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Noland Reports Higher Q3 2002 Sales and Earnings
NEWPORT NEWS, Va., November 7, 2002--Noland Company today reported third-quarter net income of $2,954,000, or 83 cents per share (diluted), compared to $1,132,000, or 32 cents per share, for the year-earlier period. Third-quarter net income was impacted by real estate gains of $709,000, or 20 cents per share (diluted).

Chairman Lloyd U. Noland III said favorable market conditions, including a hot, dry summer, boosted demand for plumbing and air conditioning equipment and supplies in much of the company's 13-state territory. Plumbing sales rose ten percent over the year-earlier period, Noland said, and air conditioning sales were 14.5 percent greater.

Offsetting some of these gains was a 13.6 percent decline in electrical/industrial sales, said Noland. "Manufacturing activity remains sluggish," he said, "but the larger factor in this sales decline was the winding down of several integrated supply accounts."

Total company sales for the third quarter were $131,076,000, 7.1 percent greater than the comparable 2001 quarter, when September sales were adversely affected by the September 11 terrorist attacks.

Gross profit for the quarter rose 11.6 percent, or $2,750,000, over the third quarter of 2001.

Operating expenses rose 5.4 percent, principally due to higher personnel-related costs and a decline in non-cash pension credits. Operating profits were $2.8 million higher, in part due to $1.2 million in gains from the sale of property.

Interest expense dropped 31 percent on lower borrowings and lower interest rates. Noland said the company continued to make progress in improving its inventory in the third quarter, achieving record-high turns and reducing unproductive inventory.

Through the first nine months, Noland's sales totaled $371,524,000, 1.9 percent higher than the year-earlier period's $364,738,000. Net income totaled $5,975,000, or $1.68 per share (diluted), 33.1 percent greater than the $4,491,000 (restated), or $1.25 per share in the first nine months of 2001.

The company also said it had determined in late October that its results for 2001 and prior years back to 1996 would be restated to recognize profits from the sales of certain parcels of real estate previously treated as non-monetary exchanges. Proceeds from the sales ultimately were invested in similar property, according to the company. For tax purposes, the transactions continue to represent non-monetary exchanges.

As a result of the restatements, 2001 net income increased from $6,869,000 ($1.92 on a diluted basis) to $7,121,000 ($1.99 per share). 2000 net income increased from $9,308,000 ($2.55 per share diluted) to $11,609,000 ($3.18 per share). A Form 10K/A has been filed with the Securities and Exchange Commission amending the annual report on form 10-K for 2001. Noland said the income for the first two quarters of 2002 was not affected by the restatements.

1. Net income benefited in both years from noncash pension credits, net of tax, as follows: $204,000 (6 cents per share) and $613,000 (17 cents per share) for 2002's third quarter and first nine months, respectively; and $400,000 (11 cents per share) and $1,200,000 (33 cents per share) for the comparable 2001 periods.
2. Based on 3,512,497 shares outstanding in 2002 and 3,540,743 shares outstanding in 2001.
3. Based on 3,549,005 shares outstanding in 2002 and 3,573,971 shares outstanding in 2001.
4. Based on 3,517,042 shares outstanding in 2002 and 3,544,343 shares outstanding in 2001.
5. Based on 3,550,034 shares outstanding in 2002 and 3,577,423 shares outstanding in 2001.

   ^* Based on 3,550,034 shares outstanding in 2002 and 3,577,423 shares outstanding in 2001.
   
   Note: Included in this news release are forward-looking management comments and other statements which reflect management's current outlook for the future. Such forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated in the statements. Such risks and uncertainties include, but are not limited to, general business and economic conditions, climatic conditions, competitive pricing pressures, and product availability.