10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10 – Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 27, 2003

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934

For the transition period from              to             

Commission file number 1-8903

MOORE MEDICAL CORP.

(Exact name of registrant as specified in its charter)

Delaware	22-1897821
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

389 John Downey Drive

P.O. Box 1500, New Britain, CT 06050

(Address of Principal Executive Offices and Zip Code)

860-826-3600

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(g) of the Act:

Common Stock ($.01 Par Value)	American Stock Exchange
Rights to Purchase Series I Junior Preferred Stock	American Stock Exchange
(Title of Each Class)	(Name of Each Exchange on Which Registered)

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  ¨

Indicate by a check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes   ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Number of Shares Outstanding at October 25, 2003
Common stock, $0.01 par value	3,189,784

FORWARD-LOOKING INFORMATION

This report contains statements about future events and expectations that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management’s beliefs, assumptions and expectations of the Company’s future economic performance, taking into account the information that is currently available to management. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties (including, but not limited to, economic, competitive, governmental and technological factors outside our control) that may cause the Company’s actual results, performance or financial condition to differ materially from the expectations of future results, performance or financial condition we express or imply in any forward-looking statements.

The words “believe,” “may,” “will,” “could,” “should,” “would,” “anticipate,” “estimate,” “expect,” “intend,” “project,” “objective,” “seek,” “strive,” “might,” “likely result,” “build,” “grow,” “plan,” “goal,” “expand,” “position,” or similar words, or the negatives of these words, or similar terminology, identify forward-looking statements.

For a description of the factors that could cause the actual results of the Company to be materially different from those projected, please review the Company’s SEC reports that detail these risks and uncertainties and the section captioned “Forward Looking Information” contained in the Company’s Annual Report on Form 10-K for the year ended December 28, 2002. Any forward looking statements should be considered in light of these factors. The Company is not under any obligation, and expressly disclaims any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.

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MOORE MEDICAL CORP. & SUBSIDIARY

TABLE OF CONTENTS

		PAGE
PART I. FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements
	Consolidated Balance Sheets at September 27, 2003 (unaudited) and December 28, 2002	4
	Consolidated Statements of Operations for the Three Months Ended September 27, 2003 (unaudited) and September 28, 2002 (unaudited)	5
	Consolidated Statements of Operations for the Nine Months Ended September 27, 2003 (unaudited) and September 28, 2002 (unaudited)	6
	Consolidated Statements of Cash Flows for the Nine Months Ended September 27, 2003 (unaudited) and September 28, 2002 (unaudited)	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	17
Item 4.	Controls and Procedures	17
PART II. OTHER INFORMATION
Item 6.	Exhibits and Reports on Form 8-K	17
Signatures		18

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PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

MOORE MEDICAL CORP. & SUBSIDIARY

Consolidated Balance Sheets

(Amounts in thousands, except par value)	September 27, 2003			December 28, 2002
	(unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	101		$	100
Accounts receivable, less allowances of $1,974 and $1,249, respectively		20,462			17,187
Inventories		12,004			11,230
Prepaid expenses and other current assets		1,249			1,216
Deferred income taxes		1,871			1,871
Total Current Assets		35,687			31,604
Noncurrent Assets
Property, plant and equipment, net		5,986			6,254
Other assets		1,957			2,137
Total Noncurrent Assets		7,943			8,391
	$	43,630		$	39,995
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	11,054		$	5,794
Amounts due to customers		1,857			2,342
Accrued expenses		1,620			1,723
Cash overdraft		1,281			1,632
Total Current Liabilities		15,812			11,491
Deferred Income Taxes		855			855
Accrued Pension		490			233
Long Term Debt		3,596			4,281
Shareholders’ Equity
Preferred stock, no shares outstanding		—			—
Common stock - $.01 par value; Shares authorized – 10,000; Shares issued – 3,246 in 2003 and 2002		32			32
Additional paid-in capital		21,527			21,513
Note receivable		(331	)		(316	)
Accumulated other comprehensive loss		(1,095	)		(1,095	)
Retained earnings		3,244			3,501
		23,377			23,635
Less treasury shares, at cost, 56 shares in 2003 and 2002.		(500	)		(500	)
Total Shareholders’ Equity		22,877			23,135
	$	43,630		$	39,995

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

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MOORE MEDICAL CORP. & SUBSIDIARY

Consolidated Statements of Operations For The Three Months Ended

(Unaudited)

(Amounts in thousands, except per share data)	September 27, 2003		September 28, 2002
Net sales	$	38,102	$	37,032
Cost of products sold		27,878		26,777
Gross profit		10,224		10,255
Sales and marketing expenses		2,680		2,699
General and administrative expenses		6,750		6,437
Operating income		794		1,119
Interest expense, net		38		113
Income before income taxes		756		1,006
Income tax provision		272		363
Net income	$	484	$	643
Basic net income per share	$	0.15	$	0.20
Diluted net income per share	$	0.15	$	0.20
Basic common shares outstanding*		3,190		3,173
Diluted common shares outstanding*		3,191		3,177

* weighted average

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

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MOORE MEDICAL CORP. & SUBSIDIARY

Consolidated Statements of Operations For The Nine Months Ended

(Unaudited)

(Amounts in thousands, except per share data)	September 27, 2003			September 28, 2002
Net sales	$	107,626		$	102,909
Cost of products sold		78,423			74,484
Gross profit		29,203			28,425
Sales and marketing expenses		9,158			7,968
General and administrative expenses		20,323			18,508
Operating (loss) income		(278	)		1,949
Interest expense, net		124			201
(Loss) income before income taxes		(402	)		1,748
Income tax (benefit) provision		(145	)		629
Net (loss) income	$	(257	)	$	1,119
Basic net (loss) income per share	$	(0.08	)	$	0.35
Diluted net (loss) income per share	$	(0.08	)	$	0.35
Basic common shares outstanding*		3,190			3,161
Diluted common shares outstanding*		3,190			3 179

* weighted average

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

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MOORE MEDICAL CORP. & SUBSIDIARY

Consolidated Statements of Cash Flows For The Nine Months Ended

(Unaudited)

(Amounts in thousands)	September 27, 2003			September 28, 2002
Cash Flows From Operating Activities
Net (loss) income	$	(257	)	$	1,119
Adjustments to reconcile net (loss) income to net cash flows provided by operating activities:
Depreciation		1,976			2,294
Provision for bad debt		1,167			667
Loss on disposal of equipment		117			55
Changes in operating assets and liabilities:
Accounts receivable		(4,442	)		(3,355	)
Inventories		(774	)		(796	)
Other assets		147			489
Accounts payable		5,260			1,070
Other liabilities		(331	)		(20	)
Net cash flows provided by operating activities		2,863			1,523
Cash Flows From Investing Activities
Acquisition of property, plant and equipment		(1,826	)		(642	)
Net cash flows used in investing activities		(1,826	)		(642	)
Cash Flows From Financing Activities
Net (repayments) borrowings on revolving line of credit		(685	)		3,443
Sale of treasury stock		—			17
Reduction of cash overdraft		(351	)		—
Repayments of long-term debt		—			(5,076	)
Net cash flows used in financing activities		(1,036	)		(1,616	)
Change in cash		1			(735	)
Cash at the beginning of period		100			835
Cash At End Of Period	$	101		$	100

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

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MOORE MEDICAL CORP. & SUBSIDIARY

Notes To Consolidated Financial Statements

(Unaudited)

Note 1. Business and Basis of Presentation

The Company

Moore Medical Corp. (“Moore Medical,” the “Company,” “we” or “us”) is an Internet-enabled, multi-channel marketer and distributor of medical, surgical and pharmaceutical products to approximately 100,000 health care practices and facilities in non-hospital settings nationwide, including: physicians, emergency medical technicians, schools, correctional institutions, municipalities, occupational/industrial health doctors and nurses, and other specialty practice communities. Moore Medical also serves the medical/surgical supply needs of 30 customer community affiliates. We market to and serve our customers through direct mail, industry-specialized telephone support staff, field sales representatives, and the Internet. Our direct marketing and distribution business has been in operation for 55 years. The Company operates principally from three distribution facilities located in the United States.

Basis of Presentation

Moore Medical has prepared the accompanying unaudited consolidated financial statements in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of management, all adjustments necessary for a fair presentation of the results for the interim period have been made. The results for the three and nine months ended September 27, 2003 do not necessarily indicate the results to be expected for the fiscal year ended December 27, 2003 or any other future period.

The accompanying unaudited consolidated financial statements should be read in conjunction with the Company’s Consolidated Financial Statements included in the Company’s 2002 Annual Report filed on Form 10-K. Certain prior year amounts have been reclassified to conform to the current year presentation.

In December 2002, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure”, an amendment of SFAS No. 123, “Accounting for Stock-Based Compensation”. SFAS 148 amends the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. Pursuant to SFAS 123, the Company elected to account for stock-based compensation plans under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees.” Accordingly, no compensation expense was included in the determination of net income (loss) for the three and nine months ended September 27, 2003 and September 28, 2002. See Note 6 for the impact on net income (loss) for the periods presented had the Company recorded stock-based compensation in the determination of net income (loss).

Note 2. Business Combination

In July 2002, the Company completed its purchase of the remaining 49% interest it did not previously own in Podiatry Online, an online information site and electronic newsletter. The purchase of Podiatry Online created a sales channel to serve podiatrists nationwide. The total purchase price of $750,000 was made with cash in the amount of $500,000 and 33,566 shares of the Company’s common stock with an aggregate value of $250,000. The acquisition was recorded as a purchase transaction, with $750,000 recorded as goodwill.

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Note 3. Goodwill and Intangible Assets

Effective January 1, 2002, the Company adopted SFAS No. 142, “Goodwill and Other Intangible Assets”. SFAS 142 changes the accounting for goodwill and intangible assets whereby such assets are no longer amortized; however, the standard does require evaluation for impairment and a corresponding writedown, if appropriate. Intangible assets with estimated useful lives continue to be amortized. SFAS 142 required an initial evaluation of goodwill impairment upon adoption. The initial evaluation was performed as of January 1, 2002 resulting in no impairment in the value of the Company’s goodwill. An annual evaluation is performed to test for goodwill impairment by applying a fair value based test. The Company recorded no impairment losses during the three and nine months ended September 27, 2003 and during fiscal 2002.

Included in other noncurrent assets are goodwill balances of $1.7 million at September 27, 2003 and December 28, 2002, which represent the excess of the purchase price paid over the fair value of the net assets acquired in the acquisitions of Podiatry Online and MERGInet Medical Resources.

Note 4. Long-Term Debt

On January 26, 2001, the Company entered into a collateralized bank financing agreement which provided up to a $15 million revolving line of credit (“loan agreement”) expiring on January 26, 2004. On November 6, 2003, the Company amended its $15 million loan agreement and extended the maturity date to June 30, 2006. Interest is charged at the prime rate, plus or minus 25 basis points or, at the option of the Company, at the LIBOR rate plus a margin ranging from 1.5% to 2.0% depending on the financial leverage of the Company. The Company pays a commitment fee ranging from 0.20% to 0.30% per annum on the unused line of credit. With the exception of a $0.1 million certificate of deposit, all amounts of cash and cash equivalents are required to be offset against outstanding borrowings on the loan agreement.

In consideration for the loan agreement, the Company has collateralized all of the Company’s assets (current and future existence) over the term of the loan agreement. Pursuant to the loan agreement, the Company covenants that as long as it has any obligations or commitments to the lender, the Company will be subject to financial covenants involving consolidated tangible net worth, minimum earnings requirements and a leverage ratio calculation. These covenant targets fluctuate over the course of the term of the loan agreement.

At December 28, 2002, the Company was in violation of the consolidated tangible net worth and earnings before interest and taxes (“EBIT”) financial covenants contained in its loan agreement for the fourth quarter of fiscal 2002. On March 27, 2003, the Company and its lender amended certain financial covenants and conditions of the loan agreement effective for the period ended December 28, 2002, including the consolidated tangible net worth and EBIT financial covenants. As of December 28, 2002, the Company was in compliance with the financial covenants, as amended. In addition, the Company was in violation of the EBIT financial covenant contained in its amended loan agreement for the quarters ended March 29, 2003 and June 28, 2003. The Company received a waiver from its lender for the covenant violation at March 29, 2003. For the covenant violation at June 28, 2003, the Company and its lender amended certain financial covenants effective for the quarter ended June 28, 2003. As of June 28, 2003, the Company was in compliance with the EBIT financial covenant, as amended. The Company was in compliance with all financial covenants for the quarter ended September 27, 2003.

Note 5. Litigation

On July 31, 2003, the Company received an unfavorable court judgment requiring the Company to pay the legal fees of the plaintiff in a lawsuit filed against the Company by the estate of a former employee. The lawsuit related to employee benefits administration in 1993. The Company has recorded $245,000 of general and administrative expense in the nine months ended September 27, 2003 related to this judgment.

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Note 6. Earnings Per Share

Earnings per share (“EPS”) amounts are calculated in accordance with SFAS No. 128, “Earnings Per Share.” Basic EPS is based on the weighted average number of shares of common stock outstanding for the period, excluding any dilutive common share equivalents. Diluted EPS reflects the potential dilution that could occur if securities to issue common stock were exercised.

A reconciliation of shares used in calculating basic and diluted EPS for the three and nine months ended September 27, 2003 and September 28, 2002 respectively, follows (in thousands):

	Three Months Ended
	September 27, 2003	September 28, 2002
Basic EPS	3,190	3,173
Effect of assumed conversion of employee stock options	1	4
Diluted EPS	3,191	3,177
	Nine Months Ended
	September 27, 2003	September 28, 2002
Basic EPS	3,190	3,161
Effect of assumed conversion of employee stock options	—	18
Diluted EPS	3,190	3,179

Employee stock options to purchase approximately 217,000 shares of common stock were outstanding during the nine months ended September 27, 2003. Such stock options could potentially dilute basic EPS in the future but were excluded from the computation of diluted earnings per share due to being anti-dilutive.

Had compensation cost for the stock option plans been recognized based on the fair value at the grant dates for awards under those plans, consistent with the provisions of SFAS No. 123, net income (loss) and basic and diluted earnings (loss) per share would have been as indicated in the table below.

	Three Months Ended
(in thousands, except per share amounts)	September 27, 2003			September 28, 2002
Net income:
As reported	$	484		$	643
Impact of stock-based compensation expense		(22	)		(33	)
Pro forma	$	462		$	610
Basic and diluted earnings per share:
As reported	$	0.15		$	0.20
Pro forma	$	0.14		$	0.19

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	Nine Months Ended
(In thousands, except per share amounts)	September 27, 2003			September 28, 2002
Net (loss) income:
As reported	$	(257	)	$	1,119
Impact of stock-based compensation expense		(73	)		(105	)
Pro forma	$	(330	)	$	1,014
Basic and diluted (loss) earnings per share:
As reported	$	(0.08	)	$	0.35
Pro forma	$	(0.10	)	$	0.32

Note 7. Recent Accounting Pronouncements

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities”. SFAS 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. This statement is effective for contracts entered into or modified after September 30, 2003.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”. This statement requires that an issuer classify financial instruments that are within its scope as a liability. Many of those instruments were classified as equity under previous guidance. Most of the guidance in SFAS 150 is effective for all financial instruments entered into or modified after May 31, 2003, and otherwise effective at the beginning of the first interim period beginning after June 15, 2003.

The Company does not expect the adoption of these statements to have a material impact on its consolidated financial position, consolidated results of operations or consolidated cash flows.

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MOORE MEDICAL CORP. & SUBSIDIARY

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

Reclassifications – Certain fiscal 2002 amounts have been reclassified to conform to the current periods presented.

Overview

Moore Medical is an Internet-enabled, multi-channel marketer and distributor of medical, surgical and pharmaceutical products to approximately 100,000 health care practices and facilities in non-hospital settings nationwide, including: physicians, emergency medical technicians, schools, correctional institutions, municipalities, occupational/industrial health doctors and nurses, and other specialty practice communities. Moore Medical also serves the medical/surgical supply needs of 30 customer community affiliates. We market to and serve our customers through direct mail, industry-specialized telephone support staff, field sales representatives, and the Internet. Our direct marketing and distribution business has been in operation for 55 years. The Company operates principally from three distribution facilities located in the United States.

The Company achieved net sales of $38.1 million for the third quarter ended September 27, 2003, an increase of 3.0% over the prior year’s quarter. In the aggregate, sales growth fell short of the Company’s expectations for the quarter; however, the Company realized sales growth over the prior year’s quarter in several of its specialty markets that were the focus of investments in prior quarters. While the Company has experienced an increase in net sales in this quarter and on a year-to-date basis compared to the same periods a year ago, pricing pressures and product mix have negatively impacted the Company’s gross margin percentage in fiscal 2003 compared to fiscal 2002.

As a result of an expanded specialized field sales force and additions to sales and marketing management to support the Company’s multi-channel marketing and distribution, sales and marketing expenses increased by approximately 15% for the nine months ended September 27, 2003, compared to the same period a year ago.

Increases in general and administrative expenses for the three and nine months ended September 27, 2003, were primarily related to increases in bad debt expense, professional service fees, pension expense and insurance expense.

The Company recorded net income of $0.5 million, or $0.15 per basic and diluted share, for the three months ended September 27, 2003 as a result of net sales growth which offset increases in general and administrative expenses. For the nine months ended September 27, 2003, lower than expected sales growth did not generate sufficient gross profit to offset the Company’s sales infrastructure investment and higher operating costs, which resulted in a net loss of $(0.3) million, or $(0.08) per basic and diluted share.

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Results of Operations

Three and Nine Months Ended September 27, 2003 versus September 28, 2002

The following table represents selected financial information, expressed as a percentage of net sales:

	Three months ended				Nine months ended
	September 27, 2003		September 28, 2002		September 27, 2003		September 28, 2002
Net sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of products sold	73.2		72.3		72.9		72.4
Gross profit	26.8		27.7		27.1		27.6
Sales and marketing expenses	7.0		7.3		8.5		7.7
General and administrative expenses	17.7		17.4		18.9		18.0
Operating income (loss)	2.1	%	3.0	%	(0.03	%)	1.9	%

Net sales for the three months ended September 27, 2003 were $ 38.1 million, an increase of 3.0% from $37.0 million in the same period a year ago. For the nine months ended September 27, 2003, net sales were $107.6 million, an increase of 4.6% from $102.9 million in the same period a year ago. The Company’s sales growth in both periods occurred primarily in its public sector (i.e., corrections, schools, federal, state and local government), podiatry and physicians’ specialty markets, and was offset by decreases in the occupational health and resellers’ specialty markets. Internet-based revenue increased 24.3% to $4.6 million and 23.8% to $13.0 million for the three and nine months ended September 27, 2003, respectively, compared to $3.7 million and $10.5 million, respectively, for the same periods a year ago, as more orders were placed on the Company’s enhanced e-business channel.

Gross margins decreased to 26.8% and 27.1% for the three and nine months ended September 27, 2003, respectively, as compared to 27.7% and 27.6% for the three and nine months ended September 28, 2002, respectively. The decreases for the three and nine months ended September 27, 2003 compared to the same periods a year ago were primarily attributable to increased competitive pricing pressures in certain markets, aggressive pricing associated with gaining entry into competitively held new accounts, and product mix.

Sales and marketing expenses remained constant at $2.7 million and increased by 15.0% to $9.2 million for the three and nine months ended September 27, 2003, respectively, compared with $2.7 million and $8.0 million for the same periods a year ago. Sales and marketing expenses as a percentage of net sales decreased to 7.0% and increased to 8.5% for the three and nine months ended September 27, 2003, respectively, as compared to 7.3% and 7.7% for the three and nine months ended September 28, 2002, respectively. Contributing to sales and marketing expenses remaining constant at $2.7 million for the three months ended September 27, 2003 compared to the same period a year ago, was an increase in sales and marketing salaries and benefits expenses, as a result of the expansion of the field sales force. The increase was offset by efficiency gains in direct advertising expenses due to more effective, targeted marketing campaigns and increased revenue received from vendor advertising programs. The year to date increases are attributable to increased sales and marketing salaries and benefits expenses to support the Company’s multi-channel marketing and distribution, and a result of the expansion of the field sales force in the fourth quarter of 2002, which continued into fiscal 2003.

General and administrative expenses increased by 6.3% to $6.8 million and 9.7% to $20.3 million for the three and nine months ended September 27, 2003, respectively, compared to $6.4 million and $18.5 million for the same periods a year ago. As a percentage of net sales, general and administrative expenses increased to 17.7% and 18.9% for the three and nine months ended September 27, 2003, respectively, as compared to 17.4% and 18.0% for the three and nine months ended September 28, 2002,

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respectively. The increase from the prior year’s periods were primarily related to increases in pension expense, professional services fees, insurance expense, and bad debt expense. During the first three quarters of fiscal 2003, the Company experienced difficulties in its collection of accounts receivable, particularly in smaller dollar volume customer accounts, which contributed to the increase in bad debt expense. In addition, on July 31, 2003, the Company received an unfavorable court judgment requiring the Company to pay the legal fees of the plaintiff in a lawsuit filed against the Company by the estate of a former employee. The lawsuit related to employee benefits administration in 1993. The Company has recorded $245,000 of general and administrative expense in the nine months ended September 27, 2003 related to this judgment.

Interest expense for the three and nine months ended September 27, 2003 decreased to approximately $38,000 and $124,000, respectively, from approximately $113,000 and $201,000, respectively, in the same periods a year ago. This decrease was primarily attributable to the recognition of approximately $50,000 of interest expense for the decrease in the fair value of the Company’s interest rate cap agreement in accordance with SFAS No. 133, “Accounting for Derivatives and Hedging Activities” in the third quarter of fiscal 2002. The decrease was also attributable to a reduction in the principal amount of borrowings under the Company’s revolving line of credit along with the impact of decreasing interest rates during both periods.

The Company’s effective income tax rate was 36.0% for the three and nine months ended September 27, 2003 compared to the effective income tax rates of 36.1% and 36.0% for the three and nine months ended September 28, 2002, respectively. The difference between the Company’s effective tax rate and the federal statutory rate is due primarily to state income taxes.

Net income was $0.5 million, or $0.15 per basic and diluted share, and net loss was ($0.3) million, or ($0.08) per basic and diluted share for the three and nine months ended September 27, 2003, respectively, compared to net income of $0.6 million, or $0.20 per basic and diluted share, and net income of $1.1 million, or $0.35 per basic and diluted share, respectively, for the three and nine months ended September 28, 2002.

Liquidity and Capital Resources

On January 26, 2001, the Company entered into a collateralized bank financing agreement which provided up to a $15 million revolving credit facility (“loan agreement”), expiring on January 26, 2004. On November 6, 2003, the Company amended the loan agreement and extended the maturity date to June 30, 2006.

At December 28, 2002, the Company was in violation of the consolidated tangible net worth and earnings before interest and taxes (“EBIT”) financial covenants contained in its credit facility for the fourth quarter of fiscal 2002. On March 27, 2003, the Company and its lender amended certain financial covenants and conditions of the credit facility effective for the period ended December 28, 2002, including the consolidated tangible net worth and EBIT financial covenants. As of December 28, 2002, the Company was in compliance with the financial covenants, as amended. In addition, the Company was in violation of the EBIT financial covenant contained in its amended loan agreement for the quarters ended March 29, 2003 and June 28, 2003. The Company received a waiver from its lender for the covenant violation at March 29, 2003. For the covenant violation at June 28, 2003, the Company and its lender amended certain financial covenants effective for the quarter ended June 28, 2003. As of June 28, 2003, the Company was in compliance with the EBIT financial covenant, as amended. The Company was in compliance with all financial covenants for the quarter ended September 27, 2003.

The Company’s cash and cash equivalents at September 27, 2003 totaled $0.1 million in the form of a certificate of deposit. With the exception of the $0.1 million certificate of deposit, all amounts of cash and cash equivalents are required to be offset against outstanding borrowings on the loan agreement. As of September 27, 2003, the Company had $3.6 million outstanding on its loan agreement.

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Net cash provided by operating activities was $2.9 million for the nine months ended September 27, 2003 and resulted primarily from a net loss of ($0.3) million and the combination of non-cash charges of $3.3 million and a decrease in uses of operating items of working capital of $0.1 million. Non-cash charges consisted primarily of depreciation expense of $2.0 million and bad debt expense of $1.2 million. The decrease in working capital needs was primarily due to a $4.9 million increase in accounts payable and other liabilities, a $0.1 million decrease in other assets, partially offset by an increase in accounts receivable by $4.4 million and an increase in inventory of $0.8 million. The increase in accounts payable and other liabilities was primarily due to timing and value of inventory receipts and payment of invoices. The increase in accounts receivable was due primarily to an increase in net sales of approximately $3.8 million in the last half of the third quarter of fiscal 2003 compared to the last half of the fourth quarter of fiscal 2002, combined with certain customers paying the Company slower in fiscal 2003 than in fiscal 2002.

Net cash used in investing activities was $1.8 million for the nine months ended September 27, 2003. The primary investment was the replacement of the communications infrastructure within the Company. The Company expects to invest a total of nearly $2.0 million during the fiscal year ended December 27, 2003 in capital projects on communication and computer infrastructure systems and operating efficiency initiatives which are expected to produce future benefits to the Company.

Net cash used in financing activities of $1.0 million for the nine months ended September 27, 2003 is the aggregate of paying down borrowings on the Company’s credit facility and a reduction in a cash overdraft.

Cash Requirements

The Company believes that cash flows from operations and available cash and cash equivalents are adequate to fund the Company’s operations for the foreseeable future.

The following table quantifies the Company’s future contractual cash obligations as of September 27, 2003 (in millions):

	Payments Due in Fiscal
	2003		2004		2005		2006		2007		Thereafter		Total
Long-term debt	$	—	$	—	$	—	$	3.6	$	—	$	—	$	3.6
Operating leases		0.4		1.2		0.4		0.3		0.2		1.2		3.7
	$	0.4	$	1.2	$	0.4	$	3.9	$	0.2	$	1.2	$	7.3

Application of Critical Accounting Policies

The Company’s consolidated financial statements are based on the application of significant accounting policies, which require management to make significant estimates and assumptions. The Company believes the following are some of the more critical accounting policies that impact the Company’s financial statements:

Principles of Consolidation - The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All intercompany accounts and transactions have been eliminated. The results of operations of companies acquired in purchase business transactions are included in the accompanying consolidated financial statements from the dates of acquisition.

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

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reporting period. Subsequent actual outcomes could differ from those estimated and assumed. The more significant estimates and assumptions used by management in the preparation of the financial statements relate to the reserves established for uncollectible accounts receivable, obsolete and slow moving inventory and certain accrued liabilities.

Inventories - Inventories, consisting of products purchased for resale, are stated at the lower of average cost or market value. Market values are based on the net realizable value of the products.

Intangible Assets - Intangible assets consist of goodwill and are included in other assets, net of amortization. As a result of adopting SFAS No. 142, “Goodwill and Other Intangible Assets,” goodwill is no longer amortized, but is evaluated for impairment and written down, if appropriate, and intangible assets with estimated useful lives continue to be amortized.

Revenue Recognition - Sales are recorded upon shipment of products to customers. Revenue from freight charged to customers is recognized when products are shipped. Provisions for customer returns and allowances are recorded in the period the related sales are recorded.

Advertising - The cost of direct response catalog advertising is deferred and amortized over the period of expected revenues. Direct response catalog advertising consists primarily of catalog production expenses and related postage costs. Revenue from catalogs is earned over varying time periods, but the largest catalogs are generally effective for less than a year.

Income Taxes - The liability method is used to calculate deferred income taxes. Under this method, deferred income tax assets and liabilities are recognized on temporary differences between the financial statement and tax bases of assets and liabilities, using applicable tax rates, and on tax carryforwards.

Stock-Based Compensation – The Company records stock option awards in accordance with the provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees.” The Company estimates the fair value of stock option awards in accordance with SFAS No. 123, “Accounting for Stock-Based Compensation,” and discloses the resulting estimated compensation effect on net income on a pro forma basis for all periods presented.

Fiscal Year - The Company’s fiscal year ends on the Saturday closest to December 31. Fiscal year end 2003 ends on December 27, 2003. The 2002 fiscal year ended on December 28, 2002.

Recent Accounting Pronouncements

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS No. 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” SFAS No. 149 is effective for contracts entered into or modified after September 30, 2003.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” This statement requires that an issuer classify financial instruments that are within its scope as a liability. Many of those instruments were classified as equity under previous guidance. Most of the guidance in SFAS No. 150 is effective for all financial instruments entered into or modified after May 31, 2003, and otherwise effective at the beginning of the first interim period beginning after June 15, 2003.

The Company does not expect the adoption of these statements to have a material impact on its consolidated financial position, consolidated results of operations or consolidated cash flows.

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Item 3. Quantitative & Qualitative Disclosures About Market Risk

Interest Rate Risk

As described in the notes to the financial statements included in this Form 10-Q, the Company maintains a collateralized bank financing agreement, which provides up to a $15 million revolving line of credit maturing on June 30, 2006. Interest is charged at the prime rate, plus or minus 25 basis points or, at the option of the Company, at the LIBOR rate plus a margin ranging from 1.5% to 2.0% depending on the financial leverage of the Company. In February 2002, the Company purchased a 30-month interest rate cap in the notional amount of $3.0 million with a cap rate of 4.0% to hedge against an increase in interest rates. At September 27, 2003 and December 28, 2002, the fair value of the interest rate cap was $0. The Company does not expect changes in interest rates to have a material effect on income or cash flows in fiscal 2003, although there can be no assurances that interest rates will not significantly change.

Item 4. Controls and Procedures

The Company’s management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-4(c) and 15d-14(c) of the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this quarterly report. Based on such evaluation, our CEO and CFO have each concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report. As required by Rule 13a-15(d) under the Exchange Act, the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the Company’s internal control over financial reporting to determine whether any changes occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, there has been no such change during the quarter covered by this report.

Part II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

10.25	Employment Agreement between the Company and Mark Florence, effective August 15, 2003.
10.26	Third Amendment, dated as of November 6, 2003, by Moore Medical Corp. and Fleet Capital Corporation with respect to a Loan and Security Agreement dated as of January 26, 2001, as amended.
31.1	Certification of Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2	Certification of Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes – Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes – Oxley Act of 2002.

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(b) Reports on Form 8-K

During the quarter ended September 27, 2003, the Company filed the following Current Reports on Form 8-K:

The Company filed a Form 8-K on July 17, 2003, to report a change in the Company’s certifying public accountant.

The Company filed a Form 8-K on August 8, 2003, as a result of the Company issuing a press release reporting financial results for the quarter ended June 28, 2003, which was included as an exhibit to the Form 8-K.

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.

MOORE MEDICAL CORP.

(REGISTRANT)

BY:	/s/ Linda M. Autore	BY:	/s/ John M. Zinzarella
	Linda M. Autore, President and Chief Executive Officer November 12, 2003		John M. Zinzarella, Vice President of Finance, Treasurer and Chief Financial Officer November 12, 2003

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EX-10.25

Exhibit 10.25

AMENDED AND RESTATED EMPLOYMENT AGREEMENT, agreed to be entered into on and effective as of August 15, 2003 (the “Effective Date”), by and between MOORE MEDICAL CORP., a Delaware corporation with an office in New Britain, Connecticut (the “Employer”), and MARK FLORENCE of 23 Joseph Road, Shrewsbury, MA 01545 (the “Employee”).

The Employer and Employee hereby agree as follows:

1. Term; Duties. The term of this Agreement shall be for the period from the Effective Date through December 31, 2003 (or earlier, pursuant to paragraphs 6, 7, 15 or 16) (the “Term”). The Term shall be automatically extended for successive one-year periods unless the Company gives the Employee notice of termination no later than (two) months prior to the end of the Term. During the Term, the Employer will employ the Employee, and the Employee will serve the Employer, as its Vice President/General Manager, Primary Care, reporting to its President and subject at all times to the direction of its Board of Directors and Executive Committee. During the Term the Employee’s office will be at such office of the Employer in Connecticut as the Employer may designate. The Employee agrees that during the Term he will devote his entire working time and give his best efforts and attention to the business of the Employer. The Employee shall not be required to perform duties inconsistent with those normally assigned by the Employer to its executive level employees.

2. Salary. As compensation for his services during the Term, the Employer will pay the Employee, in installments on the Employer’s regular payroll payment dates and subject to statutory withholding amounts, a salary: for 2003 beginning July 1, 2003 at the annual rate of $180,000 plus an inflationary adjustment in subsequent contract periods for any increase thereafter in the Consumer Price Index (or relevant industry data index, e.g., Connecticut Business Industry Association).

3. Bonus Compensation. As additional compensation for his services during the Term, the Employer will pay the Employee such bonus compensation as may become due to the Vice Presidents of the Employer under the 2003 Bonus Plan of the Employer. The Employee has received a copy of said Plan. The Employee will, during the Term, be entitled to participate in the company’s Bonus Plan as the Employer’s Board of Directors may adopt for successive years.

4. Vacation; Benefits. The Employee will be entitled to three weeks vacation during each calendar year in the Term. The Employee has received a list of the Employer’s current benefit plans and policies regarding severance, sick leave and the like, available or applicable to the Employee. The Employee acknowledges that said list does not set forth all material terms and conditions of these plans and policies, and that they are subject to modification or elimination by the Employer.

5. Non-Competition. This agreement supersedes all previous agreements, written or oral. The Employee covenants and agrees that during the Term, and until nine months thereafter, he will not, directly or indirectly, engage or own any interest in any distributor of medical or surgical supplies or pharmaceuticals, whether as principal, agent, partner, director, officer, stockholder, investor, lender, consultant, employee, or in any other capacity. The Employer will not

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unreasonably withhold its consent in writing to the Employee’s employment during the 9 months non-compete period, after the Term, by a company not principally engaged in the distribution of medical, surgical or pharmaceutical products which has a subsidiary, division or other separate business unit engaged in such business if the company in writing requests such consent from the Employer and gives the Employer its written agreement, in form and substance satisfactory to the Employer, which (i) provides that the Employee’s services for said company will not, directly or indirectly, relate to the business or affairs of said subsidiary, division or unit or to the development of such a distribution business, (ii) sets forth the practical steps that said company will take to assure compliance with clause (i) hereof, and (iii) grants the Employer the right and practical ability to have its independent accountants determine compliance or non-compliance with said clause. The Employee agrees that a remedy at law for any breach or threatened breach of the foregoing covenant will be inadequate, and that Employer will be entitled to temporary and permanent injunctive relief in respect thereof without the necessity of posting a bond or proving actual damage to Employer.

6. Death. The death of the Employee will terminate the Term.

7. Incapacity. If during the Term the Employee is unable, on account of illness or other incapacity, to perform his duties for a total of more than 45 consecutive, or an aggregate of 75 days during any twelve month period, the Employer has the right to terminate the Term on ten days’ written notice to the Employee, and the Employee will thereafter be entitled to receive only one-half of his salary installments otherwise payable until the earlier of the last day of (i) the month-end after the delivery of said notice, or (ii) the Term (determined without giving effect to such termination).

8. Employer Information. All information and materials disclosed by the Employer to the Employee or acquired at the Employer’s expense by the Employee or acquired or developed by the Employee in connection with his services under this Agreement, all trade secrets of the Employer and all Work-Product (hereinafter defined) (herein collectively “Employer Information”) shall be and remain the sole property of the Employer. The Employee shall protect all Employer Information which may be in his possession or custody and shall deliver all such Information (and all copies thereof, in any media) to the Employer at its request. Notwithstanding the foregoing, Employment Information shall not include information that the Employee can demonstrate (i) was known to him prior to the disclosure to him by the Employer, or (ii) was publicly known at the time of the disclosure or which thereafter became publicly known without fault of the Employee.

9. Work-Product. All right, title and interest in and to any work-product which the Employee acquires, compiles, authors, invents, makes or otherwise generates, in whole or in part, including all works authored and all inventions made, for use in connection with or arising out of or in relation to his services under this Agreement, whether or not copyrightable or patentable (herein collectively “Work-Product”), shall belong exclusively to the Employer. During and after the Term of this Agreement, the Employee shall execute, acknowledge, and deliver all documents, including, without limitation, all instruments of assignment, and perform all acts, which the Employer may reasonably request to secure its rights hereunder.

10. Confidentiality; Non-use. During and after the Term, the Employee shall not, without first obtaining the written consent of the Employer, divulge or disclose to anyone outside the Employer, whether by private or public communication or publication or otherwise, or use except

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pursuant to this Agreement, any Employer Information; however, an incidental non-derogatory disclosure by the Employee of Employer Information (other than trade secret or Work Product information) after 18 months following the end of the Term will not breach this provision.

11. Conflicts of Interest; Conflicting Obligations. The Employee agrees that it is his responsibility to recognize and avoid, and disclose to the President of the Employer in writing, any situation which might, either directly or indirectly, adversely affect his judgment in serving the Employer or which might otherwise involve a conflict between his personal interests and the interests of the Employer. The Employee represents and warrants to the Employer that at the date hereof no such situation exists or is contemplated or anticipated. The Employee agrees not to disclose or use in the course of his services for the Employer any trade secret, confidential or proprietary information, or work-product of any party other than the Employer. The Employee represents and warrants to the Employer that his entry into and performance of this Agreement do not and will not conflict with any obligation by which he is or may become bound or any right of a third party to which he is or may become subject. The Employee will not serve as a Board member of another company unless he seeks and obtains the Employer’s approval prior to making a commitment to do so.

12. Non-Solicitation. The Employee agrees that, until one year after the Term, he will not solicit, induce, attempt to hire, or hire any employee of the Employer, or assist in such hiring by any other party, or encourage any such employee to terminate his or her employment with the Employer.

13. Standard Intellectual Property Agreement. The Employee agrees to execute the Employer’s standard employee agreement relating to intellectual property and employment information. To the extent any of the provisions of this Agreement are in conflict with any of the provisions of such standard agreement, the provisions of this Agreement will control.

14. Stock Option as an Inducement. Not Applicable. (Note: A grant of a stock option to purchase 10,000 shares of common stock, at $8.65 per share was awarded to Mark Florence on April 23, 2001.)

15. Effect of “Change of Control”; Termination; Severance. The Employer or Employee may terminate the Term on written notice to the other within 30 days after a “Change of Control” (as defined in Section 3(b) of the Employer’s Change of Control and Change of Position Payment Plan). The Employee has received a copy of said Plan. The Employee may also terminate the Term on written notice to the Employer within 30 days after “Change of Position” (as defined in Section 3(c)(ii) of the Plan) occurring within twelve months after a Change of Control. A termination will be effective 30 days after the delivery of the notice. In the event of a termination by the Employer, the Employee will be entitled to a severance payment, under Section 4 of the Plan and subject thereto, in the amount of 100% of the “Base Amount” (as defined in Section 4 of the Plan). In the event of a termination by the Employee after a Change of Position within twelve months of a Change of Control, the Employee will be entitled to a severance payment, under Section 4 of the Plan and subject thereto, in the amount of 75% of said Base Amount. The provisions of this paragraph 15 supersede any prior agreement between the Employer and the Employee relating to any severance, termination or change of control arrangement or payment.

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16. Termination. The Employer will have the right to terminate the Term for cause. However, in the event the Employee’s employment is terminated by the Employer without cause, the Employee will be entitled to receive his salary payments for nine months following the last month of employment, less the compensation earned and consideration received by the Employee from any subsequent employment or for otherwise providing services. However, the Employee will not have an affirmative duty to seek employment not consistent with his experience (including prior levels of responsibility) and expertise. “Cause” shall include material breach of this Agreement not cured within 10 days, breach of fiduciary duty, gross insubordination, willful neglect of duties, habitual unreliability, personal conduct in material violation of the Employer’s policies or universally accepted good business practices, and other matters of comparable severity to any of the above.

17. Governing Law; Etc. This Agreement is governed by the laws of Connecticut. It represents the entire agreement of the parties and it cannot be changed except by a writing signed by the President of the Employer and the Employee. All notices by the Employee to the Employer under this Agreement shall be delivered to the President of the Employer.

IN WITNESS WHEREOF, the parties have signed and delivered this Employment Agreement on the Execution Date, effective as of the Effective Date.

	MOORE MEDICAL CORP.
/s/ Mark Florence	by	/s/ Linda M. Autore
MARK FLORENCE		Linda M. Autore, President & CEO

State of Connecticut

County of Middlesex

I certify that I know or have sufficient evidence that Mark Florence is the person who appeared before me, and that said person acknowledged that he signed this instrument and acknowledged it to be his free and voluntary act.

Dated: August 25, 2003	/s/ Linda M. Larson
	Notary Public for the State of Connecticut
	My commission expires November 30, 2004

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EX-10.26

Exhibit 10.26

THIRD AMENDMENT AGREEMENT

THIRD AMENDMENT AGREEMENT (this “Agreement”) dated as of November 6, 2003 by and between Moore Medical Corp. (the “Borrower”) and Fleet Capital Corporation (the “Lender”) with respect to a certain Loan and Security Agreement dated as of January 26, 2001 by and between the Borrower and the Lender, as amended by an Amendment Agreement dated as of March 27, 2003 and a Second Amendment Agreement dated as of August 8, 2003 (as amended from time to time, the “Loan Agreement”).

W I T N E S S E T H:

WHEREAS, the Borrower has requested that the Lender agree to amend certain provisions in the Loan Agreement, and the Lender has agreed with the Borrower to amend the Loan Agreement on the terms and conditions set forth herein.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

§1. Definitions. Capitalized terms used herein without definition that are defined in the Loan Agreement shall have the same meanings herein as therein.

§2. Ratification of Existing Agreements. The Borrower acknowledges and agrees that the Borrower does not have any defense, offset, counterclaim, or right of recoupment of any kind with respect to any of the Borrower’s obligations and liabilities to the Lender evidenced by or arising under the Loan Agreement, the Revolving Credit Note, and/or any of the other Loan Documents, including without limitation the Obligations.

§3. Representations and Warranties. The Borrower represents and warrants to the Lender that all of the representations and warranties made by the Borrower in the Loan Agreement and the other Loan Documents are true in all material respects on the date hereof as if made on and as of the date hereof, except to the extent that such representations and warranties relate expressly to an earlier date.

§4. Conditions Precedent. The effectiveness of the amendments contemplated hereby shall be subject to the satisfaction on or before the date hereof of each of the following conditions precedent:

(a) Representations and Warranties. All of the representations and warranties made by the Borrower herein, whether directly or incorporated by reference, shall be true and correct on the date hereof.

(b) Performance; No Event of Default. The Borrower shall have performed and complied in all respects with all terms and conditions herein required to be performed or complied with by it prior to or at the time hereof, and there shall exist no Default or Event of Default.

(c) Corporate Action. All requisite corporate action necessary for the valid execution, delivery and performance by the Borrower of this Agreement and all other instruments and documents delivered by the Borrower in connection therewith shall have been duly and effectively taken.

(d) Delivery. The Borrower and the Lender shall have executed and delivered this Agreement.

(e) Fee. The Borrower shall have paid to the Lender an amendment fee in the amount of $30,000.

§5. Amendments to the Loan Agreement.

(a) Amendment and Restatement of Certain Definitions. The following definitions in Appendix A to the Loan Agreement are amended and restated in their entirety to read as follows:

Applicable Margin – For each period commencing on an Adjustment Date through the date immediately preceding the next Adjustment Date (each a “Rate Adjustment Period”), the Applicable Margin with respect to each Revolving Credit Loan and with respect to the Unused Line Fee shall be the applicable percentage set forth below with respect thereto, based upon the Pricing Tier determined as set forth below with respect to the applicable average daily amount of Availability during the fiscal quarter immediately preceding such Adjustment Date and the EBITDA of the Borrower, determined on a Pro Forma Basis as of the end of the fiscal quarter of the Borrower immediately preceding such Adjustment Date for the four most recent fiscal quarters then ended:

Pricing Tier	EBITDA
Average Availability	< $3,500,000	³ $3,500,000 but < $5,500,000	³ $5,500,000
> $6,000,000	Tier 3	Tier 2	Tier 1
£ $6,000,000	Tier 3	Tier 2	Tier 2

The Applicable Margin associated with a Pricing Tier level is outlined in the following Grid:

Pricing Tier	Base Rate Portion		LIBOR Portion		Unused Line Fee (p.a.)
3	0.25	%.	2.00	%.	0.30	%.
2	0.00	%	1.75	%.	0.25	%
1	-0.25	%.	1.50	%.	0.20	%

Notwithstanding the foregoing, if the Borrower fails to deliver any Compliance Certificate when due pursuant to subsection 7.1.3 of the Agreement, then for the period commencing on the date such Compliance Certificate was due through the date such failure has been cured to Lender’s satisfaction or waived by Lender, the Applicable Margin shall be that percentage corresponding to Pricing Tier 3 in the table above.

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Revolving Credit Maturity Date – June 30, 2006.

Subordinated Debt - unsecured Indebtedness of the Borrower or any of its Subsidiaries that is expressly subordinated and made junior to the payment and performance in full of the Obligations, and evidenced as such by a subordination agreement or by another written instrument containing subordination provisions in form and substance approved by the Lender in writing.

(b) Amendment of Definition of Permitted Acquisition – Clause (v) of the definition of Permitted Acquisition in Appendix A to the Loan Agreement is amended by deleting the word “EBIT” and substituting “EBITDA” therefor, and clause (i) of the definition of Permitted Acquisition in Appendix A to the Loan Agreement is amended and restated in its entirety to read as follows:

(i) when added to all prior Permitted Acquisitions during the twelve month period ending on the date of such acquisition, (x) no more than two Permitted Acquisitions shall have occurred during such twelve month period, (y) the aggregate purchase price for the proposed acquisition and all such other acquisitions during such twelve month period shall not exceed $2,000,000, except for amounts payable in common stock of Borrower or which constitutes Subordinated Debt, and (z) the amount of such Subordinated Debt shall not exceed $5,000,000 at any time;

(c) New Definition – The following definition is added in alphabetical order to Appendix A to the Loan Agreement:

EBITDA – as defined in Schedule 7.3.

(d) Deletion of Definitions – The definitions of VA Debt, VA Letter of Credit, and Podiatry Online Subordinated Debt are deleted from Appendix A to the Loan Agreement.

(e) Amendments of Schedule 7.3 – Schedule 7.3 to the Loan Agreement is amended as follows:

(i) Paragraph 3 of Schedule 7.3 is amended and restated in its entirety to read as follows:

3. Minimum EBITDA. Borrower will not permit EBITDA (as defined below) to be less than (i) $1,100,000 for the fiscal quarter ended September 30, 2003; (ii) $2,100,000 for the two fiscal quarters ending December 31, 2003; (iii) $2,800,000 for the three fiscal quarters ending March 31, 2004; (iv) $3,700,000 for the four fiscal quarters ending June 30, 2004; (v) $3,800,000 for the four fiscal quarters ending September 30, 2004; (vi) $3,900,000 for the four fiscal quarters ending

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December 31, 2004; (vii) $4,200,000 for the four fiscal quarters ending March 31, 2005; (viii) $4,500,000 for the four fiscal quarters ending June 30, 2005; (ix) $4,900,000 for the four fiscal quarters ending September 30, 2005; or (x) $5,200,000 for the four fiscal quarters ending December 31, 2005 or for any period of four fiscal quarters ending thereafter.

(ii) The following definitions are added in alphabetical order to the definitions in Schedule 7.3 to the Loan Agreement:

EBITDA – With respect to the Borrower for any period, the Consolidated net income of the Borrower and its Subsidiaries for such period, determined in accordance with GAAP, after all expenses and other proper charges, plus, without duplication and to the extent deducted from the calculation of Consolidated net income for such period (a) payment or provision for any income taxes for such period, (b) interest expense for such period, (c) depreciation and amortization expenses for such period, and (d) with respect to the calculation of EBITDA for the fiscal quarters ending prior to September 30, 2004, write-offs of Pre-2003 Accounts taken during the fiscal quarter ending September 30, 2003 in an aggregate amount not to exceed $391,020, minus (d) the sum of (i) any gain or loss from the sale of capital assets; (ii) any gain arising from any write-up of assets; (iii) earnings of any Subsidiary accrued prior to the date it became a Subsidiary; (iv) net earnings of any business entity (other than a Subsidiary of Borrower) in which Borrower or a Subsidiary has an ownership interest unless such net earnings shall have actually been received by Borrower in the form of cash distributions; (v) the earnings of any Person to which any assets of Borrower or any Subsidiary shall have been sold, transferred or disposed of, or into which Borrower or any Subsidiary shall have merged, or been a party to any other form of reorganization, prior to the date of such transaction; (vi) any gain arising from the acquisition of any Securities by Borrower or any Subsidiary; and (vii) any gain arising from extraordinary or non-recurring items.

Pre-2003 Accounts Receivable – Accounts that arose on or prior to December 31, 2002.

(iii) The following definition in Schedule 7.3 to the Loan Agreement is amended and restated in its entirety to read as follows:

Leverage Ratio – the ratio of (a) Consolidated Total Liabilities to (b) Consolidated Tangible Net Worth.

(f) Amendment of Section 7.1.1 of Loan Agreement – The following sentence is added to the end of Section 7.1.1 of the Loan Agreement:

Up to one inspection permitted by this Section 7.1.1 shall be at the expense of the Borrower during each fiscal year of the Borrower, provided that, (a) such limit shall not apply with respect to inspections during the continuance of any Default, and all inspections conducted during the

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continuance of a Default shall be at the expense of the Borrower, and (b) at any time that the average daily amount of Availability for a period of 30 days is equal to or less than $6,000,000 or the EBITDA of the Borrower for its most recent four fiscal quarters was less than $5,500,000, the Borrower shall, until the average daily amount of Availability is thereafter greater than $6,000,000 for a period of 30 days and the EBITDA of the Borrower for its most recent four fiscal quarters was at least $5,500,000, pay for all inspections permitted by this Section 7.1.1, provided that, except with respect to inspections during the continuance of a Default, the Borrower shall not be required to pay for more than three inspections during any fiscal year.

(g) Amendments of Section 7.1.3 of Loan Agreement – Clause (v) of Section 7.3 of the Loan Agreement is amended and restated in its entirety to read as follows:

(v) (A) not later than 30 days after the end of each month, including the last month of Borrower’s fiscal year, unaudited interim financial statements of Borrower and its Subsidiaries as of the end of such month and of the portion of Borrower’s fiscal year then elapsed, on a Consolidated and consolidating basis, certified by the chief financial officer of Borrower as prepared in accordance with GAAP and fairly presenting, in all material respects, the Consolidated financial position and results of operations of Borrower and its Subsidiaries for such month and period subject only to changes from audit and year-end adjustments and except that such statements need not contain notes,

(B) not later than 20 days after the end of each month, (x) an accounts receivable aging schedule, accounts payable aging schedule, and detailed inventory report (each of the foregoing to be provided electronically), and (y) updated Borrowing Base and collateral certificates and accounts receivable and Revolving Credit Loan reconciliation reports, all such reports referred to in this clause (B) to be in form and detail reasonably satisfactory to the Lender, provided that, at any time that the average daily amount of Availability for a period of 30 days is equal to or less than $6,000,000, the Borrower shall, until the average daily amount of Availability is thereafter at least $6,000,000 for a period of 30 days, in addition to providing the reports referred to in this clause (B) within 20 days after the end of each month, provide such reports at such additional times as may be requested from time to time by Lender, and

(C) promptly, as and when requested by Lender, a physical appraisal of the inventory of the Borrower and its Subsidiaries, prepared at the expense of the Borrower by an appraiser acceptable to Lender, provided that (1) Lender will only have the right to request such an appraisal at a time that the average daily amount of Availability is less than $6,000,000 for a period of 30 days, and (2) except during the continuance of an Event of Default, Lender shall only have the right to request one such appraisal in any fiscal year;

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(h) Amendment of Section 7.2.3 of Loan Agreement – Clauses (vi), (vii), (viii), and (ix) of Section 7.2.3 of the Loan Agreement are amended and restated in their entirety as follows:

(vi) Intentionally Omitted;

(vii) unsecured Indebtedness of any wholly-owned Subsidiary of Borrower that is a Guarantor;

(viii) Intentionally Omitted;

(ix) Subordinated Debt in an aggregate amount not to exceed $5,000,000 at any time;

(h) Amendment of Section 7.2.18 of Loan Agreement – Section 7.2.18 of the Loan Agreement is amended and restated in its entirety as follows:

7.2.18 Subordinated Debt. Amend, supplement or otherwise modify the terms of any of the Subordinated Debt or prepay, redeem or repurchase any of the Subordinated Debt.

§6. Expenses.

The Borrower agrees to pay to the Lender upon demand an amount equal to any and all out-of-pocket costs or expenses (including reasonable legal fees and disbursements and appraisal expenses) incurred or sustained by the Lender in connection with the preparation of this Agreement.

§7. Miscellaneous Provisions.

(a) Except as otherwise expressly provided by this Agreement, all of the respective terms, conditions and provisions of the Loan Agreement and the other Loan Documents shall remain the same. The Loan Agreement and the other Loan Documents, each as amended hereby, shall continue in full force and effect, and this Agreement and the Loan Agreement shall be read and construed as one instrument.

(b) This Agreement is intended to take effect under, and shall be construed according to and governed by, the laws of the State of Connecticut, and this Agreement may not be amended except by a writing executed by the Borrower and the Lender.

(c) This Agreement may be executed in any number of counterparts, but all such counterparts shall together constitute but one instrument. In making proof of this Agreement it shall not be necessary to produce or account for more than one counterpart signed by each party hereto by and against which enforcement hereof is sought. A facsimile of an executed counterpart shall have the same effect as the original executed counterpart.

[Signatures Follow on Next Page]

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IN WITNESS WHEREOF, each of the parties hereto have caused this Agreement to be executed in its name and behalf by its duly authorized officer as of the date first written above.

MOORE MEDICAL CORP.
By:	/s/ John M. Zinzarella
	Name: John M. Zinzarella
	Title: VP of Finance, Treasurer & CFO
FLEET CAPITAL CORPORATION
By:	/s/ Lisa Freeman
	Name: Lisa Freeman
	Title: Vice President

The undersigned Guarantor

acknowledges and accepts the foregoing

and ratifies and confirms its obligations

under its Guaranty:

NUMOORE MEDICAL CORP.
By:	/s/ John M. Zinzarella
	Its VP of Finance, Treasurer and CFO

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EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Linda M. Autore, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Moore Medical Corp.;

2. Based on my knowledge, this quarterly 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 quarterly report;

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

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

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

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

c) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

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

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

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls.

Date: November 12, 2003

BY:	/s/ Linda M. Autore
	Linda M. Autore, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

I, John M. Zinzarella, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Moore Medical Corp.;

2. Based on my knowledge, this quarterly 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 quarterly report;

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

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

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

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

c) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

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

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

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls.

Date: November 12, 2003

BY:	/s/ John M. Zinzarella
	John M. Zinzarella, Vice President of Finance, Treasurer and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Moore Medical Corp. (the “Company”) on Form 10-Q for the period ended September 27, 2003, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Linda M. Autore, President and Chief Executive Officer of the Company and member of the Board of Directors, certify, pursuant to Section 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) and 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Linda M. Autore

Linda M. Autore

President and Chief Executive Officer

November 12, 2003

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Moore Medical Corp. (the “Company”) on Form 10-Q for the period ended September 27, 2003, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John M. Zinzarella, Vice President of Finance, Treasurer and Chief Financial Officer of the Company, certify, pursuant to Section 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) and 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ John M. Zinzarella

John M. Zinzarella, CPA

Vice President of Finance, Treasurer and
Chief Financial Officer

November 12, 2003