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 June 30, 2004		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.

YesX    No





Outstanding common stock, $10.00 par value at July 31, 2004: 3,383,656 shares.















This report contains 20 pages.





NOLAND COMPANY AND SUBSIDIARIES



INDEX





|Part I.   FINANCIAL INFORMATION                            | PAGE NO.        
|---------------------------------------------------------- | ----------------
|                                                           |                 
|Item 1.  Financial Statements                              |                 
|                                                           |                 
|Consolidated Balance Sheets -                              |                 
|June 30, 2004 (Unaudited) and Dec. 31, 2003 (Audited)      | . . . . . . . .3
|                                                           |                 
|Unaudited Consolidated Statements of Income -              |                 
|Three Months and Six Months Ended June 30, 2004 and 2003   | . . . . . . . .4
|                                                           |                 
|Unaudited Consolidated Statements of Cash Flows -          |                 
|Six Months Ended June 30, 2004 and 2003                    | . . . . . . . .5
|                                                           |                 
|Notes to Unaudited Consolidated Financial Statements       | . . . . . . . .6
|                                                           |                 
|Item 2.  Management's Discussion and Analysis of Financial |                 
|Condition and Results of Operations                        | . . . . . . . .8
|                                                           |                 
|Item 3.  Qualitative and Quantitative Disclosures          |                 
|About Market Risk                                          | . . . . . . . 12
|                                                           |                 
|Item 4.  Controls and Procedures                           | . . . . . . . 13
|                                                           |                 
|Part II.    Other Information                              |                 
|                                                           |                 
|Item 1.  Legal Matters                                     | . . . . . . . 14
|                                                           |                 
|Item 4.  Submission of Matters to a Vote of Security       |                 
|Holders                                                    | . . . . . . . 14
|                                                           |                 
|Item 6.  Exhibits and Reports on 8-K                       | . . . . . . . 15
|                                                           |                 
|SIGNATURE                                                  | . . . . . . . 16
|                                                           |                 
|EXHIBITS                                                   | . . . . . . . 17





PART I. FINANCIAL INFORMATION

NOLAND COMPANY AND SUBSIDIARIES

Consolidated Balance Sheets

Item 1. Financial Statements

June 30,    December 31,

2004          2003

(Unaudited)   (Audited)

Assets

Current Assets:

Cash and cash equivalents	$  3,904,101	$  3,703,719

Trade accounts receivable, net	  63,438,275	  48,122,094

Other accounts receivable	   7,006,485	   8,570,010

Inventory, net	  69,787,625	  67,690,838

Other current assets	 2,236,165	 1,678,995

Total Current Assets	 146,372,651	 129,765,656

Property and Equipment, at cost:

Land		  19,620,002	  19,062,864

Buildings	 111,772,266	 109,211,586

Equipment and fixtures	  73,143,001	  71,726,775

Property in excess of current needs	 5,882,716	 3,458,760

Total	 210,417,985	 203,459,985

Less accumulated depreciation	 92,333,590	 90,368,999

Property and Equipment, net	 118,084,395	 113,090,986

Assets Held for Resale	     247,136	     247,136

Prepaid Pension	  27,380,056	  27,067,056

Other Assets	 1,080,588	 1,090,610

$293,164,826	$271,261,444



Liabilities and Stockholders' Equity

Current Liabilities:

Notes payable - short-term borrowings	$  4,975,173	$  6,627,197

Current maturity of long-term debt	     516,016	     521,691

Bank overdrafts	   5,440,571	   5,677,062

Accounts payable	  38,358,933	  27,932,064

Other accruals and liabilities	  15,965,333	  18,041,681

Federal and state income taxes	 -	 850,204

Total Current Liabilities	 65,256,026	 59,649,899

Long-term Debt	  37,066,712	  35,144,703

Deferred Income Taxes	  20,214,295	  15,649,607

Accrued Postretirement Benefits	 2,384,352	 2,313,502

Total Liabilities	 124,921,385	 112,757,711

Stockholders' Equity:

Capital common stock, par value $10;

authorized, 6,000,000 shares; issued,

3,383,656 and 3,373,267 shares	  33,836,560	  33,732,670

Additional paid in capital	     762,635	     416,510

Retained earnings	 135,015,979	 125,715,351

Accumulated other comprehensive loss,

net of tax	    (591,597)	    (880,862)

Unearned compensation, stock plans	 (780,136)	 (479,936)

Stockholders' Equity	 168,243,441	 158,503,733



$293,164,826	$271,261,444



The accompanying notes are an integral part of the financial statements.



NOLAND COMPANY AND SUBSIDIARIES

Unaudited Consolidated Statements of Income



Three Months Ended	    Six Months Ended

June 30, 		        June 30,

2004	      2003          2004       2003

Merchandise Sales          $145,630,713 $122,532,036 $268,396,504 $232,694,643

Cost of goods sold:

Purchases and freight-in  113,874,063   96,213,605  214,599,108  181,472,871

Inventory, beginning       72,798,001   60,883,700   67,690,838   60,869,800

Inventory, ending         (69,787,625) (61,517,106) (69,787,625) 61,517,106)

Cost of goods sold      116,884,439  95,580,199  212,502,321  180,825,565

Gross profit on sales         28,746,274   26,951,837   55,894,183   51,869,078

Operating expenses            25,820,097   23,646,220   49,817,064   46,761,672

Rental income                    292,283      325,779      624,181      532,391

Gains from sale of property  9,444,285  424,433  9,454,871 3,845,319

Operating profit             12,662,745  4,055,829  16,156,171  9,485,116

Other income                     389,662      380,257      747,293      820,190

Interest expense             397,960  321,415  777,030  619,517

Income before income taxes   12,654,447  4,114,671  16,126,434  9,685,789

Income taxes                 4,919,400  1,610,400  6,285,300  3,761,300

Net income                  $7,735,047 $2,504,271 $9,841,134 $5,924,489

Earnings per share:

Basic                    $2.32 $.73 $2.95 $1.71

Diluted                  $2.29 $.73 $2.92 $1.70

Average shares outstanding:

Basic                     3,338,313  3,424,986  3,335,836  3,455,175

Diluted                   3,370,947  3,453,625  3,368,885  3,486,283

Cash dividends per share    $.08 $.08 $.16 $.16







The accompanying notes are an integral part of the financial statements.





NOLAND COMPANY AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows

Six Months

Ended June 30,



|                                                                                  | 2004                  | 2003               
|--------------------------------------------------------------------------------- | --------------------- | -------------------
|CASH FLOWS FROM OPERATING ACTIVITIES:                                             |                       |                    
|Net income                                                                        | $9,841,134            | $ 5,924,489        
|Adjustments to reconcile net income to net cash provided by operating activities: |                       |                    
|Depreciation and amortization                                                     | 4,478,674             | 3,901,083          
|Decrease (increase) in prepaid pension cost                                       | (313,000)             | 104,000            
|Increase in accrued postretirement benefits                                       | 70,850                | 57,131             
|Amortization of unearned compensation-restricted stock                            | 149,815               | 96,615             
|Provision for doubtful accounts                                                   | (41,901)              | (389,722)          
|Increase in LIFO Reserve
Gains from sale of property                              | 2,700,000
(9,454,871) | 250,000
(3,845,319)
|Deferred income taxes                                                             | 4,388,149             | -                  
|Change in operating assets and liabilities:                                       |                       |                    
|(Increase) in accounts receivable                                                 | (15,274,280)          | (5,180,537)        
|Decrease in other accounts receivable                                             | 1,563,525             | 2,379,636          
|(Increase) in inventory                                                           | (4,796,787)           | (897,306)          
|(Increase) decrease in other current assets                                       | (557,170)             | 48,160             
|Decrease (increase) in other assets                                               | 6,938                 | (459,841)          
|Increase (decrease) in accounts payable                                           | 10,426,869            | (425,147)          
|(Decrease) in accruals and other liabilities                                      | (1,610,545)           | (1,118,289)        
|(Decrease) increase in accrued income taxes                                       | (850,204)             | 951,609            
|Total adjustments                                                                 | (9,113,938)           | (4,527,927)        
|Net cash provided by operating activities                                         | 727,196               | 1,396,562          
|                                                                                  |                       |                    
|CASH FLOWS FROM INVESTING ACTIVITIES:                                             |                       |                    
|Capital expenditures                                                              | (10,025,116)          | (19,581,911)       
|Proceeds from sale of assets                                                      | 10,010,988            | 7,994,476          
|Net cash used in investing activities                                             | (114,128)             | (11,587,435)       
|                                                                                  |                       |                    
|CASH FLOWS FROM FINANCING ACTIVITIES:                                             |                       |                    
|Short-term debt (payments) borrowings - net                                       | (1,652,024)           | 9,427,326          
|(Decrease) in bank overdrafts                                                     | (236,491)             | (975,404)          
|Long-term debt borrowings - net                                                   | 1,916,334             | 7,126,970          
|Retirementof common stock                                                         | -                     | (6,307,617)        
|Dividends paid                                                                    | (540,505)             | (564,825)          
|Net cash (used in) provided by financing activities                               | (512,686)             | 8,706,450          
|                                                                                  |                       |                    
|CASH AND CASH EQUIVALENTS:                                                        |                       |                    
|Increase (decrease) during first six months                                       | 200,382               | (1,484,423)        
|Beginning of year                                                                 | 3,703,719             | 5,752,095          
|End of first six months                                                           | $3,904,101            | $ 4,267,672        
|                                                                                  |                       |                    
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                |                       |                    
|Non-cash increase in fair value of derivatives                                    | $289,265              | $170,984           
|Common stock and additional paid in capital related                               |                       |                    
|to equity compensation plans                                                      | $450,015              | $367,223           

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 Management, 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 June 30, 2004, and its consolidated results of operations and cash flows for the three and six months ended June 30, 2004 and 2003.  The balance sheet as of December 31, 2003 was derived from audited financial statements as of that date.

2.	The Notes to Consolidated Financial Statements included in the Company's December 31, 2003 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 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 six months ended June 30, 2004 are not necessarily indicative of the results for the full year.

5.	Trade accounts receivable as of June 30, 2004 and December 31, 2003 are net of allowance for doubtful accounts of $1,041,305 and $1,083,206, respectively.  Quarterly bad debt charges, net of recoveries, were $296,553 for 2004 and $297,481 for 2003.  Year-to-date bad debt charges, net of recoveries, were $562,089 for 2004 and $591,481 for 2003.

6.	The Company issued 10,112 shares of common stock during the second quarter 2004 for its equity based compensation plans.  The issuance of these shares increased additional paid in capital and unearned compensation.

1. At June 30, 2004 the Company has three interest rate swap agreements with an aggregate notional amount of $22,133,000 that reduces its exposure to market risks from changing interest rates.  Under the swap agreements, the Company has agreed to exchange, at specified intervals, the difference between fixed and variable interest amounts calculated by reference to the notional principal amount.  Any differences paid or received on interest rate swap agreements are recognized as adjustments to interest expense over the life of each swap, thereby adjusting the effective interest rate on the underlying obligation.  The Company does not hold or issue such financial instruments for trading purposes.  Derivatives used for hedging purposes must be designated as, and effective as, a hedge of the identified risk exposure at the inception of the contract.  Accordingly, changes in the fair value of the derivative contract must be highly correlated with changes in the fair value of the underlying hedged item at inception of the hedge and over the life of the hedge contract.  The agreements are accounted for as cash flow hedges in accordance with Statement of Financial Accounting Standard ("SFAS") No. 133 "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS No. 138.

During the three and six months ended June 30, 2004, the Company reclassified $204,000 and $411,000, respectively, from other comprehensive income ("OCI") to current period interest expense.  Comparable amounts for the three and six months ended June 30, 2003 are $197,000 and $390,000, respectively.  The net deferred loss recorded in OCI will be reclassified to earnings as interest payments occur.  As of June 30, 2004, approximately $831,000 in deferred losses on derivative instruments accumulated in OCI is expected to be reclassified to earnings during the next twelve months.

8.	The Company provides retirement benefits and postretirement health and life benefits to its eligible employees. The components of net periodic (income) cost for these plans for the three and six months ended June 30, 2004 and 2003 are:

Pension Benefits      Other Benefits

Three Months Ended June 30

2004      2003        2004     2003

Service cost               $ 347,750  $ 303,500   $ 16,000 $ 14,000

Interest cost                788,500    759,500     48,250   50,000

Return on assets          (1,336,000)(1,167,750)     --       --

Amortization of net gain      43,250    156,750    (12,000)  (6,250)

Amortization of transition

obligation                   --    --    50,750  50,750

Net periodic (income) cost $(156,500)  $52,000   $103,000 $108,500



Pension Benefits      Other Benefits

Six Months Ended June 30

2004      2003        2004     2003

Service cost               $ 695,500  $ 607,000   $ 32,000 $ 28,000

Interest cost              1,577,000  1,519,000     96,500  100,000

Return on assets          (2,672,000)(2,335,500)     --       --

Amortization of net gain      86,500    313,500    (24,000) (12,500)

Amortization of transition

obligation                   --    --    101,500  101,500

Net periodic (income) cost $(313,000)  $104,000   $206,000 $217,000

9.	The difference in diluted and basic average shares outstanding used to calculate earnings per share is due to the effect of restricted stock using the treasury stock method.

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 six months ended June 30, 2004 and 2003 are as follows:

|                                                                           | Three Months   | Six Months    
|-------------------------------------------------------------------------- | -------------- | --------------
|                                                                           | Ended June 30, | Ended June 30,
|                                                                           | 2004           | 2003          
|Net income                                                                 | $7,735,047     | $2,504,271    
|Gain (loss) on derivative                                                  |                |               
|instruments                                                                | 622,369        | (206,692)     
|Income tax (expense)                                               benefit | (235,878)      | 78,336        
|Comprehensive income                                                       | $8,121,538     | $2,375,915    





Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview



The wholesale distribution of mechanical equipment and supplies is highly competitive.  Competition results primarily from price, service and the availability of goods.  The business may be affected to the extent the residential and commercial construction industries are affected by interest rate changes and the weather.

Forward-Looking Statements

Management's discussion and analysis and other sections of this quarterly report contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  The words "estimate", "project", "anticipate", "intend", "believe", and similar expressions are intended to identify forward-looking statements.  Such 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 conditions, climatic conditions, competitive pricing pressures, and product availability.

Critical Accounting Policies



The Company makes estimates and assumptions when preparing financial statements.  These estimates and assumptions affect various matters, including:

- reported amounts of assets and liabilities in the Company's Consolidated Balance Sheets at the dates of the financial statements;
- disclosure of contingent assets and liabilities at the dates of the financial statements; and
- reported amounts of revenues and expenses in the Company's Consolidated Statements of Income during the reporting periods.  These estimates involve judgments with respect to, among other things, future economic factors which are difficult to predict and are beyond management's control.  Actual amounts could differ from these estimates.

The critical accounting policies considered most important to the Company's financial condition and results of operations that require management's most difficult, subjective, or complex judgments that have not changed since December 31, 2003 are as follows:

- Allowance for Doubtful Accounts



- Consideration Received from Vendors



- Self Insurance Reserves



In the first three months of 2004, there have been no changes in the above critical accounting policies.

For interim reporting purposes there is an additional critical accounting policy that is not applicable for full year reporting. The Company uses estimated gross profit rates to determine cost of goods sold during interim periods. This process includes estimates for inventory shrink and the LIFO reserve adjustment. For the interim LIFO reserve adjustment the Company estimates the final year-end FIFO inventory and the rate of inflation/deflation. 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.



Results of Operations

The following table highlights changes in the results of operations for the three and six months ended June 30, 2004 and 2003:

In Thousands	      Three Months Ended June 30		 Six Months Ended June 30

|                                                                                   | 2004     | 2003     | % Change | 2004     | 2003              | % Change
|---------------------------------------------------------------------------------- | -------- | -------- | -------- | -------- | ----------------- | --------
|Sales                                                                              | $145,631 | $122,532 | 18.9%    | $268,397 | $232,695232,692$$ | 15.3%   
|Cost of Goods Sold                                                                 | 116,885  | 95,580   | 22.3%    | 212,503  | 180,826           | 17.5%   
|Gross Profit                                                                       | 28,746   | 26,952   | 6.7%     | 55,894   | 51,869            | 7.8%    
|Operating Expenses                                                                 | 25,820   | 23,646   | 9.2%     | 49,817   | 46,762            | 6.5%    
|Rental Income                                                                      | 293      | 326      | -10.7%   | 624      | 533               | 17.1%   
|Gains from Sale of                                                        Property | 9,444    | 424      | 2127.4%  | 9,455    | 3,845             | 145.9%  
|Operating Profit                                                                   | 12,663   | 4,056    | 212.2%   | 16,156   | 9,485             | 70.3%   
|Other Income                                                                       | 390      | 380      | 2.6%     | 747      | 820               | -8.9%   
|Interest Expense                                                                   | 398      | 321      | 24.0%    | 777      | 620               | 25.3%   
|Income Taxes                                                                       | 4,920    | 1,611    | 205.4%   | 6,285    | 3,761             | 67.1%   
|Net Income                                                                         | $7,735   | $2,504   | 208.9%   | $9,841   | $5,924            | 66.1%   

Strong construction activity and rising prices contributed to the 18.9% increase in sales for the second quarter of 2004. The Company also benefited from good weather, in sharp contrast to the record rainfall a year ago that caused construction delays and adversely affected second quarter 2003.  All three product categories achieved double-digit sales gains in the second quarter led by plumbing's 21% improvement.  Hot weather in June boosted demand for replacement air conditioning equipment, contributing to a 16% rise in air conditioning sales for the quarter. Electrical/industrial sales also increased 16%.  Gross profit margins declined due to intense competition and costs associated with the LIFO method of accounting for inventory costs.  Rising prices resulted in a charge to cost of goods sold of $2,172,000 for the second quarter of 2004 compared to a charge of $115,000 for the second quarter of 2003.



Operating profit for the second quarter of 2004 increased $8,607,000, or 212.2%, over the second quarter of 2003 due to a $9,020,000 year-to-year increase in gains from the disposal of surplus real property.  Operating expenses for the second quarter of 2004 were $2,174,000, or 9.2%, higher than the year earlier total largely due to costs associated with the Company's new central distribution center and five new branches opened since mid-2003.  Operating expenses benefited from pension income in the second quarter of 2004 in the amount of $156,500 compared to a pension expense of $52,000 in the second quarter of 2003.

Through the first six months sales totaled $268,397,000 or 15.3% more than the first half of 2003's $232,695,000.  After tax gains from the disposal of surplus real property totaled $5,866,000 in the first six months of 2004 versus $2,386,000 in the year-earlier period.

Conditions appear to be favorable for continued sales growth in the third quarter but possibly at a slower pace.  Customer orders for future delivery business are only modestly higher than a year ago but the current level of housing construction suggests there are ample opportunities in the short term. If the weather cooperates our recent sales momentum should continue in the second quarter.



Liquidity and Capital Resources

The Company's primary capital requirements for the second quarter of 2004 were for property and equipment expenditures and working capital. The Company maintains its short- and long-term liquidity through: (1) cash flow from operations; (2) short-term borrowings from bank line of credit arrangements, when needed; and (3) additional long-term debt, when needed.

The Company's financial condition remains strong with working capital of $81,117,000 and a current ratio of 2.2 to 1.  During the first six months of 2004 the Company's cash position increased $200,000.







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 June 30, 2004, the Company had three swap agreements with an aggregate notional amount of $22.1 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, 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 increased $386,000, net of income tax expense of $236,000, for the three months ended June 30, 2004 and $289,000, net of income tax expense of $177,000, for the six months ended June 30, 2004.  Comparable amounts for the three and six months ended June 30, 2003 were  decreases of $128,000, net of a tax benefit of $78,000 and $171,000, net of a tax benefit of $104,000, 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.







Item 4. Controls and Procedures

(a)	Evaluation of disclosure controls and procedures:  The Company's Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the design and operation of its disclosure controls and procedures as of the end of the periodyear covered by this quarterlyannual report.  The Company's disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that are filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.  Based on this evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that these controls and procedures are effective as of the end of the period covered by this quarterly report.

(b) 	Change in internal controls:  During the quarter ended June 30, 2004, there have been no changes in the Company's internal control over financial reporting, identified in connection with our evaluation thereof, that have materially affected, or are reasonably likely to materially affect, our 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 twenty one 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 is 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 4.	Submission of Matters to a Vote of Securities Holders

a)	The Company's 2003 Annual Meeting of Stockholders was held on April 29, 2004.  Holders of 3,251,917 shares, 96.4 percent of outstanding shares, were present in person or by proxy.

b)	The Company's management solicited proxies pursuant to Regulation 14 under the Securities Exchange Act of 1934.  There was no solicitation in opposition to management's nominees as listed in the proxy statement.  The following nominees were elected pursuant to the vote of the stockholders:



|Name                     | For       | Abstain or
Authority Withheld
|------------------------ | --------- | -----------------------------
|Thomas N. Allen          | 3,243,843 | 8,074                        
|Mark M. Gambill          | 3,242,590 | 9,327                        
|Allen C. Goolsby         | 3,181,391 | 70,526                       
|Arthur P. Henderson, Jr. | 3,183,939 | 67,978                       
|Kenneth C. King          | 3,183,966 | 67,951                       
|C. Edward Pleasants      | 3,243,843 | 8,074                        
|Lloyd U. Noland, III     | 3,184,442 | 67,475                       



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 Vice President - Finance pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification of the Vice President  Finance pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

b)	Reports on 8-K: None



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







August 5, 2004					     Arthur P. Henderson, Jr.

Arthur P. Henderson, Jr.

Vice President  Finance