable 4,675,090 8,136,809
(Decrease) in other accruals and liabilities (6,446,827) (5,662,039)
Increase (decrease) in federal and state income taxes 648,504 (228,328)
Increase in accrued post retirement benefits 61,029 37,745
Total adjustments (5,468,977) (5,324,800)
Net cash used by operating activities (4,942,408) (4,241,665)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,652,531) (2,608,936)
Proceeds from sale of assets 66,010 78,558
Net cash used by investing activities (2,586,521) (2,530,378)
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term (payments) borrowings-net - 2,500,000
Long-term debt repayments (21,526) (1,377,813)
Dividends paid (296,071) (222,053)
Net cash (used) provided by financing activities (317,597) 900,134
CASH AND CASH EQUIVALENTS:
(Decrease) during first quarter (7,846,526) (5,871,909)
Beginning of year 12,577,642 9,890,970
End of first quarter $4,731,116 $4,019,061
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the first quarter for:
Interest $ 710,264 $ 763,174
Income taxes $ - $ 881,728
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, 1996 and 1995.
2. The Notes to Consolidated Financial Statements included in the
Company's December 31, 1995, 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. The
Company uses estimated gross profit rates to determine cost of
goods sold during interim periods.
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, 1996 and 1995 are net of
allowance for doubtful accounts of $1,008,132 and $968,427,
respectively. Quarterly bad debt charges, net of recoveries,
were $297,270 for 1996 and $214,563 for 1995.
5. The dollar amount of Noland Company's backlog of orders
believed to be firm was approximately $40,531,320 at March 31,
1996.
<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's financial condition remains strong with working
capital of $71.4 million and a current ratio of 2.5. Total debt at
March 31, 1996 was $8.9 million less than at March 31, 1995.
Management believes the Company has adequate financial resources to
meet the needs of foreseeable future.
Results of Operations
For the first-quarter of 1996 the Company had net income of
$527,000, or 14 cents per share, compared to net income of $1.1
million or 29 cents per share, for the first quarter of 1995.
Sales of $106.2 million for the first quarter of 1996 were down 4.9
percent compared to sales of $111.7 million for the first quarter
of 1995. The decline in sales can be attributed to harsh winter
weather, which slowed construction activity more than usual,
reducing the demand for our products. By contrast, the $111.7
million in sales for 1995 was a record for any first quarter. The
Company is confident that much of the first quarter's sales
shortfall represents business that was deferred -- not lost.
Coupled with the arrival of the spring building season, we expect
the pent-up demand to translate into stronger sales in the second
quarter. The Company's gross margin of profit increased slightly
over the year-earlier period from 19.2 percent to 19.4 percent,
while operating expenses were held flat with the year-earlier
period.
Interest expense declined by 8.7 percent, reflecting lower interest
rates and lower investments in accounts receivable and inventory.
The Company continues to believe that business conditions will be
somewhat better in 1996 than last year, and that the Company is in
a good position to capitalize on them.
<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
April 22, 1996
Arthur P. Henderson, Jr.
Vice President-Finance
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<PERIOD-END> MAR-31-1996
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<RECEIVABLES> 50,711,383
<ALLOWANCES> 1,008,132
<INVENTORY> 61,373,232
<CURRENT-ASSETS> 118,131,230
<PP&E> 139,508,110
<DEPRECIATION> 62,895,146
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<CURRENT-LIABILITIES> 46,777,250
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<COMMON> 37,008,760
<OTHER-SE> 75,215,630
<TOTAL-LIABILITY-AND-EQUITY> 209,134,326
<SALES> 106,239,797
<TOTAL-REVENUES> 106,239,797
<CGS> 85,610,265
<TOTAL-COSTS> 20,311,859
<OTHER-EXPENSES> (1,508,553)
<LOSS-PROVISION> 297,270
<INTEREST-EXPENSE> 684,787
<INCOME-PRETAX> 844,169
<INCOME-TAX> 317,600
<INCOME-CONTINUING> 526,569
<DISCONTINUED> 0
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<NET-INCOME> 526,569
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