Noland 10K/A 2001 Annual report (amended)

FORM 10-K/A

Amendment No. 1

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, 2001 Commission file no. 2-27393

NOLAND COMPANY

A Virginia Corporation IRS Identification #54-0320170

80 29^th 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 15, 2002, was approximately $40,498,838.

3,557,829 shares of the Registrant's Common Stock were outstanding at the close of business on March 15, 2002.

DOCUMENTS (or portions thereof) INCORPORATED BY REFERENCE

None

Explanatory Note

This amendment to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2001 is being filed to reflect gains from the sales of excess real estate in 2001, 2000, and 1999 previously reported as non-monetary exchanges. Management's Discussion and Analysis, Selected Quarterly Financial Data (unaudited), Consolidated Statement of Income, Consolidated Balance Sheet, Consolidated Statement of Cash Flow, Consolidated Statement of Stockholders' Equity and Comprehensive Income, and Notes to the Consolidated Financial Statements for the years ended December 31, 2001, 2000, and 1999 have been restated to reflect this change. The Ten Year Review of Selected Financial Data (Unaudited) for 1996 forward has also been restated for the same reason. All information in this Form 10-K/A is as of December 31, 2001, and does not reflect, unless otherwise noted, any subsequent information or events other than the change mentioned above.

This report contains 34 pages. The exhibit index is shown on page 32 of this 10-K/A.

PART II

Item 6Ten-Year Review of Selected Financial Data (Dollar amounts in thousands, except per share data)	2001 Restated	2000 Restated	1999 Restated
Income Statement Data
Sales	$477,911	$488,714	$482,830
Gross Profit	98,169	98,736	96,938
Operating Expenses	91,357	88,376	88,115
Operating Profit	7,447	14,859	9,079
Interest Expense	1,723	2,715	2,819
Interest Expense as Percent of Total Assets	.8	1.1	1.2
Income Before Income Taxes	11,720	19,098	13,568
Pretax Profit as Percent of Sales	2.5	3.9	2.8
Income Tax Expense	4,599	7,489	5,264
Effective Tax Rate	39.2	39.2	38.8
Net Income	7,121	11,609	8,304
Income Paid to Stockholders (Cash Dividends)	1,145	1,168	1,184
Income Reinvested	5,976	10,441	7,120
Property and Equipment Expenditures	11,782	7,703	7,059
Depreciation and Amortization	8,168	8,222	8,450
Balance Sheet Data
Stockholders' Equity	146,261	141,229	132,866
Working Capital	69,729	74,520	68,014
Current Ratio	2.4	2.4	2.1
Total Assets	230,693	237,448	234,768
Long-term Debt	20,675	26,637	28,015
Borrowed Funds	26,140	38,134	40,213
Borrowed Funds as Percent of Total Assets	11.3	16.1	17.1
Total Liabilities as Percent of Total Assets	36.6	40.5	43.4
Per Share Data
Diluted Earnings	1.99	3.18	2.24
Cash Dividends Paid to Stockholders	.32	.32	.32
Stockholders' Equity (Book Value)	41.11	39.40	35.90
Return on Average Stockholders' Equity	5.0	8.5	6.4
Stock Price Range:
Average High	26.21	19.09	22.95
Average Low	18.90	14.98	18.25
Number of Employees at December 31	1,415	1,492	1,512
Number of Branches at December 31	103	102	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					93,988		99,122		98,329
Income Before Income Taxes					7,540		19,472		14,959
Income Tax Expense					2,957		7,632		5,804
Net Income					4,583		11,840		9,155
Net Income Per Share					1.28		3.25		2.47
Stockholders' Equity (Book Value) Per Share					46.56		44.81		39.90
Return on Average Stockholders' Equity					2.8		7.7		6.3
1998	1997	1996	1995	1994		1993		1992
Restated	Restated	Restated
$465,479	$464,965	$465,705	$469,512	$440,202		$402,941		$412,086
93,446	93,753	90,789	89,087	86,166		77,306		77,265
87,927	87,659	84,383	83,389	78,259		74,692		73,227
5,566	6,318	7,039	5,698	7,907		2,614		4,038
3,498	3,078	2,828	3,239	2,626		2,422		3,058
1.5	1.4	1.3	1.5	1.2		1.2		1.7
9,238	9,101	10,286	8,237	10,568		5,291		6,610
2.0	2.0	2.2	1.8	2.4		1.3		1.6
3,339	3,422	4,041	3,290	4,341		1,996		2,518
36.1	37.6	39.3	39.9	41.1		37.7		38.1
5,899	5,679	6,245	4,947	6,227		3,295		4,092
1,184	1,184	1,184	1,036	888		888		888
4,715	4,495	5,061	3,911	5,339		2,407		3,204
14,751	9,556	11,519	9,735	10,858		7,611		6,191
7,977	6,890	6,868	6,655	6,232		6,178		6,365

125,780	121,284	116,674	111,688	107,865		102,596		100,189
65,314	75,845	77,379	71,889	65,575		65,203		65,509
2.0	2.6	2.6	2.4	2.0		2.3		2.8
235,221	219,294	220,514	213,520	217,085		201,029		185,372
32,413	39,784	45,039	41,611	36,914		38,505		40,511
54,785	48,430	54,267	45,332	53,130		47,485		46,097
23.3	22.1	24.6	21.2	24.5		23.6		24.9
46.5	44.7	47.1	47.7	50.3		48.9		46.0

1.59	1.53	1.69	1.34	1.68		.89		1.11
.32	.32	.32	.28	.24		.24		.24
33.99	32.77	31.52	30.18	29.15		27.72		27.07
4.8	4.8	5.5	4.5	5.9		3.2		4.2

27.17	24.59	21.81	21.31	20.94		18.13		16.13
22.27	21.72	18.89	18.38	17.56		15.06		13.91
1,554	1,606	1,692	1,655	1,741		1,683		1,720
106	107	107	99	99		93		93

93,827	92,713	90,582	91,187	86,404	77,318	76,541
9,619	8,061	10,079	10,337	10,806	5,303	5,886
3,473	3,030	3,961	4,124	4,441	2,000	2,226
6,146	5,031	6,118	6,213	6,365	3,303	3,660
1.66	1.35	1.65	1.68	1.72	.89	.99
38.14	37.46	36.42	34.39	33.69	32.21	31.19
4.4	3.7	4.7	4.9	5.2	2.8	3.2

Item 7Management's Discussion and Analysis of Financial Condition and Results ofOperations

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.

Forward-Looking Statements

Management's discussion and analysis and other sections of this Annual Report contain "forward-looking statements" under the securities laws. 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.

Restatement of Consolidated Financial Statements

In late October 2002, the Company determined that gains from certain sales of excess real estate in 2001, 2000, 1999, and prior years should have been recognized as other income. These transactions were previously treated as non-monetary exchanges and no gain was recognized. The effect of recognizing the gains was to increase net income by $252,000 in 2001, $2,301,000 in 2000, $157,000 in 1999. The consolidated statement of income and consolidated cash flows for 2001, 2000, and 1999, and the consolidated balance sheet and consolidated statement of stockholders' equity and comprehensive income as of December 31, 2001, 2000, and 1999, and the notes thereto included in this Form 10-K/A have been restated to include the effect of recognizing these gains.

Results of Operations

Sales for 2001 totaled $477.9 million, 2.2 percent less than 2000 sales of $488.7 million. Sales for 1999 were $482.8 million. Sluggish economic conditions in many parts of the Company's 13-state territory adversely affected sales, despite pockets of strength in residential construction. In addition, deflation in pricing on key plumbing commodities had a negative impact on plumbing sales, which decreased 3.9 percent. Electrical/industrial sales declined 9.0 percent as a result of continued weakness in manufacturing. Air conditioning sales increased 7.4 percent. A significant part of this increase came from sales in several new Florida branches, but same store sales also rose modestly.

The gross profit margin was 20.5 percent for 2001 compared to 20.2 percent for 2000, and 20.1 percent for 1999. The gross profit margin for 2001 was affected by the LIFO inventory adjustment, which decreased cost of goods sold by $4.2 million. The LIFO adjustment increased cost of goods sold by $374,000 and $1.4 million in 2000 and 1999, respectively. Inventory quantity reductions contributed to the positive effect of LIFO for 2001. Excluding the LIFO adjustment, margins declined in 2001 as a result of competitive pricing conditions and an aggressive strategy to dispose of unproductive inventory.

Operating expenses increased $3.0 million from 2000's $88.4 million to $91.4 million in 2001. 1999's operating expenses were $88.1 million. Higher personnel-related costs, non-cash charges of $847,000 related to accounts receivable valuation reserves and a decline in non-cash pension income, which reduces operating expense, account for much of the increase. Operating expenses benefited in 2001, 2000, and 1999 from non-cash pension credits of $2.8 million, $4.4 million, and $3.8 million, respectively as a result of the Company having an over-funded pension plan.

The combination of lower sales and higher operating expenses, and smaller gains from the sale of property resulted in a 49.9 percent decline in operating profits compared to 2000. Operating profits for 2000 were 63.7 percent higher than 1999 due to larger gains from the sale of property. Gains from the sale of excess real estate of $404,000 in 2001, $3,705,000 for 2000, and $256,000 in 1999 have been recognized in operating profits as a result of restating income for these years. The sale of excess real estate was previously treated as a non-monetary exchange and no gain was recognized. Other non-operating income for 2001 decreased 13.8 percent compared to 2000. Interest expense decreased 36.5 percent to $1.7 million in 2001 from $2.7 million in 2000. Lower interest rates and reduced borrowings accounted for the decline. Interest expense for 1999 was $2.8 million.

The effective tax rate was 39.2 percent, 39.2 percent, and 38.8 percent in 2001, 2000, and 1999, respectively.

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 borrowings, when needed; and (4) additional long-term debt, when needed.

In 2001 net cash provided by operating activities was $24.1 million compared to $10.2 million in 2000 and $23.2 million in 1999. Cash from operations in 2001 was used to reduce long-term debt by $7.5 million, for capital expenditures of $11.8 million, to pay dividends, and to repurchase and retire 29,172 shares of the Company's outstanding common stock for $669,000. Working capital decreased $4.8 million, and the current ratio remained at 2.4. 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.

The Company continued its progress on the inventory front in 2001. Inventory turns improved, unproductive inventory was reduced, and the total investment in inventory declined $7.4 million after a $4.7 million reduction in 2000.

Recent Accounting Pronouncements

The Financial Accounting Standards Board ("FASB") has issued SFAS No. 141 "Business Combinations," SFAS No. 142 "Goodwill and Other Intangible Assets," and SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" that are effective for years beginning after December 15, 2001 and SFAS No. 143 "Accounting for Asset Retirement Obligations" that is effective for years beginning after June 15, 2002. Adoption of these statements is not expected to have a material impact on the Company's financial statements.

Item 7AQuantitative 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 entered into two separate interest rate swaps to manage it's exposure to interest rate changes on it's borrowings. These swaps are with financial institutions that have investment grade credit ratings, minimizing the risk of credit loss. Both swaps are non-trading.

At December 31, 2001, the Company had two swap agreements at an aggregate notional amount of $20,075,000 to manage interest rate changes related to the Company's industrial revenue bonds and a portion of its revolving credit agreement. The swaps effectively convert the variable rate borrowings (LIBOR and BMA Municipal Swap Index) into fixed rate borrowings with fixed rates of 5.36% and 4.22%.

Statement of Financial Accounting Standards (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 face 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 other comprehensive income ("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. Other comprehensive income was reduced by $303,000, net of tax benefit of $185,000 as of December 31, 2001.

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 for calculating 2002 pension credits is expected to decline resulting in a lower credit than 2001 and 2000.

Item 8Financial Statements and Supplementary Data

Index to Consolidated Financial Statements

Independent Auditors' Report

Consolidated Financial Statements:

Selected Quarterly Financial Data (Unaudited)

Consolidated Statement of Income-- Years ended December 31, 2001, 2000,

and 1999

Consolidated Balance Sheet-- December 31, 2001, 2000, 1999

Consolidated Statement of Cash Flows-- Years ended December 31, 2001, 2000, and 1999

Consolidated Statement of Stockholders' Equity and Comprehensive Income -- Years ended December 31, 2001, 2000, and 1999

Notes to Consolidated Financial Statements

--Years ended December 31, 2001, 2000, and 1999

INDEPENDENT AUDITORS' REPORT

KPMG LLP

To the Board of Directors and Stockholders of Noland Company:

We have audited the accompanying consolidated balance sheet of Noland Company and Subsidiary (the Company) as of December 31, 2001, and the related consolidated statements of income, stockholders' equity and comprehensive income, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. The accompanying consolidated financial statements of the Company as of December 31, 2000 and 1999 were audited by other auditors whose report thereon dated February 22, 2001, expressed unqualified opinion on those consolidated statements.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the 2001 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Noland Company as of December 31, 2001, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

As discussed in note 2 to the consolidated financial statements, the Company has restated its consolidated financial statements for the years ended December 31, 2001, 2000 and 1999.

KPMG LLP

Norfolk, Virginia

February 22, 2002

except as to note 2 for which the

date is November 5, 2002

Selected Quarterly Financial Data ' (unaudited)

(In thousands, except per share amounts)

First Quarter Second Quarter Third Quarter Fourth Quarter

	2001	2000	2001	2000	2001	2000	2001	2000	2001	2000
Sales	$114,931	$120,994	$127,470	$129,131	$122,337	$124,284	$113,173	$ 114,305	$477,911	$488,714
Gross Profit	$ 23,003	$ 23,875	$ 25,053	$ 24,700	$ 23,664	$ 24,184	$ 26,449	$ 25,977	$ 98,169	$ 98,736
Net Income, As Reported	$ 1,212	$ 2,365	$ 1,895	$ 2,564	$ 1,132	$ 1,991	$ 2,630^(A)	$ 2,388^(A)	$ 6,869	$ 9,308
Net Income As Restated(B)	$ 1,464	$ 2,647	$ 1,895	$ 2,884	$ 1,132	$ 3,816	$ 2,630^(A)	$ 2,262^(A)	$ 7,121	$ 11,609
Basic Earnings Per Share As Reported	$ .34	$ .65	$ .54	$ .70	$ .32	$ .56	$ .74^(A)	$ .67^(A)	$ 1.94	$ 2.57
Basic Earnings	$ .41	$ .72	& .54	$ .79	$ .32	$ 1.06	$ .74^(A)	$ .64^(A)	$ 2.01	$ 3.21
Per Share As Restated(B)
Diluted Earnings Per Share As Reported	$ .34	$ .64	$ .53	$ .69	$ .32	$ .55	$ .74^(A)	$ .67^(A)	$ 1.92	$ 2.55
Diluted Earnings Per Share As Restated(B)	$ .40	$ .71	$ .53	$ .78	$ .32	$ 1.06	$ .74^(A)	$ .63^(A)	$ 1.99	$ 3.18

(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 adjustments had the effect of increasing net income for the fourth quarter of 2001 and 2000 by approximately $2,500,000 ($.71 per share) and $1,632,000 ($.46 per share), respectively.

(B) Net income and earnings per share (diluted and basic) for the first quarter of 2001 and all four quarters of 2000 has been restated as a result of recognizing gains from the sale of excess real estate previously reported as non-monetary exchanges.

CONSOLIDATED STATEMENT OF INCOME

Noland Company and Subsidiary

For the years ended December 31, 2001, 2000 and 1999

(In thousands, except per share amounts)

20012000 1999

(Restated)(Restated) (Restated)

Sales	$ 477,911	$488,714	$482,830
Cost of Goods Sold:
Purchases and freight in	372,364	385,260	385,161
Inventory, January 1	65,121	69,839	70,570
Inventory, December 31	(57,743)	(65,121)	(69,839)
Cost of Goods Sold	379,742	389,978	385,892
Gross Profit on Sales	98,169	98,736	96,938
Operating Expenses	91,357	88,376	88,115
Gains from sale of property, net	(635)	(4,499)	(256)
Operating Profit	7,447	14,859	9,079
Other Income:
Cash Discounts, net	4,373	4,660	4,719
Service charges	1,182	1,412	1,440
Miscellaneous	441	882	1,149
Total Other Income	5,996	6,954	7,308
Interest Expense	1,723	2,715	2,819
Income Before Income Taxes	11,720	19,098	13,568
Income Taxes	4,599	7,489	5,264
Net Income	$ 7,121	$ 11,609	$ 8,304
Basic Earnings Per Share	$ 2.01	$ 3.21	$ 2.26
Diluted Earnings Per Share	$ 1.99	$ 3.18	$ 2.24

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

CONSOLIDATED BALANCE SHEET

Noland Company and Subsidiary

December 31, 2001, 2000, and 1999 (In thousands)	2001 (Restated)	2000 (Restated)	1999 (Restated)
Assets
Current Assets:
Cash and cash equivalents	$ 3,606	$ 3,349	$ 2,528
Accounts receivable (net of allowance for doubtful accounts)	56,700	56,585	55,601
Inventory (net of reduction to LIFO)	57,743	65,121	69,839
Deferred income taxes	-	1,023	1,147
Other current assets	679	3,414	601
Total Current Assets	118,728	129,492	129,716
Property and Equipment, at cost:
Land	17,722	14,182	13,884
Buildings	88,210	86,920	83,824
Equipment and fixtures	66,746	64,898	64,620
Property in excess of current needs	1,540	1,453	1,699
Total	174,218	167,453	164,027
Less accumulated depreciation	89,550	84,478	79,599
Total Property and Equipment, net	84,668	82,975	84,428
Assets Held for Resale	447	1,021	1,021
Prepaid Pension	25,804	22,983	18,618
Other Assets	1,046	977	985
	$ 230,693	$237,448	$ 234,768
Liabilities and Stockholders' Equity
Current Liabilities:
Notes payable, short-term borrowings	$ 4,000	$ 8,475	$ 7,800
Current maturity of long-term debt	1,465	3,022	4,398
Book overdrafts	6,485	6,680	8,403
Accounts payable	23,670	22,459	26,895
Other accruals and liabilities	13,011	13,389	13,177
Federal and state income taxes	368	947	1,029
Total Current Liabilities	48,999	54,972	61,702
Long-term Debt	20,675	26,637	28,015
Deferred Income Taxes	12,668	12,786	10,642
Accrued Postretirement Benefits	2,090	1,824	1,543
Stockholders' Equity:
Capital common stock, par value, $10; authorized, 6,000,000 shares; issued 3,557,829, 3,584,758, and 3,700,876 shares	35,578	35,848	37,009
Retained earnings	111,345	105,746	96,228
Accumulated other comprehensive loss, net of tax	(303)	-	-
Unearned compensation, stock plans	(359)	(365)	(371)
Stockholders' Equity	146,261	141,229	132,866
	$ 230,693	$ 237,448	$ 234,768

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

CONSOLIDATED STATEMENT OF CASH FLOWS

Noland Company and Subsidiary

For the years ended December 31, 2001, 2000, and 1999 (In thousands)	2001 (Restated)	2000 (Restated)	1999 (Restated)
Cash Flows From Operating Activities:
Net Income	$ 7,121	$ 11,609	$ 8,304
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization	8,168	8,222	8,450
Amortization of prepaid pension cost	(2,821)	(4,365)	(3,771)
Deferred income taxes	1,092	2,268	1,975
Gain on sale of property	(635)	(4,499)	(256)
Provision for doubtful accounts	2,531	1,644	1,928
(Decrease) increase in LIFO reserve	(4,181)	374	1,391
Other non-cash adjustments	215	192	205
Change in operating assets and liabilities:
(Increase) in accounts receivable	(2,579)	(2,628)	(2,111)
Decrease (increase) in inventory	11,559	4,344	(660)
Decrease (increase) in other current assets	2,668	(2,813)	(221)
Decrease in assets held for resale	574	-	-
(Increase) decrease in other assets	(159)	(89)	20
Increase (decrease) in accounts payable	1,211	(4,436)	5,005
(Decrease) increase in other accruals and liabilities	(378)	212	2,180
(Decrease) increase in federal and state income taxes	(579)	(82)	494
Increase in postretirement benefits	266	281	302
Total adjustments	16,952	(1,375)	14,931
Net cash provided by operating activities	24,073	10,234	23,235
Cash Flows From Investing Activities:
Capital expenditures	(11,782)	(7,703)	(7,059)
Proceeds from sale of assets	2,645	5,531	1,149
Net cash used by investing activities	(9,137)	(2,172)	(5,910)
Cash Flows From Financing Activities:
Decrease in book overdrafts	(195)	(1,723)	(2,122)
Short-term debt, net (payments) borrowings	(4,475)	675	300
Long-term debt borrowings	12,500	7,644	7,500
Long-term debt repayments	(20,507)	(10,398)	(22,372)
Dividends paid	(1,145)	(1,168)	(1,184)
Purchase and retirement of common stock	(669)	(2,103)	-
Purchase of restricted stock	(188)	(168)	(238)
Net cash used by financing activities	(14,679)	(7,241)	(18,116)
Cash and Cash Equivalents:
Increase (decrease) during year	257	821	(791)
Beginning of year	3,349	2,528	3,319
End of year	$ 3,606	$ 3,349	$ 2,528
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$ 1,847	$ 2,646	$ 2,847
Cash paid for income taxes	$ 3,972	$ 6,018	$ 3,208

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

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME

Noland Company and Subsidiary

For the years ended December 31, 2001, 2000 and 1999

(In thousands, except share amounts)


	COMMON STOCK Shares Amount	Retained Earnings	Unearned Compensation	Accumulated Other Comprehensive Loss	Total
Balance, December 31, 1998 ' Restated	3,700,876 $ 37,009	$ 89,108	$ (337)	$ -	$ 125,780
Net income ' Restated		8,304			8,304
Cash dividends ($.32 per share)		(1,184)			(1,184)
Purchase of restricted stock			(238)		(238)
Amortization of unearned Compensation			118		118
Other			86		86
Balance, December 31, 1999 ' Restated	3,700,876 37,009	96,228	(371)		132,866
Net income ' Restated		11,609			11,609
Cash dividends (.32 per share)		(1,168)			(1,168)
Purchase of restricted stock			(168)		(168)
Amortization of unearned Compensation			136		136
Purchase and retirement of common stock	(117,966) (1,180)	(923)			(2,103)
Other	1,848 19		38		57
Balance, December 31, 2000 - Restated	3,584,758 35,848	105,746	(365)		141,229
Net income 'Restated		7,121			7,121
Loss on derivative instruments, net of income taxes				(303)	(303)
Comprehensive income ' Restated					6,818
Cash dividends (.32 per share)		(1,145)			(1,145)
Purchase of restricted stock			(188)		(188)
Amortization of unearned compensation			154		154
Purchase and retirement of common stock	(29,172) (292)	(377)			(669)
Other	2,243 22		40		62
Balance, December 31, 2001 - Restated	3,557,829 $ 35,578	$ 111,345	$ (359)	$ (303)	$ 146,261

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - RESTATED

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, air conditioning, and electrical/industrial.

Markets for these products include contractors, industrial plants, utilities and others. The Company operates in only one segment of business.

2. Restatement of Consolidated Financial Statements

In late October 2002, the Company determined that gains from certain sales of excess real estate in 2001, 2000, and 1999 should be recognized as other income. These transactions were previously treated as non-monetary exchanges and no gain was recognized. The effect of recognizing the gains was to increase net income by $252,000 in 2001, $2,301,000 in 2000, and $157,000 in 1999. The consolidated statement of income and consolidated statement of cash flows for 2001, 2000, and 1999, and the consolidated balance sheet and consolidated statement of stockholders' equity and comprehensive income as of December 31, 2001, 2000, and 1999, and the notes thereto included in this Form 10-K/A have been restated to include the effects of recognizing the gains, as follows:

Consolidated Results of Operations

For the years ended December 31, 2001, 2000 and 1999

(In thousands, except per share amounts)

2001 2000 1999

	As Reported	Restated	As Reported	Restated	As Reported	Restated
Operating expenses	$91,357	$91,357	$88,399	$88,376	$88,115	$88,115
Operating profit	6,812	7,447	10,337	14,859	8,823	9,079
Gains from sale of property, net	231	635	817	4,499	-	256
Total other income	6,226	5,996	7,771	6,954	7,308	7,308
Income before income taxes	11,315	11,720	15,393	19,098	13,312	13,568
Income taxes	4,446	4,599	6,085	7,489	5,165	5,264
Net income	$ 6,869	$ 7,121	$ 9,308	$11,609	$ 8,147	$ 8,304
Basic earnings per share	$ 1.94	$ 2.01	$ 2.57	$ 3.21	$ 2.22	$ 2.26
Diluted earnings per share	$ 1.92	$ 1.99	$ 2.55	$ 3.18	$ 2.20	$ 2.24
Comprehensive Income	$ 6,566	$ 6,818	$ 9,308	$11,609	$ 8,147	$ 8,304
Net cash provided by operating activities	$21,099	$24,073	$12,928	$10,234	$23,449	$23,235
Net cash used by investing activities	$(6,163)	$(9,137)	$(4,866)	$(2,172)	$(6,124)	$(5,910)

Consolidated Balance Sheet

December 31, 2001, 2000, and 1999

(In thousands)

2001 2000 1999

	As Reported	Restated	As Reported	Restated	As Reported	Restated
Accounts receivable, net	$ 56,694	$ 56,700	$ 56,585	$ 56,652	$ 55,704	$ 55,601
Other current assets	679	679	436	3,347	236	601
Total current assets	118,722	118,728	126,514	129,492	129,454	129,716
Total property and equipment, net	79,415	84,668	81,099	82,975	83,541	84,428
Total assets	$225,434	$230,693	$232,594	$237,448	$233,619	$234,768

Deferred income taxes	$ 10,666	$ 12,668	$ 10,937	$ 12,786	$ 10,197	$ 10,642
Stockholders' equity	143,004	146,261	138,224	141,229	132,162	132,866
Total liabilities and stockholders' equity	$225,434	$230,693	$232,594	$237,448	$233,619	$234,768

As a result of recognizing these gains, the Company's December 31, 1998 property and equipment, net, deferred income taxes, and retained earnings changed from the previously reported amounts of $85,805, $9,122, and $88,561 to $86,651, $9,468, and 89,108, respectively.

3. 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.

The Company disposed of its fifty percent interest in two foreign joint ventures in 2001. Prior to the sale, the equity method of accounting was used for both entities. The aggregate investment in and results of operations from both joint ventures are not material.

b. Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. Material estimates that are susceptible to changes in the near term are the allowance for doubtful accounts, last-in, first-out (LIFO) reserve, and pension plan assumptions.

c. Inventory

Inventory is stated at the lower of cost or market. The cost of inventory has been principally determined by the 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 20 to 40 years for buildings and 3 to 10 years for equipment and fixtures.

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.

The Company reevaluates property, plant, and equipment whenever significant events or changes occur which might impair recovery of recorded costs. Impaired assets, if any, are written down to fair value.

Property in excess of current needs consists primarily of land held for possible future expansion.

e. Other Accruals and Liabilities

Included in other accruals and liabilities is accrued compensation expense of $4,420, $4,689, and $4,744 for 2001, 2000, and 1999, respectively.

f. Income Taxes

A deferred tax asset or liability is recognized for the deferred tax consequences of all temporary differences.

g.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.

Cash is maintained in bank deposit accounts which, at times,

may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents. There are no requirements for compensating balances.

h. Derivative Financial Instruments

The Company uses interest rate swap agreements to reduce its exposure to market risks from changing interest rates. Two swap agreements are outstanding at December 31, 2001. The agreements are accounted for in accordance with Statement of Financial Accounting Standards (SFAS) No. 133 "Accounting for Certain Derivative Instruments and Certain Hedging Activities," as amended by SFAS No. 138, which became effective January 1, 2001. SFAS No. 133 established accounting and reporting standards that require all derivative instruments be recorded in the balance sheet as an asset or liability measured at its fair value. Changes in a derivative's fair value must be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative instrument's gains and losses to be recorded in the statement of stockholders equity as a component of other comprehensive income for cash flow hedges, and requires that the Company formally document, designate, and assess the effectiveness of transactions that receive hedge accounting. The Company does not hold or issue financial instruments for trading purposes.

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 $1,793,000 in 2001, $2,140,000 in 2000 and $2,150,000 in 1999.

j. Unearned Compensation - Stock Plans

The Company provides a restricted stock plan for certain executives of the Company. Under the Plan, 100,000 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 on 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 recorded in a contra-equity account and amortized over seven years. Shares granted for 2001, 2000, and 1999 were 9,900, 10,000, and 9,700 with a fair value of $188,000, $168,000, and $238,000, respectively. The amount amortized to compensation expense in 2001, 2000, and 1999 was $154,000, $136,000, and

$118,000, respectively. In addition, 500, 900, and 1,500 shares were forfeited in 2001, 2000, and 1999, respectively.

Effective July 1, 1999 the Company adopted the 1999 Outside Directors Stock Plan (the Plan) to provide incentive and award to the Company's Outside Directors. The Common Stock Benefit Trust (the Trust), a grantor trust, was established to provide a source of funds to meet the obligations of the Plan. The Trust is consolidated with the Company. The cost of purchased shares or par value of issued shares held by the Trust, net of the deferred compensation expense, is shown as a reduction of stockholders' equity. In 2001, 2000, and 1999, $22,000, $20,000, and $44,000 was charged against stockholders' equity, and $51,000, $38,000, and $23,000 recorded as director compensation, respectively.

k. Earnings Per Share

Basic earnings per share for 2001, 2000, and 1999 is calculated based on 3,540,212, 3,614,951, and 3,676,276 shares, respectively. Diluted earnings per share for 2001, 2000, and 1999 is based on 3,576,630, 3,646,517 and 3,700,876 shares, respectively. The dilutive potential shares consist of restricted stock.

l. Professional Standards

The Financial Accounting Standards Board has issued the following Statements of Financial Accounting Standards: SFAS No. 141 "Business Combinations," SFAS No. 142 "Goodwill and Other Intangible Assets," SFAS No. 143 "Accounting for Asset Retirement Obligations," and SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets." Adoption of these Statements is not expected to have a material impact on the Company's financial statements.

m. Revenue Recognition

Revenue from product sales is recognized when goods are received by the customer or the risks and rewards of ownership transfer to the customer.

n. Reclassifications

Certain amounts in prior years' financial statements have been reclassified to conform to the 2001 presentation.

4. Accounts Receivable

Accounts receivable are net of an allowance for doubtful accounts of $2,312,000, $1,464,000, and $1,008,000 as of December 31, 2001, 2000, and 1999, respectively. Bad debt charges, net of recoveries, were $1,860,000 for 2001, $1,169,000 for 2000 and $1,147,000 for 1999.

5. Inventory

Comparative year-end inventories are as follows:

(Th (In thousands)	2001	2000	1999
InventInventory at FIFO	$ 88,203	$ 99,762	$ 104,106
Reduction to LIFO	30,460	34,641	34,267
Inventory at LIFO	$ 57,743	$ 65,121	$ 69,839

Liquidation of certain inventory layers carried at the lower costs which prevailed in prior years as compared with the costs of 2001, 2000, and 1999 purchases had the effect of increasing 2001, 2000, and 1999 net income $2,085,000 ($.58 per share), $232,000 ($.06 per share), and $47,000 ($.01 per share), respectively.

6. Debt

a. Short-term Borrowings:

Amounts payable to banks at December 31, 2001, 2000, and 1999 were $4,000,000, $8,475,000, and $7,800,000, respectively. The average interest rate, which is based on existing Federal Funds rates, was 2.2 percent at December 31, 2001, 7.1 percent at December 31, 2000, and 5.4 percent at December 31, 1999. The carrying amount of these short-term borrowings approximates fair value because of the short maturity.

The Company had unused lines of credit totaling $43.5 million at December 31, 2001.

b. Long-term Debt:

(In thousands)	2001	2000	1999
Promissory note, 9.6% interest payable
quarterly, $1,950 paid June 2001 (1)	$ -	$ 1,950	$ 3,800
Promissory note, 6.6% interest
plus $83 principal payable
monthly through 2002. (1)	1,000	2,000	3,000
Promissory note, variable interest
payable monthly (2.37% at December
31, 2001), principal due August
2003. (1) (2)	10,000	15,000	15,000
Industrial revenue financings, variable
interest payable quarterly (1.9% at
December 31, 2001) with varying
maturities from 2005 to 2009. (1) (3)	10,075	10,075	10,075
Other	1,065	634	538
	22,140	29,659	32,413
Less current maturities	1,465	3,022	4,398
	$ 20,675	$26,637	$28,015

(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 $20,480,000.

(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 maturity date of these bonds was extended for five years in 2000. 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 $10,440,000. The contract amount of the letter of credit is a reasonable estimate of its fair value as the rate is fixed over the life of the commitment. No material loss is anticipated due to nonperformance by the counterparties to those agreements.

Annual maturities of long-term debt for the five years subsequent to December 31, 2001, are as follows: 2002, $1,465,000; 2003, $10,024,000; 2004, $24,000; 2005, $1,524,000; 2006, $1,040,000.

Late in the second quarter of 2001 the Company entered into two interest rate swap agreements. Under the agreements the Company agreed to exchange, at specified intervals, the difference between fixed and variable interest amounts that are calculated by reference to notional amounts of $10,000,000 and $10,075,000. The swaps effectively convert the variable rate borrowings (LIBOR and BMA Municipal Swap Index) into fixed rate borrowings with fixed rates of 5.36% and 4.22% and maturity dates of May 2006 and February 2009. Any difference between interest paid and received on the swap is recognized as interest expense over the life of each swap, thereby adjusting the effective interest rate on the underlying obligations.

Accounting for the swaps in accordance with SFAS No. 133, as amended by SFAS No. 138, resulted in a loss of $303,000, net of an income tax benefit of $185,000, in other comprehensive income for changes in fair value of the cash flow hedges for the year ended December 31, 2001. Included in other debt is $488,000, which is the fair value of the derivatives.

7. Postretirement Health and Life Benefits

The following tables reconcile the plan's change in benefit obligation and show the plan's funded status at December 31, 2001, 2000, and 1999.

(In th(In thousands)	2001	2000	1999
Change in benefit obligation
Benefit obligation at the end
of the prior year	$ 4,486	$ 4,348	$ 4,869
Service cost	43	47	55
Interest cost	303	331	316
Plan participants' contributions	26	66	71
Actuarial (gain) loss	(64)	59	(602)
Benefit payments	(308)	(365)	(361)
Benefit obligation at year end	$4,486	$ 4,486	$ 4,348
Reconciliation of funded status
Funded status	$(4,486)	$(4,486)	$(4,348)
Unrecognized net actuarial loss	157	220	160
Unrecognized transition obligation	2,239	2,442	2,645
Accrued cost	$(2,090)	$(1,824)	$(1,543)

The discount rate used to calculate the benefit obligation was 7.25 percent for 2001, 7.60 percent for 2000, and 8.00 percent for 1999. There are no plan assets. Employer paid benefits are limited to a fixed reimbursement allowance based on years of service at retirement. No health care cost trend assumption is necessary.

The components of the provision for net periodic postretirement benefit costs are:

(In thousands)	2001	2000	1999
ServiService cost	$ 43	$ 47	$ 55
Interest cost	$ 303	$ 331	$ 316
Net amortization	$ 203	$ 203	$ 222
Net postretirement benefit cost	$ 549	$ 581	$ 593

8. Retirement Plan

The following tables reconcile the plan's change in benefit obligation and change in plan assets and show the funded status at December 31, 2001, 2000, and 1999.

(In thousands)	2001	2000	1999
Change in benefit obligation
Benefit obligation at the end
of the prior year	$ 41,220	$ 37,518	$ 42,903
Service cost	954	862	1,222
Interest cost	2,958	2,853	2,755
Actuarial loss (gain)	624	1,160	(6,556)
Benefit payments	(2,591)	(1,173)	(2,806)
Benefit obligation at year end	$ 43,165	$ 41,220	$ 37,518
Change in plan assets
Fair value of plan assets at
beginning of year	$ 77,492	$ 79,798	$ 77,153
Actual return on plan assets	(3,745)	(1,135)	5,451
Benefits paid	(2,591)	(1,173)	(2,806)
Fair value of plan assets at year end	$ 71,156	$ 77,490	$ 79,798
Reconciliation of funded status
Funded status	$ 27,991	$ 36,270	$ 42,280
Unrecognized net actuarial gain	(2,187)	(13,287)	(23,662)
Prepaid benefit	$ 25,804	$ 22,983	$ 18,618

Weighted-average assumptions as of the end of the year were:

	2001	2000	1999
Discount rate	7.25%	7.60%	8.0%
Rate of compensation increase	4.0%	4.0%	4.0%
Expected return on plan assets	7.75%	7.75%	8.25%

The components of the net pension benefit are:

(In thousands)	2001	2000	1999
Service cost	$ 954	$ 862	$ 1,222
Interest cost	2,958	2,853	2,755
Expected return on plan assets	(5,915)	(6,095)	(6,266)
Amortization of net actuarial gain	(818)	(1,985)	(1,482)
Net pension benefit	$(2,821)	$(4,365)	$(3,771)

9. Income Taxes

The components of income tax expense are as follows:

(In th(In thousands)	2001	2000	1999
Federal:
Current	$ 2,755	$ 4,372	$ 3,368
Deferred	1,156	1,825	1,102
State:
Current	474	849	606
Deferred	214	443	188
Total	$ 4,599	$ 7,489	$ 5,264

The components of the net deferred tax liability are:

(In thousands)	2001	2000	1999
Current deferred (assets) liabilities
Accounts receivable	$ (398)	$ (287)	$ (190)
Inventory	1,302	(103)	(338)
Accrued vacation	(624)	(633)	(619)
Total net current deferred (asset) liability	280	(1,023)	(1,147)
Noncurrent deferred (assets) liabilities
Property and equipment	5,440	5,762	4,794
Pension asset	9,778	8,709	7,006
Postretirement benefit liability	(792)	(691)	(581)
Other	(1,758)	(994)	(577)
Total net non-current deferred liability	12,668	12,786	10,642
Net deferred liability	$ 12,948	$11,763	$ 9,495

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)	2001	2000	1999
Statutory rate applied to
pretax income	$ 3,985	$ 6,548	$ 4,613
State income taxes, net
of federal tax benefit	456	734	508
Other	158	207	143
Total tax expense	$ 4,599	$ 7,489	$ 5,264

10. Lease Commitments/Related Parties

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. The corporate office is leased from a related party for an annual rent of $260,000.

Rental expense under operating leases for 2001, 2000, and 1999 was $1,797,000, $1,528,000, and $1,558,000, respectively.

Minimum payments due for years after 2001 under noncancelable operating leases are $1,728,000 in 2002, $1,548,000 in 2003, $1,119,000 in 2004, $1,018,000 in 2005, $803,000 in 2006, and $343,000 thereafter.

11. Common Stock

The Board of Directors authorized the repurchase and retirement of up to 250,000 shares of the Company's outstanding common stock. Shares retired were 29,172 in 2001 and 117,996 shares in 2000, at a cost of $669,000 and $2,103,000, respectively.

12. Concentration of Credit Risk

The Company sells its products to all major areas of construction and manufacturing markets throughoutthe 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.

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 material adverse effect on the Company's financial position or results of operations.

PART IV

Item 14Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) Financial Statements:

(1) and (2) ' See "Index to Consolidated Financial Statements" at Item 8 of this Annual Report on 10-K/A

Financial Statement Schedule included in PART IV of this report:

For the three years ended December 31, 2001

Form 10-K/A Page(s)

Schedule II Valuation and

Qualifying Accounts 28

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.

Independent Auditors' Report

on Consolidated Financial

Statement Schedule 31

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 ' An 8-K was filed on October 12, 2001 to report the dismissal of PricewaterhouseCoopers LLP as the registrant's independent accountants and the appointment of KPMG LLP as the new independent accountants. PricewaterhouseCoopers LLP was dismissed after selling its Virginia Beach, Virginia office that historically had performed auditing services for the Company. The Audit Committee of the Company's board of directors approved the change.

(d) Financial Statement Schedule II

SCHEDULE II

Noland Company and Subsidiary

Valuation and Qualifying Accounts

Column A	Column B	Column C Additions			Column D	Column E

Description	Balance asof January 1	Charged to Costs andExpenses	Charged to OtherAccounts	Deductions(2)		Balance atYear-End

Valuation accounts deducted from assets to which they apply ' doubtful accounts receivable

December 31, 2001	$1,464,278	$1,860,472 (1)	$ -	$1,012,995		$2,311,755

December 31, 2000	$1,008,132	$1,169,009 (1)	$ -	$ 712,863		$1,464,278

December 31, 1999	$1,008,132	$1,147,347 (1)	$ -	$1,147,347		$1,008,132

(1) Net of recoveries on bad debts of $670,734 for 2001, $474,796 for 2000, and $781,028 for 1999.

(2) Represents charges for which reserve was previously provided.

SIGNATURE

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 to the Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

NOLAND COMPANY

Arthur P. Henderson, Jr.

November 7, 2002 By: 

Vice President - Finance

CERTIFICATIONS

I, Lloyd U. Noland, III, certify that:

1. I have reviewed this amended annual report on Form 10-K of the registrant for the year ended December 31, 2001.

2. Based on my knowledge, this amended annual 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 amended annual report.

3. Based on my knowledge, the financial statements, and other financial information included in this amended annual 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 amended annual report.

Lloyd U. Noland, III

Name:Lloyd U. Noland, III

Title: Chief Executive Officer

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

1. I have reviewed this amended annual report on Form 10-K of the registrant for the year ended December 31, 2001.

Arthur P. Henderson, Jr.

Name: Arthur P. Henderson, Jr.

Title: Vice President - Finance

INDEPENDENT AUDITORS' REPORT

ON CONSOLIDATED FINANCIAL STATEMENT SCHEDULE



To the Board of Directors and Stockholders of Noland Company:

Under date of February 22, 2002, except as to note 2 for which the date is November 5, 2002, we reported on the consolidated balance sheet of Noland Company and subsidiary (the Company) as of December 31, 2001, and the related consolidated statements of income, stockholders' equity and comprehensive income, and cash flows for the year ended December 31, 2001, as contained in the 2001 annual report to stockholders. These consolidated financial statements and our report thereon are included herein in the annual report on Form 10-K/A for the year 2001. In connection with our audit of the aforementioned consolidated financial statements, we also audited the related consolidated financial statement schedule as listed in item 14(a)2 of this Form 10-K/A. This 2001 financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement schedule based on our audit.

In our opinion, the 2001 financial statement schedule when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

KPMG LLP

Norfolk, Virginia

February 22, 2002

EXHIBIT INDEX

Exhibit Number	Exhibit	Page

(99-1) Opinion of Former Independent Accountants 33

- As Restated

Certification under Section 906 of the

Sarbanes-Oxley Act of 2002 34

EXHIBIT 99-1 ' Report of Former Independent Accountants

Report of Independent Accountants

To the Board of Directors and Stockholders of Noland Company:

In our opinion, the consolidated balance sheet as of December 31, 2000 and 1999 and the related consolidated statements of income, of cash flows and of stockholders' equity and comprehensive income for each of the two years in the period ended December 31, 2000 listed in the accompanying index present fairly, in all material respects, the financial position of Noland Company and its subsidiary at December 31, 2000 and 1999 and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under item 14(a)(2) for each of the two years in the period ended December 31, 2000 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statem ent schedule are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in note 2 to the consolidated financial statements, the Company has restated its consolidated financial statements for the years ended December 31, 2000 and 1999.

PRICEWATERHOUSECOOPERS LLP

Richmond, Virginia

February 22, 2001

except as to note 2 for which the

date is November 6, 2002

EXHIBIT 99-2 ' Certification of Company Officers

CERTIFICATION UNDER 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 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the 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

Chief Executive Officer

Arthur P. Henderson, Jr.

Vice President Finance

Noland (NOLD) Inactive 10-K/A2001 FY Annual report (amended)