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 September 30, 2003	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

 

 

 

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 common stock, $10.00 par value at November 12, 2003: 3,372,938 shares.

 

 
** 

 

 

 

 

This report contains 18 pages.
**NOLAND COMPANY AND SUBSIDIARIES

INDEX**
 
**Page No.
Part I.	Financial Information

  Item 1.	  Financial Statements

     Consolidated Balance Sheets -

       September 30, 2003 (Unaudited) and December 31, 2002 . . . . . . . 3

     Unaudited Consolidated Statements of Income -

       Three Months and Nine Months Ended September 30, 2003 and 2002 . . 4

     Unaudited Consolidated Statements of Cash Flows -

       Nine Months Ended September 30, 2003 and 2002 . . . . . . . . . .  5

     Notes to Unaudited Consolidated Financial Statements  . . . . . . .  6

  Item 2.	 Management's Discussion and Analysis of Financial

		 Condition and Results of Operations . . . . . . . . . . . . . 9

  Item 3.	 Qualitative and Quantitative Disclosures About

		 Market Risk . . . . . . . . . . . . . . . . . . . . . . . . .11

  Item 4.   Controls and Procedures . . . . . . . . . . . . . . . . . . .12

	
**Part II.	OTHER INFORMATION**
  Item 1.  Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . 13

  Item 6.  Exhibits and Reports on 8-K . . . . . . . . . . . . . . . . . 13			
**SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

 
**EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
**PART 1. FINANCIAL INFORMATION

NOLAND COMPANY AND SUBSIDIARIES

Consolidated Balance Sheets

Item 1. Financial Statements

				September 30,	December 31,

    2003	          2002  

(unaudited)      ___________           

Assets

Current Assets:					

	Cash and cash equivalents				$  3,666,334	$  5,752,095

	Accounts receivable, net				  55,990,013	  53,989,145

	Inventory, net						  60,412,234	  60,869,800

	Other current assets					   1,497,842	   1,321,661
		Total Current Assets				 121,566,423	 121,932,701
Property and Equipment, at cost:

	Land								  17,467,588	  17,363,297

	Buildings							 106,863,877	  97,081,328

	Equipment and fixtures					  70,769,630	  67,633,018

	Property in excess of current needs		   4,878,257	   3,630,246
		Total							 199,979,352	 185,707,889

	Less accumulated depreciation			  89,321,827	  92,747,494
		Property and Equipment, net			 110,657,525	  92,960,395
Assets Held for Resale						     447,136	     447,136

Prepaid Pension							  27,119,056	  27,275,056

Other assets							   1,359,050	     997,506
Total Assets							$261,149,190	$243,612,794**Liabilities and Stockholders' Equity

Current Liabilities					

	Notes payable, short-term borrowing		$  6,872,352	$     -     

	Current maturity of long-term debt		     524,557	     434,761

	Book overdrafts						   5,303,615	   6,589,929

	Accounts payable						  29,932,655	  30,330,914

	Other accruals and liabilities			  17,054,188	  15,707,987

	Federal and state income tax			   2,813,737	   1,288,830
		Total Current Liabilities			  62,501,104	  54,352,421
Long-term Debt							  27,171,170	  20,163,000

Deferred Income Taxes						  13,949,254	  13,932,340

Accrued Postretirement Benefits				   2,258,748	   2,154,791
Total Liabilities					105,880,276    	 90,602,552
Stockholders' Equity:

	Capital common stock, par value $10;

	  authorized, 6,000,000 shares; issued,

	  3,372,938 and 3,526,991 shares			  33,729,380	  35,269,910

	Additional paid in capital				     416,510	     158,400

Retained earnings					 122,733,351	 119,086,490	

	Accumulated other comprehensive loss,

	  net of tax						  (1,063,340)	  (1,091,053)

	Unearned compensation, stock plans		    (546,987)	    (413,505)

		Total Stockholders' Equity			 155,268,914	 153,010,242
Total Liabilities and Stockholders' Equity		$261,149,190	$243,612,794
The accompanying notes are an integral part of the financial statements.
**NOLAND COMPANY AND SUBSIDIARIES

Unaudited Consolidated Statements of Income

     Three Months Ended		  Nine Months Ended

September 30,			    September 30,
2003		   2002		 2003		     2002
											           ****
Merchandise sales		$121,771,477   $130,270,277	  $354,466,120   $369,272,252
Cost of goods sold:

  Purchases and freight-in	  92,497,771     96,465,401	   273,970,642    291,658,785

  Inventory, beginning		  61,517,106     64,494,759	    60,869,800     57,743,020

  Inventory, ending		  60,412,234 58,292,781	    60,412,234 58,292,781
	Cost of goods sold	  93,602,643102,667,379	   274,428,208291,109,024
Gross profit on sales		  28,168,834     27,602,898	    80,037,912     78,163,228

Operating expenses		  24,005,639     24,005,766	    70,767,311     70,023,811

Gains from sale of

property			 __  672,338 	 1,199,048 	   __4,517,657	 __1,207,367

Operating profit			   4,835,533  4,796,180	    13,788,258  9,346,784
Other income:

  Service charges		     298,041        309,519	       910,735        851,853

  Miscellaneous			     611,427    188,917	     1,351,314    546,275
	

	Total other income	     909,468    498,436	     2,262,049  1,398,128
Interest expense			     342,985    298,285	       962,502    878,437
Income before taxes		   5,402,016  4,996,331	    15,087,805  9,866,475
 

Income taxes:

  State				     325,600        299,700	       911,300        591,900

  Federal				   1,811,000  1,742,700  4,986,600 3,299,400
	Total income taxes	   2,136,600  2,042,400	     5,897,900  3,891,300
Net income				$  3,265,416   $  2,953,931	  $  9,189,905   $  5,975,175
Earnings per share:

  Basic				$        .98   $        .84	  $       2.69   $       1.70
  Diluted				$        .97   $        .83	  $       2.67   $       1.68
Average shares outstanding:

  Basic				   3,329,515  3,512,497	     3,412,619  3,517,042
  Diluted				   3,364,158  3,549,005	     3,443,501  3,550,034
Cash dividends per share	$        .08   $        .08	  $        .24   $        .24
The accompanying notes are an integral part of the financial statements.
**NOLAND COMPANY AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows

 Nine Months Ended

September 30,
2003		   2002
													 

CASH FLOWS FROM OPERATING ACTIVITIES:

 Net income	                                               $9,189,905 	$5,975,175
 Adjustments to reconcile net income to net cash

   provided by operating activities:

    Depreciation and amortization		                    5,944,106	 5,956,096

    Amortization of prepaid pension cost		           156,000	  (988,500)

    Increase in accrued postretirement benefits              103,957	   188,494

    Amortization of unearned compensation-restricted stock	151,644	   122,485

    Increase in LIFO reserve						500,000	   853,000

    Provision for doubtful accounts                        1,005,012	 1,652,282

    Gain on sale of property                              (4,517,657)	(1,207,367)

    Change in operating assets and liabilities:

     (Increase) accounts receivable    	              (3,005,880)	(5,329,033)

     (Increase) in inventory                                 (42,434)	(1,402,761)

     (Increase) in other current assets                     (176,181)	(3,565,726)

     (Increase) decrease in other assets                    (366,170)      143,337

     (Decrease) increase in accounts payable                (398,259)    5,648,823

     Increase (decrease) in other accruals and liabilities 1,390,828	  (120,101)

     Increase in federal and state income taxes            1,524,907	 1,505,533
     Total adjustments                                     2,269,873	 3,456,562
**Net cash provided by operating activities**11,459,778	 9,431,737
**CASH FLOWS FROM INVESTING ACTIVITIES:**
 Capital expenditures                                    (28,168,791)	(7,310,540)

 Proceeds from sale of assets                              9,049,838	 1,786,521

**Net cash used by investing activitie**s                (19,118,953)	(5,524,019)
**CASH FLOWS FROM FINANCING ACTIVITIES:**
 (Decrease) in book overdrafts                            (1,286,314)	(3,344,434)

 Short-term borrowing - net                                6,872,352	   159,606 

 Long-term debt borrowings (payments) - net                7,097,966	  (799,992)

 Purchase of common stock                                 (6,276,002)	  (421,410)

 Dividends paid                                             (834,588)	  (853,862)

**Net cash provided (used) by financing activities**5,573,414	(5,260,092)
**CASH AND CASH EQUIVALENTS:**
 Decrease during first nine months                        (2,085,761)	(1,352,374)

 Beginning of year                                         5,752,095	 3,606,187
 End of first nine months                                 $3,666,334	$2,253,813**SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:**
 Non-cash change in fair value of derivatives             $   27,712	$  811,514
 Common stock and additional paid in capital related

  to equity compensation plans                            $  339,056	$  235,399
The accompanying notes are an integral part of the financial statements.
**NOLAND COMPANY AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

1.	In the opinion of the Company, the accompanying interim consolidated financial statements of Noland Company and Subsidiaries contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company's consolidated financial position as of September 30, 2003, and its consolidated results of operations for the three and nine months ended September 30, 2003 and 2002 and its cash flows for the nine months ended September 30, 2003 and 2002.  The balance sheet as of December 31, 2002 was derived from audited financial statements as of that date. 

2.	The Notes to Consolidated Financial Statements included in the Company's December 31, 2002 Annual Report on Form 10-K are an integral part of the interim unaudited financial statements.  The Company takes a physical inventory in the fourth quarter of each year.  The Company uses estimated gross profit rates to determine cost of goods sold during interim periods. In addition, the Company makes certain estimates on a interim basis to compute the LIFO reserve. The rate of inflation/deflation for an interim period is not necessarily consistent with the full year rate of inflation/deflation. Year-end inventory adjustments to reflect actual inventory levels are made in the fourth quarter.

3.	The consolidated financial statements include the accounts of Noland Company and its wholly owned subsidiary Noland Properties, Incorporated.  Noland Properties, Incorporated has one wholly owned limited liability company which in turn owns two limited liability companies.

4.	Due to the seasonal nature of the construction industry supplied by the registrant, results of operations for the three and nine months ended September 30, 2003 are not necessarily indicative of the results for the full year.

5.	Trade accounts receivable as of September 30, 2003 and December 31, 2002 are net of allowance for doubtful accounts of $1,454,394 and $1,815,000, respectively. Quarterly bad debt charges, net of recoveries, were $250,708 for 2003 and $387,312 for 2002.  Year-to-date bad debt charges, net of recoveries, were $842,189 for 2003 and $1,652,282 for 2002.

6.	Since December 31, 2002 the Company has acquired 163,966 shares of its common stock.  In addition, 9,913 shares of common stock were issued through equity compensation plans.  The issuance of these shares increased additional paid in capital and unearned compensation.

7.	During the three and nine months ended September 30, 2003, the Company reclassified $212,000 and $602,000, respectively, from other comprehensive income ("OCI") to current period interest expense as required by SFAS No 133 "Accounting for Derivative Instruments and Hedging Activities."  Comparable amounts for the three and nine months ended September 30, 2002 are $110,000 and $484,000, respectively.  The net deferred loss recorded in OCI will be reclassified to earnings as interest payments occur.  As of September 30, 2003, approximately $765,000 in deferred losses on derivative instruments accumulated in OCI is expected to be reclassified to earnings during the next twelve months.

8.	The difference in diluted and basic average shares outstanding used to calculate earnings per share is due to non-vested shares of restricted stock. 

9.	The Company began netting cash discounts allowed against sales and cash discounts earned against purchases in the first quarter of 2003 to better reflect the gross margin of profit on sales.  Previously net cash discounts were reported as other income.  Cash discounts allowed and cash discounts earned have been reclassified from other income to sales and purchases, respectively, for the third quarter and first nine months of 2002.

10.	Comprehensive income consists of net income and changes in the fair value of derivative instruments.  The components of comprehensive income for the three and nine months ended September 30, 2003 and 2002 are as follows:
 
Three Months
Nine Months 
Ended September 30,
Ended September 30, 
2003
2002
2003
2002     
Net income
$3,265,416
$2,953,931
$9,189,905
$5,975,175
Income (loss) on derivative instruments
   319,963
  (861,526)
    44,626
(1,306,658)
Income tax (expense) benefit
 (121,266)
  326,466
 (16,914)
  495,144
Comprehensive income
$3,464,113
$2,418,871
$9,217,617
$5,163,661
 

11.	The Financial Accounting Standards Board has issued Statements of Financial Accounting Standards ("SFAS") Nos. 149 "Amendment of Statement 133 on Derivative Instruments and Hedging Activities" and 150 "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equities" that are relevant to Noland Company.  SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003.  SFAS No. 150 was adopted July 1, 2003 with no material impact on the Company's financial statements.

12.	As reported previously, Noland Company is a defendant in personal injury claims based on alleged past exposure to asbestos-containing products or materials produced by others and allegedly distributed by the Company years ago.  Since the early 1990s, the Company has been sued many times, along with a large number of other companies, by one law firm in cases that allege asbestos-related injuries to persons in the maritime industry.  In none of these suits has a link to the Company been substantiated, and most of them already have been dismissed.

The Company also has been named as one of the defendants in various other asbestos-related suits within its operating footprint in which a connection to the Company was alleged.  Some of these suits have been dismissed with prejudice and several have been settled through the Company's insurance carrier and some are still pending and are being defended.  Management does not consider the foregoing suits, individually or in the aggregate, to be material to the Company.

The Company has also been named as one of the defendants in approximately nineteen hundred asbestos-related suits filed by one law firm in the Circuit Court for Newport News, Virginia or in the Circuit Court for Portsmouth, Virginia.  At this time it is still not possible to fully evaluate the merits of these new suits.  The Company is not aware of any relationship between the Company and any of the plaintiffs; nor does it have any information as to the extent of any injury that may have been suffered by any of them.  All of these cases will be defended vigorously.
** 

 

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations**
Included in this discussion are forward-looking management comments and other statements which reflect management's current outlook for the future.  Such forward-looking 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 and economic conditions, climatic conditions, competitive pricing pressures, and product availability.

 

 

 
**Liquidity and Capital Resources

The Company maintains its short- and long-term liquidity through: (1) cash flow from operations; (2) short-term borrowings from bank lines of credit arrangements, when needed; and (3) additional long-term debt, when needed.

The Company's debt increased $14.0 million since December 31, 2002.  The additional debt was used for capital expenditures and the purchase of 161,966 shares of its common stock.  The cost to repurchase the shares was $6.3 million.  In addition, 2,000 shares of restricted stock were forfeited.  Capital expenditures were $28.2 million in the first nine months of 2003 for the purchase of a new airplane, construction of the new distribution center and the purchase of several properties for use as new branch facilities.  Proceeds from selling excess real estate provided a portion of the funds for the projects.  Management believes the Company has adequate financial resources to meet the needs of the foreseeable future.
**Results of Operations

Sales for the third quarter of 2003 totaled $121.8 million or 7.0 percent less than the year-earlier period's $130.3 million.  Hurricane Isabel had an impact on our business in late September in North Carolina, Virginia and Maryland but sales were lagging even before the storm hit.  Air conditioning business continued to do well, with third-quarter sales up 6 percent.  Plumbing sales were down 10 percent, in part due to a weakness in commercial construction and heightened competition.  Electrical/industrial sales declined 21 percent, reflecting less integrated supply business than last year.  Sales for the first nine months of 2003 were $354.5 million, 4.0 percent less than the $369.3 million total for the year-earlier period.  We are disappointed in our sales performance so far this year, but on a same-store basis, year-to-date sales by our traditional branches are equal to last year's, indicating that we are at least holding our own in an extremely competitive environment.  The gross margin of profit rose from 21.2 percent in the third quarter of 2002 to 23.1 percent in third quarter 2003, reflecting better pricing conditions. For the first nine months of 2003, gross margins increased from 21.2 percent to 22.6 percent.  In the first quarter of 2003 the Company began reporting cash discounts allowed for early payment of receivables as a reduction of sales and cash discounts taken for the early payment of inventory purchases as a reduction in cost of purchases.  Previously, net cash discounts were reported as other income.  Cash discounts allowed and cash discounts earned have been reclassified from other income for the three and nine months ended September 30, 2002.

Operating expenses for the third quarter of 2003 were flat compared to the third quarter of 2002.  Operating expenses for the first nine months of 2003 are up 1.1 percent due to increased insurance expense, truck repairs, and a decline in non-cash pension credits. Operating expenses for the quarter and first nine months were affected by pension accounting.  Pension expense was $52,000 and $156,000 for the three and nine months ended September 30, 2003 compared to pension income of $330,000 and $989,000 for the same periods in 2002.

Operating profit for the three and nine months ended September 30, 2003 benefited from gains on the sale of excess real estate and the Company's airplane in the amount of $672,000 and $4,518,000 respectively.  Interest expense for the quarter and first nine months is up 15.0 and 9.6 percent, respectively compared to 2002 as a result of increased borrowings.
**Item 3.	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 is a party to three separate interest rate swaps to manage its exposure to interest rate changes on its borrowings.  The swaps are with financial institutions that have investment grade credit ratings, minimizing the risk of credit loss.  All swaps are non-trading.  At September 30, 2003, the Company had three swap agreements with an aggregate notional amount of $22.2 million to manage interest rate changes related to the Company's industrial revenue bonds, a portion of its revolving credit agreement and its term loan.  The swaps effectively convert the variable rate borrowings (LIBOR and BMA Municipal Swap Index) into fixed rate borrowings with fixed rates of 5.36%, 4.22% and 5.27%, respectively.

SFAS No. 133 "Accounting for Certain Derivative Instruments and Certain Hedging Activities," as amended by SFAS No. 138 and SFAS No. 149, requires all derivatives to be recorded as an asset or liability on the balance sheet at fair 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 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.  OCI was increased $199,000, net of a tax expense of $121,000, for the three months ended September 30, 2003 and $28,000, net of a tax expense of $17,000, for the nine months ended September 30, 2003.  OCI decreased for the three and nine months ended September 30, 2002 by $535,000, net of a tax benefit of $326,000 and $812,000, net of a tax benefit of $495,000, respectively.

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 used to calculate the 2003 pension expense declined resulting in pension expense for the third quarter and first nine months of 2003 compared to a pension credit in 2002's third quarter and first nine months.
****
 
**Item 4. Controls and Procedures

The Company's management, under the supervision and with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures as of September 30, 2003.  Based upon that evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective in enabling the Company to record, process, summarize and report information required to be included in the Company's periodic SEC filings within the required time period.  There have been no changes in the Company's internal controls over financial reporting that occurred during the Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
** 

Part II.  OTHER INFORMATION

Item 1.	Legal Matters**
As reported previously, Noland Company is a defendant in personal injury claims based on alleged past exposure to asbestos-containing products or materials produced by others and allegedly distributed by the Company years ago.  Since the early 1990s, the Company has been sued many times, along with a large number of other companies, by one law firm in cases that allege asbestos-related injuries to persons in the maritime industry.  In none of these suits has a link to the Company been substantiated, and most of them already have been dismissed.

The Company also has been named as one of the defendants in various other asbestos-related suits within its operating footprint in which a connection to the Company was alleged.  Some of these suits have been dismissed with prejudice and several have been settled through the Company's insurance carrier and some are still pending and are being defended.  Management does not consider the foregoing suits, individually or in the aggregate, to be material to the Company.

The Company has also been named as one of the defendants in approximately nineteen hundred asbestos-related suits filed by one law firm in the Circuit Court for Newport News, Virginia or in the Circuit Court for Portsmouth, Virginia.  At this time it is still not possible to fully evaluate the merits of these new suits.  The Company is not aware of any relationship between the Company and any of the plaintiffs; nor does it have any information as to the extent of any injury that may have been suffered by any of them.  All of these cases will be defended vigorously.
**Item 6.	Exhibits and Reports on 8-K**
a)	Exhibits:

	31.1 Certification of Chief Executive Officer pursuant to Section 302                                     of the Sarbanes-Oxley Act of 2002.

	31.2 Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	32.1 Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

b)	Reports on 8-K:

	A report on Form 8-K was furnished on July 25, 2003 to report the earnings release for the second quarter of 2003.
**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**
 

 

 

	October 31, 2003					     Arthur P. Henderson, Jr.
								Arthur P. Henderson, Jr.

								Vice President - Finance

 
**Exhibit 31.1

I, Lloyd U. Noland III, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Noland Company;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) (Intentionally omitted)

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.  The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:      October 31, 2003	Signature: Lloyd U. Noland, III
	           Lloyd U. Noland, III

	          Chief Executive Officer
**Exhibit 31.2

I, Arthur P. Henderson, Jr, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Noland Company;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) (Intentionally omitted)

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.  The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:      October 31, 2003	Signature: Arthur P. Henderson, Jr.
	           Arthur P. Henderson, Jr.

    Vice President of Finance
**Exhibit 32.1

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned certifies that this periodic report for the quarter ended September 30, 2003 fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934 and that information contained in this periodic report fairly presents, in all material respects, the financial condition and results of operations of Noland Company.

 

Lloyd U. Noland, III						Date:  October 31, 2003

Lloyd U. Noland, III 

Chief Executive Officer

 

Arthur P. Henderson, Jr.					Date:  October 31, 2003

Arthur P. Henderson, Jr.

Vice President - Finance

The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the Form 10-Q or as a separate disclosures document.******************************