FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996 Commission file no. 2-27393
NOLAND COMPANY
A Virginia Corporation IRS Identification #54-0320170
80 29th Street
Newport News, Virginia 23607
Telephone: (757) 928-9000
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock $10 Par Value
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Aggregate market value of the voting stock held by non-affiliates of the
Registrant as of March 14, 1997, was approximately $35,356,000.
3,700,876 shares of the Registrant's Common Stock were outstanding at the close
of business on March 14, 1997.
DOCUMENTS (or portions thereof) INCORPORATED BY REFERENCE
Part of
Document Form 10-K
Annual Report to Stockholders for the year ended Parts II and IV
December 31, 1996
Noland Company Proxy Statement for April 23, 1997, Parts III and IV
Annual Meeting of Stockholders
This report contains 32 pages. The exhibit index is shown on page 11 of this
10-K.
1
<PAGE>
PART I
Item 1 Business
(1) (a) A Virginia corporation founded in 1915, Noland Company is
a distributor of Plumbing/Heating, Air Conditioning,
Industrial and Electrical supplies, with branch facilities
in fourteen 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. However, the growing demand for
computer-based, fully automated procurement systems for
MRO (maintenance, repair and operating) products is
attracting new business and widening the scope and
possibilities for potential sales growth in this market.
(b) The Company operates in only one industry segment, the
distribution of mechanical equipment and supplies.
Markets for these products are all areas of construction -
residential, nonresidential (commercial, institutional,
and industrial), and non-building (highways, sewers,
water, and utilities); manufacturing; domestic water
systems; and maintenance/repair/modernization.
(c) During the last five years, the Company has continued to
serve essentially the same markets described in Item 1 (1)
(b). Current plans call for the continuation of this
policy. The Company does not manufacture any products.
(i) Total sales of each class of similar products for the last five
years are as follows:
1996 1995 1994 1993 1992
(In thousands)
Plumbing/Heating $241,235 $245,407 $241,273 $220,879 $225,239
Air Conditioning 115,963 110,920 90,574 84,600 82,906
Industrial 62,451 64,741 62,279 54,099 54,851
Electrical 46,056 48,444 46,076 43,363 49,090
$465,705 $469,512 $440,202 $402,941 $412,086
Not all branches have all four 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.
(ii) 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.
(iii) The Company does not use or market raw materials.
(iv) 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.
(v) The business in general is seasonal to the extent of the
construction industry it supplies.
<PAGE>
(vi) 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.
(vii) The dollar amount of the Company's backlog of orders believed to be
firm was approximately $37,437,444 at December 31, 1996, and
$40,194,000 at December 31, 1995.
(viii) The portion of the Company's business with the Government and
subject to renegotiation is not considered material.
(ix) 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.
(x) Company-sponsored research and development activities expenditures
in 1996, 1995 and 1994 were immaterial.
(xi) The Company believes it is in compliance with Federal, State and
local provisions which 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.
(xii) As of December 31, 1996, the Company employed 1,692 persons.
(d) From its founding in 1915, the Company has operated principally in
the Southern United States. In late 1994 the Company opened its
first location in Pennsylvania. Additional Pennsylvania locations
were opened in 1995 and 1996.
Item 2 Properties
The main properties of the Company consist of 107 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, Texas, Virginia and West Virginia.
Eighteen are held under leases and the remaining eighty-nine are owned by the
Company. 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 excess to current needs.
Item 3 Legal Proceeding
None of material consequence.
Item 4 Submission of Matters to a Vote of Security Holders
None
Additional Item
<PAGE>
Executive Officers of the Registrant
Positions and Offices Business Experience
Name Age Held with Registrant During the Past Five Years
Lloyd U. Noland, III 53 Chairman of the Board, Chief Executive Officer of
President and Director. and Registrant.
Officer since 1981
Frank A. Wimbush 51 Senior Vice President- Vice President-Sales and
Marketing and Branch Marketing for All-Phase
Operations. Officer Electric Supply Company
Since March 1995 from 1988 to 1994.
A. P. Henderson, Jr. 53 Vice President-Finance. Chief Financial Officer of
Officer since 1983 the Registrant.
Charles A. Harvey 57 Vice President-Corporate Responsible for the
Data. Officer since 1980 Registrant's Corporate
Data Division.
John E. Gullett 55 Vice President-Corporate Responsible for the
Communications. Registrant's Corporate
Officer since 1982 Communications Department.
James E. Sykes, Jr. 53 Treasurer/Secretary. Responsible for Registrant's
Officer since 1982 treasury functions and
secretarial duties.
All executive officers were elected for a term of one year beginning May 1,
1996 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 Market for the Registrant's Common Stock and Related Security Holder
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 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 1996 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, 1996.
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 10 and 11 of the enclosed Noland Company Annual
Report to Stockholders for the year ended December 31, 1996.
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, 1996, are incorporated herein by reference:
<PAGE>
Annual
Report to
Stockholders
(page)
Report of Independent Accountants 12
Consolidated Statement of Income and Retained Earnings--
Years ended December 31, 1996, 1995 and 1994 13
Consolidated Balance Sheet--December 31, 1996, 1995 and 1994 14
Consolidated Statement of Cash Flows --
Years ended December 31, 1996, 1995 and 1994 15
Notes to Consolidated Financial Statements 16-19
Item 9 Disagreements on Accounting and Financial Disclosure
None
PART III
Item 10 Directors and Executive Officers of the Registrant
Data relating to Directors is incorporated herein by reference from
pages 2 and 3 of the 1997 Noland Company Proxy Statement for the April
23, 1997 Annual Meeting of Stockholders.
Data relating to Executive Officers is included in Part I of this
report.
Item 11 Executive Compensation
The information set forth under the caption "Compensation of Executive
Officers" on page 4 of the 1997 Noland Company Proxy Statement for the
April 23, 1997, Annual Meeting of Stockholders is incorporated herein
by reference.
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 1, 2
and 3 of the 1997 Noland Company Proxy Statement for the April 23,
1997, Annual Meeting of Stockholders is incorporated herein by
reference.
Item 13 Certain Relationships and Related Transactions
(a) Effective November 1, 1996, the Company entered into a ten-year
agreement to lease an existing office building for its corporate
headquarters. The building is owned by Basic Construction
Company. Basic Construction owns 893,967 shares of Noland Company
stock. The majority of Basic Construction Company 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. Under the
terms of the lease, the Company will pay an annual rental fee of
approximately $260,000 per year. The Company will bear 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.
<PAGE>
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Consolidated Financial Statements
Included in PART II, Item 8 of this report:
Report of Independent Accountants
Consolidated Statement of Income and Retained
Earnings--Years Ended December 31, 1996, 1995
and 1994
Consolidated Balance Sheet--December 31,
1996, 1995 and 1994
Consolidated Statement of Cash Flows
--Years ended December 31,
1996, 1995 and 1994
Notes to Consolidated Financial Statements
With the exception of the aforementioned information incorporated by
reference and the information in the 1996 Annual Report to Stockholders on the
inside back cover and pages 10, 11, 20 and 21 incorporated in response to
Items 5, 6 and 7 in this Form 10-K Annual Report, the 1996 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.
2. Financial Statement Schedules
Included in PART IV of this report:
For the three years ended December 31, 1996
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.
Report of Independent Accountants
on Consolidated Financial Statement schedules 10
3. 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
No reports on Form 8-K for the three months ended December 31,
1996, were required to be filed.
(c) The Index of Exhibits and any required Exhibits are included
beginning at page 11 of this report.
(d) Not applicable.
<PAGE>
Item 14(a)(2)
Financial Statement Schedules
<PAGE>
FORM 10-K
SCHEDULE II
Noland Company and Subsidiary
Valuation and Qualifying Accounts
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
Additions
Balance Charged to Charged to Balance
Beginning Costs and Other at End
Description of Year Expenses Accounts Deductions(2) of Year
<S> <C> <C> <C> <C> <C>
Valuation accounts
deducted from assets
to which they apply--
for doubtful accounts
receivable
December 31, 1996 $1,008,132 $ 855,577(1) $ - $ 855,577 $1,008,132
December 31, 1995 $ 968,427 $ 739,929(1) $ - $ 700,224 $1,008,132
December 31, 1994 $ 968,427 $ 774,432(1) $ - $ 774,432 $ 968,427
</TABLE>
[FN]
(1) Net of recoveries on bad debts of $657,609 for 1996, $896,772 for 1995
and $685,511 for 1994.
(2) Represents charges for which reserve was previously provided.
<PAGE>
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
March 21, 1997 By Lloyd U. Noland, III
Chairman of the Board
and President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Chairman of the Board,
Lloyd U. Noland, III President and Director March 21, 1997
Lloyd U. Noland, III
Vice President-Finance,
Chief Financial Officer
Arthur P. Henderson, Jr. and Director March 21, 1997
Arthur P. Henderson, Jr.
James E. Sykes, Jr. Treasurer/Secretary March 21, 1997
James E. Sykes, Jr.
Frank A. Wimbush Senior Vice President- March 21, 1997
Frank A. Wimbush Finance and Branch Operations
and Director
Allen C. Goolsby, III Director March 21, 1997
Allen C. Goolsby, III
<PAGE>
COOPERS & LYBRAND L.L.P.
REPORT OF INDEPENDENT ACCOUNTANTS
ON CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
Our report on the consolidated financial statements of Noland Company and
Subsidiary has been incorporated by reference in this Form 10-K from page 12
of the 1996 Annual Report to Stockholders of Noland Company. In connection
with our audits of such financial statements, we have also audited the related
financial statement schedule listed in Item 14 (a) 2 on page 8 of this Form
10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
Newport News, Virginia
February 28, 1997
<PAGE>
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) Material contracts Not Applicable
(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 14 - 31
(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
(27) Financial data schedule 32
(28) Information from reports furnished to
state insurance regulatory authorities Not Applicable
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.
<PAGE>
This page intentionally left blank.
<PAGE>
EXHIBIT 13
INDEX
Page
Management's Discussion 14 - 15
Report of Independent Accountants 16
Quarterly Financial Data 17
Consolidated Statement of Income 18
Consolidated Balance Sheet 19
Consolidated Statement of Cash Flows 20
Notes to Consolidated Financial Statements 21 - 27
Ten Year Review 28 - 29
Inside back cover 30 - 31
<PAGE>
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.
Results of Operations
Sales for 1996 were $465.7 million compared to $469.5 million for 1995 for
a decline of one percent. Excluding our fourth-quarter acquisitions, total
sales declined 1.2 percent. Sales for 1995 were 6.7 percent greater than 1994's
sales of $440.2 million. Three of the Company's four product departments
suffered sales declines, with only the air conditioning department improving
sales. The Company's year-long focus on improving operations and launching
several major new initiatives may have distracted personnel from the sales
end of the business.
Gross profit, as a percent of sales, improved to 19.5 percent in 1996 from
19.0 percent for 1995. It was 19.6 percent in 1994. The gross profit
percentage in 1996 benefitted from the year-end LIFO adjustment primarily
because of low inflation. The 1996 LIFO inventory adjustment decreased cost
of goods sold by $207,000, while the 1995 adjustment increased cost of goods
sold by $2.1 million.
Operating expenses increased 1.2 percent over 1995 despite the additional
costs associated with the opening of nine branches involved in two separate
acquisitions in the latter part of 1996. In 1995 operating expenses were 6.6
percent greater than 1994. Operating expenses, as a percent of sales, were
18.1 percent in 1996 and 17.8 in 1995 and 1994. 1996 operating expenses were
reduced $232,000 for pension income compared to a $249,000 increase in
operating expenses in 1995 and a $534,000 reduction in 1994 operating expenses.
Interest expense declined by 12.7 percent to $2.8 million from $3.2 million.
The decrease is due to lower average borrowings and lower short-term rates
throughout the year. 1995 interest expense was 23.4 percent greater than 1994.
The results of the 1996 activity generated net income of $5.9 million
compared to $4.9 million for 1995 and $6.2 million for 1994.
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
arrangements, when needed; and (4) additional long-term debt, when needed.
The Company began 1996 with $12.6 million in cash. Along with cash
generated from financing activities, the Company used $10.9 million to
purchase capital assets and $6.1 to increase inventory. The Company was
also able to pay for two acquisitions which added nine branch locations.
The Company's financial position remains strong with working capital of
$77.4 million and a current ratio of 2.6 to 1. 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.
<PAGE>
Outlook
The economy appears headed for another year of growth in 1997 and our
Company's entire selling organization has been retooled with a new compensation
program, more emphasis on inside sales, and better leadership. In addition, we
are well positioned to take advantage of opportunities afforded through the
1996 opening of several strategically located branches in Pennsylvania,
Virginia and Florida. We expect to resume a healthy growth in sales in 1997.
Impact of Inflation
Reported results, for the most part, reflect the impact of inflation
because of the Company's use of the LIFO (last-in, first-out) inventory
method. During inflationary periods, this method removes artificial
profits induced by inflation and presents operating results in truer, more
absolute terms. Since adopting LIFO in 1974, the Company has avoided both
the recognition of these inflationary profits and the unnecessary payment
of related taxes on such income. At approximate replacement cost, the
Company's inventory investment was $101.3 million at year-end 1996, while
the LIFO inventory balance was $67.8 million -- a difference accumulated
since 1974 of $33.5 million.
For purposes of financial reporting, the depreciation charge to earnings
for the use of capital assets is reflected on the straight-line basis
which does not necessarily keep pace with rising replacement costs of
those assets.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
a professional services firm
COOPERS
& LYBRAND
To the Board of Directors and Stockholders of Noland Company:
We have audited the accompanying consolidated balance sheets of Noland
Company and Subsidiary as of December 31, 1996, 1995 and 1994, and the related
consolidated statements of income and retained earnings and cash flows for each
of the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Noland Company
and Subsidiary as of December 31, 1996, 1995 and 1994, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1996, in conformity with generally accepted
accounting principles.
Newport News, Virginia Coopers & Lybrand L.L.P.
February 28, 1997
<PAGE>
<TABLE>
Selected Quarterly Financial Data (unaudited)
(In thousands, except per share amounts)
<CAPTION>
First Quarter Second Quarter Third Quarter Fourth Quarter Year
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1995 1996 1995 1996 1995 1996 1995 1996 1995
Sales $106,240 $111,736 $124,574 $123,560 $123,473 $120,702 $111,418 $113,514 $465,705 $469,512
Gross Profit $ 20,630 $ 21,497 $ 23,767 $ 23,551 $ 23,526 $ 23,017 $ 22,866 $ 21,022 $ 90,789 $ 89,087
Net Income $ 527 $ 1,083 $ 2,125 $ 1,932 $ 1,890 $ 1,330 $ 1,321(A)$ 602(A) $ 5,863 $ 4,947
Net Income $ .14 $ .29 $ .58 $ .52 $ .51 $ .36 $ .35(A)$ .17(A) $ 1.58 $ 1.34
Per Share
(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 previously
undeterminable adjustments had the effect of increasing net income for the fourth quarter of 1996 by approximately
$566,000 ($.15 per share) and decreasing net income for the fourth quarter of 1995 by approximately $470,000 ($.13
per share).
</TABLE>
<TABLE>
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
NOLAND COMPANY AND SUBSIDIARY
<CAPTION>
For the years ended December 31, 1996, 1995, and 1994
(In thousands, except per share amounts) 1996 1995 1994
<S> <C> <C> <C>
Sales $465,705 $469,512 $440,202
Cost of Goods Sold:
Purchases and freight in 384,626 374,039 363,019
Inventory, January 1 58,072 64,458 55,475
Inventory, December 31 (67,782) (58,072) (64,458)
Cost of Goods Sold 374,916 380,425 354,036
Gross Profit on Sales 90,789 89,087 86,166
Operating Expenses 84,383 83,389 78,259
Operating Profit 6,406 5,698 7,907
Other Income:
Cash discounts, net 4,196 3,849 3,627
Service charges 1,512 1,469 1,330
Miscellaneous 371 460 330
Total Other Income 6,079 5,778 5,287
Interest Expense 2,828 3,239 2,626
Income Before Income Taxes 9,657 8,237 10,568
Income Taxes 3,794 3,290 4,341
Net Income $ 5,863 $ 4,947 $6,227
Retained Earnings, January 1 74,837 70,926 65,587
Cash Dividends Paid ($.32 per share in 1996,
$.28 per share in 1995 and $.24 per share in 1994) (1,184) (1,036) (888)
Retained Earnings, December 31 $79,516 $ 74,837 $70,926
Net Income Per Share $ 1.58 $ 1.34 $ 1.68
</TABLE>
[FN]
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
NOLAND COMPANY AND SUBSIDIARY
December 31, 1996, 1995, and 1994
(In thousands) 1996 1995 1994
<S> <C> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 3,508 $ 12,578 $ 9,891
Accounts receivable(net of allowance for doubtful accounts) 52,867 50,504 52,458
Inventory (net of reduction to LIFO) 67,782 58,072 64,458
Deferred income taxes 2,183 1,902 2,001
Prepaid expenses 389 276 231
Total Current Assets 126,729 123,332 129,039
Property and Equipment, at cost:
Land 13,026 13,288 13,293
Buildings 74,531 70,622 66,040
Equipment and fixtures 54,654 51,519 49,002
Property in excess of current needs 2,054 2,054 1,928
Total 144,265 137,483 130,263
Less accumulated depreciation 65,368 61,819 57,278
Total Property and Equipment, net 78,897 75,664 72,985
Assets Held for Resale 1,291 1,291 1,356
Prepaid Pension 12,223 11,991 12,240
Other Assets 745 1,242 1,465
$219,885 $213,520 $217,085
Liabilities and Stockholders' Equity
Current Liabilities:
Notes payable, short-term borrowings $ 6,000 $ - $ 14,100
Current maturity of long-term debt 3,228 3,721 2,116
Book overdrafts 6,338 11,968 8,462
Accounts payable 19,199 21,350 23,743
Other accruals and liabilities 14,097 14,236 13,330
Federal and state income taxes 488 168 1,713
Total Current Liabilities 49,350 51,443 63,464
Long-term Debt 45,039 41,611 36,914
Deferred Income Taxes 8,544 8,352 8,638
Accrued Postretirement Benefits 660 426 204
Stockholders' Equity:
Capital common stock, par value, $10;
authorized, 6,000,000 shares; issued, 3,700,876 shares 37,009 37,009 37,009
Retained earnings 79,516 74,837 70,926
Total 116,525 111,846 107,935
Less unearned compensation, restricted stock 233 158 70
Stockholders' Equity 116,292 111,688 107,865
$219,885 $213,520 $217,085
</TABLE>
[FN]
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS
NOLAND COMPANY AND SUBSIDIARY
For the years ended December 31, 1996, 1995, and 1994
(In thousands) 1996 1995 1994
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net Income $ 5,863 $4,947 $ 6,227
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,686 6,939 5,710
Deferred income taxes (89) (187) (4)
Provision for doubtful accounts 1,513 1,637 1,460
(Gain) loss on sale of property (4) - 40
Change in operating assets and liabilities:
Decrease (increase) in accounts receivable 1,320 317 (7,088)
(Increase) decrease in inventory (6,051) 6,386 (8,983)
(Increase) decrease in prepaid expenses (113) (45) 468
Decrease (increase) in assets held for resale - 65 (50)
Decrease in other assets 532 163 749
(Decrease) increase in accounts payable (2,151) (2,393) 2,767
(Decrease) increase in other accruals and liabilities (139) 906 2,787
Increase (decrease) in federal and state income taxes 320 (1,545) 457
Increase in postretirement benefits 234 222 84
Total adjustments 2,058 12,465 (1,603)
Net cash provided by operating activities 7,921 17,412 4,624
Cash Flows From Investing Activities:
Capital expenditures (10,890) (9,735) (10,858)
Proceeds from sale of assets 858 461 797
Purchase of note receivable (13,091) - -
Collections on note receivable 4,136 - -
Net cash used by investing activities (18,987) (9,274) (10,061)
Cash Flows From Financing Activities:
(Decrease) increase in book overdrafts (5,630) 3,506 (1,187)
Short-term borrowings 112,500 156,175 178,000
Short-term payments (106,500) (170,275) (170,900)
Long-term borrowings 7,500 10,954 -
Long-term debt repayments (4,565) (4,652) (1,455)
Dividends paid (1,184) (1,036) (888)
Purchase of restricted stock (125) (123) (82)
Net cash provided (used) by financing activities 1,996 (5,451) 3,488
Cash and Cash Equivalents:
(Decrease) increase during year (9,070) 2,687 (1,949)
Beginning of year 12,578 9,891 11,840
End of year $ 3,508 $ 12,578 $ 9,891
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest $ 3,059 $ 2,997 $ 2,553
Income taxes $ 3,973 $ 5,022 $ 3,889
</TABLE>
[FN]
The accompanying notes are an integral part of the financial statements.
<PAGE>
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/heating, air
conditioning, industrial and electrical.
Markets for these products are all areas of construction--residential,
nonresidential (commercial, institutional and industrial) and non-building
(highways, sewer, water and utilities); manufacturing; domestic water systems;
and maintenance /repair /modernization.
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.
b. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles 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.
c. Inventory
Inventory is stated at the lower of cost or market. The cost of inventory
has been principally determined by the last-in, first-out (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 properties and equipment.
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.
Property in excess of current needs consists primarily of land held for
possible future expansion.
e. Retirement Plan
The Company has a noncontributory retirement plan that covers all
employees with one year or more of service. Benefits are based on years of
service and compensation during active employment. The Company's policy is
to fund annually the minimum funding requirements under the Employee Retirement
Income Security Act of 1974.
<PAGE>
f. Postretirement Benefit Plans
The Company offers postretirement health and life benefits to
substantially all employees who retire with the required years of service.
Health care benefits consist of a reimbursement towards the purchase of the
retirees' health plan of choice. The amount of reimbursement is based on years
of service. Life insurance in the amount of $3,000 is provided to all retirees.
Additional coverage may be purchased by the retiree in an amount up to a total
of fifty percent of final earnings. The Company pays a share of the cost of
such additional coverage. The cost of these benefits is funded on a
pay-as-you-go basis.
g. Income Taxes
A deferred tax asset or liability is recognized for the deferred tax
consequences of all temporary differences.
h. 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.
The Company has no requirements for compensating balances. The Company
maintains its cash in bank deposit accounts which, at times, may exceed
federally insured limits. The Company has not experienced any losses in such
accounts. The Company believes it is not exposed to any significant credit
risk on cash and cash equivalents.
i. 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 $1,897,000
in 1996, $1,969,000 in 1995 and $2,175,000 in 1994.
j. Unearned Compensation - Restricted Stock Plan
The Company provides a restricted stock plan for senior executives of the
Company. Under the Plan, 50,000 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 at the rate of 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 charged to
stockholders'equity and subsequently amortized over seven years. The fair value
of the awards in 1996, 1995 and 1994 was $125,000, $123,000 and $82,000,
respectively. These amounts were reflected as unearned compensation -
restricted stock, with $50,000, $35,000 and $12,000 amortized to compensation
expense in 1996, 1995 and 1994, respectively. The number of shares granted was
6,000 in 1996, and 1995 and 4,000 in 1994.
k. Reclassifications
Certain amounts in prior years' financial statements have been
reclassified to conform to the 1996 presentation.
3. Accounts Receivable
Accounts receivable are net of an allowance for doubtful accounts of
$1,008,000 for 1996 and 1995 and $968,000 for 1994. Bad debt charges, net of
recoveries, were $856,000 for 1996, $739,000 for 1995, and $774,000 for 1994.
<PAGE>
4. Inventory
Comparative year-end inventories are as follows:
(In thousands) 1996 1995 1994
Inventory, at approximate
replacement cost $101,318 $91,814 $96,100
Reduction to LIFO 33,536 33,742 31,642
LIFO inventory $67,782 $58,072 $64,458
5. Notes Payable
a. Short-term Borrowings:
Amounts payable to banks at December 31, 1996 and 1994 were $6,000,000 and
$14,100,000, respectively. There were no short-term borrowings at December 31,
1995. The average interest rate, which is based on existing Federal Funds rates,
at December 31, 1996 and 1994 was 7.1 percent and 6.08 percent, respectively.
The carrying amount of these short-term borrowings approximates fair value
because of the short maturity of the borrowings.
The Company had unused lines of credit totaling $16.8 million at
December 31, 1996.
b. Long-term Debt:
(In thousands) 1996 1995 1994
Promissory note, 9.60% interest payable
quarterly, $1,850,000 due annually June
1997 through 2000 with balance due June
2001. (1) $ 9,350 $11,200 $11,800
Promissory note, 10.15% interest
payable quarterly. Principal paid
in full in 1995. (1) - - 1,375
Promissory note, variable interest
payable weekly (6.50% at December
31, 1996), fully revolving basis
through June 1, 1998. (1) 10,000 10,000 10,000
Promissory note, variable interest
payable monthly (6.21% at December
31, 1996), principal due August
1998. (2) 15,000 7,500 -
Industrial revenue financings, variable
interest payable quarterly (4.21% at
December 31, 1996) with varying
maturities from 1997 to 2004. (1)(3) 13,415 15,200 15,330
Other 502 1,432 525
48,267 45,332 39,030
Less current maturities 3,228 3,721 2,116
$45,039 $41,611 $36,914
(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 $11,062,000.
<PAGE>
(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
carrying value of these bonds is a reasonable estimate of fair value as
interest rates are based on prevailing market rates. 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 $13,900,000. The contract amount of the letter
of credit is a reasonable estimate of its fair value as the value is fixed
over the life of the commitment. No material loss is anticipated due to
nonperformance by the counterparties to those agreements.
The fair value of the remaining $34.9 million of long-term debt is
estimated based on the borrowing rates currently available to the Company
for loans with similar terms and average maturities. The fair value of
this long-term debt is $35.2 million for 1996.
Annual maturities of long-term debt for the five years subsequent to
December 31, 1996, are as follows: 1997, $3,228,000; 1998, $16,864,000;
1999, $3,840,000; 2000, $3,366,000; 2001, $3,395,000.
6. Postretirement Health Care and Life Insurance Benefits
The components of the provision for net periodic postretirement benefit
costs are:
(In thousands) 1996 1995 1994
Service cost - benefits earned
during the period $ 58 $ 45 $ 50
Interest cost on accumulated postretirement
benefit obligation 300 316 309
Net amortization and deferral 210 203 203
Net postretirement benefit cost $ 568 $ 564 $ 562
The following table sets forth the plans' combined postretirement benefit
liability as of December 31, 1996, 1995, and 1994:
(In thousands) 1996 1995 1994
Accumulated postretirement benefit obligation:
Retirees $(2,690) $(2,938) $(2,676)
Fully eligible active
employees (650) (644) (565)
Other active plan
participants (924) (880) (704)
(4,264) (4,462) (3,945)
Unrecognized transition
obligation 3,254 3,457 3,660
Unrecognized net loss 350 579 81
Postretirement liability recognized in the
balance sheet $ (660) $ (426) $ (204)
<PAGE>
The discount rate used to calculate the APBO was 7.5 percent for 1996, 7.0
percent for 1995 and 8.5 percent for 1994. There are no plan assets.
7. Retirement Plan
The components of the provision for net periodic pension cost are:
(In thousands) 1996 1995 1994
Service cost - benefits earned
during the period $ 998 $ 726 $ 843
Interest cost on projected
benefit obligation 2,402 2,278 2,177
Actual return on assets (7,955) (11,936) 650
Net amortization and deferral 4,323 9,181 (4,204)
Net pension cost $ (232) $ 249 $ (534)
Assumptions used in the accounting were:
1996 1995 1994
Discount rate 7.0% 7.0% 8.5%
Rate of increase in future
compensation levels 4.0% 4.0% 4.0%
Long-term rate of return 8.25% 8.0% 8.0%
The following table sets forth the Plan's funded status and
the related amounts recognized in the Company's balance sheet at
December 31, 1996, 1995, and 1994.
(In thousands) 1996 1995 1994
Actuarial present value of
projected benefit obligation,
based on employment service
to date and current salary levels:
Vested benefits $(31,041) $(30,966) $(25,250)
Nonvested benefits (250) (259) (230)
Accumulated benefit obligation (31,291) (31,225) (25,480)
Additional amounts related
to projected salary increases (3,175) (2,431) (2,127)
Projected benefit obligation (34,466) (33,656) (27,607)
Plan assets at fair value;
primarily U.S. Government and
corporate bonds and equity
securities 55,120 49,531 39,856
Plan assets in excess of
projected benefit obligation 20,654 15,875 12,249
Unrecognized net loss/(gain)
from past experience different
from that assumed (8,431) (3,884) (9)
Prepaid pension $ 12,223 $ 11,991 $ 12,240
<PAGE>
8. Income Taxes
The components of income tax expense are as follows:
(In thousands) 1996 1995 1994
Federal:
Current $3,289 $2,936 $3,723
Deferred (76) (159) -
State:
Current 594 541 618
Deferred (13) (28) -
Total $3,794 $3,290 $4,341
The components of the net deferred tax liability are:
(In thousands) 1996 1995 1994
Current deferred (assets)
Accounts receivable $ (379) $ (379) $ (365)
Inventory (1,196) (960) (1,072)
Accrued vacation (608) (563) (564)
Total net current deferred (asset) (2,183) (1,902) (2,001)
Noncurrent deferred (assets) liabilities
Property and equipment 4,694 4,687 4,702
Pension asset 4,600 4,512 4,606
Postretirement
benefit liability (252) (160) (77)
Other (498) (687) (593)
Total net noncurrent deferred
liability 8,544 8,352 8,638
Net deferred liability $6,361 $6,450 $6,637
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) 1996 1995 1994
Statutory rate applied to
pretax income $3,283 $2,801 $3,593
State income taxes, net
of federal tax benefit 391 357 409
Other 120 132 339
Total tax expense $3,794 $3,290 $4,341
9. Postemployment Benefits
Statement of Financial Accounting Standards No. 112, "Employers' Accounting
for Postemployment Benefits" was adopted January 1, 1994. This Statement is
not material to the Company's financial condition or results of operations.
10. Lease Commitments
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.
Rental expense under operating leases for 1996, 1995, and 1994 was
$1,036,000, $992,000, and $711,000, respectively.
<PAGE>
Minimum payments due for years after 1996 under noncancelable operating
leases are $1,111,000 in 1997, $958,000 in 1998, $854,000 in 1999, $687,000 in
2000 and $2,616,000 thereafter.
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. Asset Acquisition
The Company purchased a secured note from Foothill Capital Corporation
issued by Raub Supply Co., for $9.9 million. Additional operating advances of
$3.2 million were made through the note to Raub. Collections on the note totaled
$4.1 million. Effective December 6, 1996 the Company agreed to accept certain
operating assets of Raub, with a fair value of $7.6 million, as partial payment
on the note. Results, using the purchase method, for new locations beginning
December 7, 1996 are included in 1996 audited results. The outstanding note
balance of $1.4 million is collateralized by real estate.
The following table reflects the unaudited pro forma combined results of
operations, assuming the acquisition had occurred at the beginning of each year
presented:
(In thousands) 1996 1995
Net sales $ 488,182 $ 505,749
Net income 6,117 5,512
Net income per share $ 1.65 $ 1.49
The pro forma information does not purport to be indicative of the results
which actually would have occurred had the acquisition been in effect during the
periods presented or of results which may occur in the future.
13. 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 a material adverse effect on the Company's financial position or
results of operations.
<PAGE>
<TABLE>
<CAPTION>
TEN-YEAR REVIEW OF SELECTED FINANCIAL DATA (Unaudited)
Noland Company and Subsidiary
(Dollar amounts in thousands, except per share data) 1996 1995 1994 1993
Income Statement Data
<S> <C> <C> <C> <C>
Sales $465,705 $469,512 $440,202 $402,941
Gross Profit 90,789 89,087 86,166 77,306
Operating Expenses 84,383 83,389 78,259 74,692
Operating Profit (Loss) 6,406 5,698 7,907 2,614
Interest Expense 2,828 3,239 2,626 2,422
Interest Expense as Percent of Total Assets 1.3 1.5 1.2 1.2
Income (Loss) Before Income Taxes 9,657 8,237 10,568 5,291
Pretax Profit as Percent of Sales 2.1 1.8 2.4 1.3
Income Taxes Payable (Receivable) 3,794 3,290 4,341 1,996
Effective Tax Rate 39.3 39.9 41.1 37.7
Net Income (Loss) 5,863 4,947 6,227 3,295
Income Paid to Stockholders (Cash Dividends) 1,184 1,036 888 888
Income Reinvested 4,679 3,911 5,339 2,407
Property and Equipment Expenditures 10,890 9,735 10,858 7,611
Depreciation and Amortization 6,868 6,655 6,232 6,178
Balance Sheet Data
Stockholders' Equity 116,292 111,688 107,865 102,596
Working Capital 77,379 71,889 65,575 65,203
Current Ratio 2.6 2.4 2.0 2.3
Total Assets 219,885 213,520 217,085 201,029
Long-term Debt 45,039 41,611 36,914 38,505
Borrowed Funds 54,267 45,332 53,130 47,485
Borrowed Funds as Percent of Total Assets 24.7 21.2 24.5 23.6
Total Liabilities as Percent of Total Assets 47.1 47.7 50.3 48.9
Per Share Data *
Net Income (Loss) 1.58 1.34 1.68 .89
Cash Dividends Paid to Stockholders .32 .28 .24 .24
Stockholders' Equity (Book Value) 31.42 30.18 29.15 27.72
Return on Average Stockholders' Equity 5.1 4.5 5.9 3.2
Stock Price Range:
Average High 21.81 21.31 20.94 18.13
Average Low 18.89 18.38 17.56 15.06
Number of Employees at December 31 1,692 1,655 1,741 1,683
Number of Branches at December 31 107 99 99 93
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 90,582 91,187 86,404 77,318
Income (Loss) Before Income Taxes 9,450 10,337 10,806 5,303
Income Taxes Payable (Receivable) 3,714 4,124 4,441 2,000
Net Income (Loss) 5,736 6,213 6,365 3,303
Net Income (Loss) Per Share 1.55 1.68 1.72 .89
Stockholders' Equity (Book Value) Per Share 36.32 34.39 33.69 32.21
Return on Average Stockholders' Equity 4.4 4.9 5.2 2.8
</TABLE>
[FN]
* Based on 3,700,876 shares outstanding.
<PAGE>
<TABLE>
<CAPTION>
TEN-YEAR REVIEW OF SELECTED FINANCIAL DATA (Unaudited)
Noland Company and Subsidiary
(Dollar amounts in thousands, except per share data) 1992 1991 1990 1989 1988 1987
Income Statement Data
<C> <C> <C> <C> <C> <C>
Sales $412,086 $384,535 $428,473 $454,629 $461,255 $434,593
Gross Profit 77,265 71,000 79,982 83,328 83,491 80,978
Operating Expenses 73,227 74,355 75,641 75,413 75,098 70,397
Operating Profit (Loss) 4,038 (3,355) 4,341 7,915 8,393 10,581
Interest Expense 3,058 3,724 4,742 5,973 5,673 4,865
Interest Expense as Percent of Total Assets 1.7 2.0 2.5 3.1 2.8 2.5
Income (Loss) Before Income Taxes 6,610 (1,203) 6,377 8,468 8,882 11,422
Pretax Profit as Percent of Sales 1.6 NA 1.5 1.9 1.9 2.6
Income Taxes Payable (Receivable) 2,518 (478) 2,651 3,441 3,553 4,936
Effective Tax Rate 38.1 (39.7) 41.6 40.6 40.0 43.2
Net Income (Loss) 4,092 (725) 3,726 5,027 5,329 6,848(1)
Income Paid to Stockholders (Cash Dividends) 888 1,702 1,665 1,629 1,554 1,480
Income Reinvested 3,204 NA 2,061 3,398 3,775 5,368
Property and Equipment Expenditures 6,191 7,075 10,798 9,812 12,918 9,153
Depreciation and Amortization 6,365 6,543 6,433 6,306 6,028 5,623
Balance Sheet Data
Stockholders' Equity 100,189 96,985 99,412 97,351 93,953 90,178
Working Capital 65,509 64,433 70,701 76,486 78,713 83,456
Current Ratio 2.8 2.6 2.8 2.8 2.5 2.8
Total Assets 185,372 189,072 192,887 195,069 200,716 194,139
Long-term Debt 40,511 42,898 44,299 48,721 47,631 51,254
Borrowed Funds 46,097 54,299 56,131 60,030 68,240 68,462
Borrowed Funds as Percent of Total Assets 24.9 28.7 29.1 30.8 33.9 35.3
Total Liabilities as Percent of Total Assets 46.0 48.7 48.5 50.1 53.2 53.5
Per Share Data *
Net Income (Loss) 1.11 (.20) 1.01 1.36 1.44 1.85(1)
Cash Dividends Paid to Stockholders .24 .46 .45 .44 .42 .40
Stockholders' Equity (Book Value) 27.07 26.21 26.86 26.30 25.39 24.37
Return on Average Stockholders' Equity 4.2 NA 3.8 5.3 5.8 7.8
Stock Price Range:
Average High 16.13 14.88 19.19 24.19 20.63 22.69
Average Low 13.91 12.25 15.00 22.09 18.75 19.13
Number of Employees at December 31 1,720 1,704 1,797 1,924 2,019 1,972
Number of Branches at December 31 93 92 92 94 101 100
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 76,541 70,888 80,429 84,486 88,585 82,665
Income (Loss) Before Income Taxes 5,886 (1,315) 6,824 9,626 13,976 13,109
Income Taxes Payable (Receivable) 2,226 (495) 2,770 3,815 5,499 5,304
Net Income (Loss) 3,660 (820) 4,054 5,811 8,477 7,805
Net Income (Loss) Per Share .99 (.22) 1.10 1.57 2.29 2.11
Stockholders' Equity (Book Value) Per Share 31.19 30.81 31.17 30.84 29.71 27.84
Return on Average Stockholders' Equity 3.2 NA 3.5 5.2 8.0 7.8
</TABLE>
[FN]
(1) Net income for 1987 includes $362,000 ($.10 per share) due to the
cumulative effect on prior years of a change in accounting for
deferred income taxes.
<PAGE>
Inside Back Cover Info
Shareholder and Investor Information
Corporate Information
Corporate Headquarters:
Noland Company
80 29th Street
Newport News, Virginia 23607
(757) 928-9000
Wholly Owned Subsidiary:
Noland Properties, Inc.
Suite 400, Central Fidelity National Bank
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:
Coopers & Lybrand, L.L.P.
11832 Rock Landing Drive
Newport News, Virginia 23606
Legal Counsel:
Hunton & Williams
P.O. Box 1535
Richmond, Virginia 23212
Stock Information
The Company's common stock is traded over the counter as part of NASDAQ's
National Market System (symbol: NOLD). On March 13, 1997, the approximate
number of holders of record of the Company's common stock was 2,500.
<PAGE>
Market Prices:
The following table sets forth the reported high and low prices for the common
stock on the NASDAQ system:
High Low
1996
Qtr. 4 $23.75 $20.50
Qtr. 3 $22.25 $19.50
Qtr. 2 $21.25 $18.00
Qtr. 1 $20.00 $17.50
1995
Qtr. 4 $20.25 $17.50
Qtr. 3 $21.25 $17.75
Qtr. 2 $22.00 $19.50
Qtr. 1 $21.75 $18.75
P/E Ratio:*
High Low
1996 15 13
1995 15 13
*Based on final, full-year earnings
Dividend Policy:
Noland has paid regular cash dividends for 64 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 1996
and the last two quarters of 1995. The rate was $.06 per share for the first
two quarters of 1995.
Registrar:
Noland Company
Transfer Agent:
ChaseMellon Shareholder Services, L.L.C.
Four Station Square, Third Floor
Pittsburgh, Pennsylvania 15219-1173
(412) 236-8000
Annual Meeting:
April 23, 1997, 10:00 a.m.
Noland's Corporate Headquarters
Newport News, Virginia
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 3,508,000
<SECURITIES> 0
<RECEIVABLES> 53,875,000
<ALLOWANCES> 1,008,000
<INVENTORY> 67,782
<CURRENT-ASSETS> 126,729,000
<PP&E> 144,265,000
<DEPRECIATION> 65,368,000
<TOTAL-ASSETS> 219,885,000
<CURRENT-LIABILITIES> 49,349
<BONDS> 45,039,000
0
0
<COMMON> 37,009,000
<OTHER-SE> 79,283,000
<TOTAL-LIABILITY-AND-EQUITY> 219,885,000
<SALES> 465,705,000
<TOTAL-REVENUES> 465,705,000
<CGS> 374,916,000
<TOTAL-COSTS> 77,448,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 856,000
<INTEREST-EXPENSE> 2,828,000
<INCOME-PRETAX> 9,657,000
<INCOME-TAX> 3,793,000
<INCOME-CONTINUING> 5,863,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,863,000
<EPS-PRIMARY> 1.58
<EPS-DILUTED> 1.58
</TABLE>
