Noland Company is a Virginia corporation founded in 1915 and incorporated in 1922. As of December 31, 2002 the Company employed 1,358 persons. The Company is a wholesale distributor of plumbing, air conditioning and electrical/industrial supplies, with branch facilities in a 13 state territory that ranges from Pennsylvania to Florida. It handles products of over 2,000 vendors and sells to thousands of customers in the commercial construction, residential construction and industrial markets of the southeastern United States. The Company also sells air conditioning equipment to customers in Panama and several South American countries.

The wholesale distribution of all products in which the Company is engaged is highly competitive. Competition results primarily from price, service and the availability of goods. Industry statistics indicate that Noland Company is one of the larger companies in its chosen territory.

The Company is focusing more of its efforts on growing air conditioning sales. In 2000, the Company was awarded the distribution rights for Ruud Air Conditioning equipment and supplies in several major markets in Florida. This led to the opening of several new branches to serve this territory, increasing our concentration in the Florida market. At the same time, the demand for electrical/industrial products has declined. Several significant, unprofitable integrated supply contracts were terminated resulting in the closing, in late 2002, of the Company's Industrial Distribution Center. Several profitable integrated supply accounts were transferred to branches closer to the customer.

Total sales of each class of similar products for the last five years are as follows:

Not all branches have all three departments. If a product department does not exist in a particular branch, any sales of that departments products are attributed to the department that makes the sale.

Recognizing the need to improve the efficiency of its supply chain, the Company in 2002 began construction of an $8.4 million Distribution Logistics Center ("DLC") near Richmond, Virginia. This 200,000 square-foot facility, scheduled to open in mid-2003, will allow us to make more products available to our branches in a cost-effective manner and, over time, reduce our total inventory investment. The DLC will also serve as a buffer between our vendors and our branches, allowing delivery lead times to be stabilized.

It is the practice of the Company to carry a full line of inventory items for rapid delivery to customers. At times, advance buying is necessary to ensure the availability of products for sale. The Company also extends credit, and maintains an adequate supply of merchandise which together use most of the Companys working capital. The business in general is seasonal to the extent of the construction industry it supplies.

The amount of the Companys backlog of orders believed to be firm was approximately $30,700,000 and $30,100,000 at December 31, 2002 and 2001, respectively.

The portion of the Companys business with the government and subject to renegotiation is not considered material.

Expenditures for Company-sponsored research and development activities and environmental control facilities in 2002, 2001 and 2000 were immaterial. The Company believes it is in compliance with federal, state and local provisions that have been enacted or adopted regulating the discharge of materials into the environment.

Noland Properties, Inc., the Companys property management subsidiary, has initiated efforts to sell excess property and re-invest the proceeds in income-producing property. These activities are expected to contribute to the bottom line in 2003 and beyond.

The main properties of the Company consist of 98 facilities, including warehouses, offices, showrooms, paved outside storage areas and covered pipe storage sheds. These are located in the following states: Alabama, Arkansas, Florida, Georgia, Kentucky, Maryland, Mississippi, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia and West Virginia, of which 16 are leased and the remaining 82 are Company owned. The executive office of the Company is located at 80 29^th Street, Newport News, Virginia 23607.

In the opinion of management, the aforementioned facilities are suitable for the purposes for which they are used, are adequate for the needs of the business and are in continuous use in the day-to-day course of operations. Management believes the underlying economic value of its facilities is significantly higher than the historical cost shown in the consolidated balance sheet as of December 31, 2002. The Companys policy is to maintain, repair and renovate its properties on a continuing basis, replacing older structures with new buildings and yard facilities as the need for such replacement arises. In addition, reference is made to Note 3 (d), page 15 of the Annual Report to Stockholders, filed as an exhibit hereto, with respect to property in excess of current needs.

The information set forth under the above caption is incorporated herein by reference from page 20, Note 14 of the Noland Company Annual Report to Stockholders for the year ended December 31, 2002.

The information set forth on the inside back cover of the Annual Report to Stockholders contains information concerning the market price of Noland Companys common stock for the past two years, the number of holders thereof and the dividend record with respect thereto for the past two years. This information is incorporated herein by reference.

The information set forth under the caption "Ten-Year Review of Selected Financial Data" relating to sales, net income, total assets, long-term debt, net income per share and dividends per share for the years 1993 through 2002 is incorporated herein by reference from page 21 of the Noland Company Annual Report to Stockholders for the year ended December 31, 2002.

The information set forth under the above caption is incorporated herein by reference from pages 8 and 9 of the Noland Company Annual Report to Stockholders for the year ended December 31, 2002.

The information set forth under the above caption is incorporated herein by reference from page 9 of the Noland Company Annual Report to Stockholders for the year ended December 31, 2002.

The following consolidated financial statements of Noland Company, included in the Annual Report to Stockholders for the year ended December 31, 2002, are incorporated herein by reference:

None

Data relating to Directors is incorporated herein by reference from pages 3, 4 and 5 of the 2003 Noland Company Proxy Statement for the May 1, 2003 Annual Meeting of Stockholders.

The information set forth under the caption "Compensation of Executive Officers" on page 6 of the 2003 Noland Company Proxy Statement for the May 1, 2003 Annual Meeting of Stockholders is incorporated herein by reference.

The information set forth under the captions "Voting Securities and Principal Holders Thereof" and "Nominees for Director" on pages 2, 4 and 5 of the 2003 Noland Company Proxy Statement for the May 1, 2003 Annual Meeting of Stockholders is incorporated herein by reference.

(a) The Company is in the seventh year of a ten-year agreement to lease its corporate headquarters office building. The building is owned by Basic, Inc. Basic, Inc. owns 893,967 shares of Noland Company stock. The majority of Basic, Inc. stock is owned by The L.U. Noland 1982 Trust, whose trustees are Mr. Lloyd U. Noland, Jr.s wife, Jane K. Noland, and his three children: Lloyd U. Noland III, Susan C. Noland and Anne N. Edwards. The Company pays an annual rental fee of approximately $290,000 per year and bears the direct costs of utilities and real estate taxes. The terms of the lease were based on an evaluation by an independent real estate firm and is considered by management to be an arms length transaction.

(a) Evaluation of Disclosure Controls and Procedures: Based on their evaluation of our disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Exchange Act) as of a date within 90 days of the filing of this Annual Report on Form 10-K, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and are operating in an effective manner.

(b) Changes in Internal Controls: There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their most recent evaluation.

(a)Consolidated Financial Statements included in PART II, Item 8 of this report:

The 2001 and 2000 consolidated financial statements were restated in October 2002 to recognize gains from the sales of excess real estate that were previously treated as non-monetary gains.

With the exception of the aforementioned information incorporated by reference and the information in the 2002 Annual Report to Stockholders on the inside back cover and pages 8, 9, and 21 incorporated in response to Items 5, 6 and 7 in this Form 10-K Annual Report, the 2002 Annual Report to Stockholders is not to be deemed "filed" as part of this report. The individual financial statements of the registrant have not been filed because consolidated financial statements are filed. The registrant is an operating company and the subsidiary is wholly owned.

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.

(c)The Index of Exhibits and any required Exhibits are included beginning at page 14 of this report.

(d)Financial Statement Schedule II

(1) Net of recoveries on bad debts of $563,823 for 2002, $670,734 for 2001, and $474,796 for 2000.

Arthur P. Henderson, Jr.

Arthur P. Henderson, Jr. Date March 17, 2003

Vice President Finance

As to any security holder requesting a copy of the Form 10-K, the Company will furnish any exhibit indicated in the above list as filed with the Form 10-K upon payment to it of its expenses in furnishing such exhibit.