~~FORM~~UNITED ~~10-Q~~STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10 – Q

(Mark One)

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

~~THE~~For ~~SECURITIES~~the ~~EXCHANGE~~quarterly ~~ACT~~period OFended ~~1934~~June 28, 2003

For the quarterly period ended September 28, 2002

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

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	~~22-1897821~~
(State of incorporation)		(I.R.S. Employer Identification Number)8n
(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)
860-826-3600
(Registrant’s telephone 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)

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 ü 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 ü

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~~July 26, ~~2002~~2003
Common stock, $0.01 par value		3,189,784

~~MOORE~~FORWARD-LOOKING ~~MEDICAL~~INFORMATION ~~CORP. & SUBSIDIARIES~~

This report contains statements about future events and expectations that constitute forward-looking statements within the ~~TABLE~~meaning OFof ~~CONTENTS~~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.

PART I. FINANCIAL INFORMATION
		PAGE
Item 1.	Consolidated Financial Statements
	Consolidated Balance Sheets at September 28, 2002 (unaudited) and December 29, 2001	3
	Consolidated Statements of Operations for the Three Months Ended September 28, 2002 and September 29, 2001(unaudited)	4
	Consolidated Statements of Operations for the Nine Months Ended September 28, 2002 and September 29, 2001(unaudited)	5
	Consolidated Statements of Cash Flows for the Nine Months Ended September 28, 2002 and September 29, 2001 (unaudited)	6
	Consolidated Statements of Shareholders Equity for the Nine Months Ended September 28, 2002 and September 29, 2001 (unaudited)	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	15
Item 4.	Controls and Procedures	17
PART II. OTHER INFORMATION
Item 6.	Exhibits and Reports on Form 8-K	17
	Signatures and Certifications	18

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.

MOORE MEDICAL CORP. & SUBSIDIARY

TABLE OF CONTENTS

		PAGE

PART I. FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements

	Consolidated Balance Sheets at June 28, 2003 (unaudited) and December 28, 2002	4

	Consolidated Statements of Operations for the Three Months Ended June 28, 2003 (unaudited) and June 29, 2002 (unaudited)	5

	Consolidated Statements of Operations for the Six Months Ended June 28, 2003 (unaudited) and June 29, 2002 (unaudited)	6

	Consolidated Statements of Cash Flows for the Six Months Ended June 28, 2003 (unaudited) and June 29, 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	16

Item 4.	Controls and Procedures	17

PART II. OTHER INFORMATION

Item 4.	Submission of Matters to a Vote of Security Holders	17

Item 6.	Exhibits and Reports on Form 8-K	17

	Signatures	18

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

MOORE MEDICAL CORP. & ~~SUBSIDIARIES~~SUBSIDIARY

Consolidated Balance Sheets

(Amounts in thousands, except par value)	~~September~~June 28, ~~2002 (Unaudited)~~2003			December 2928, ~~2001~~2002
	(unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	100		$	~~835~~100
Accounts receivable, less allowances of $1,347 and $933, respectively		17,810			15,122
Accounts receivable, less allowances of $1,743 and $1,249, respectively		19,680			17,187
Inventories		11,~~625~~344			1011,~~829~~230
Prepaid expenses and other current assets		21,~~386~~027			1,~~875~~216
Deferred income taxes		1,~~853~~871			1,~~523~~871
Total Current Assets		3334,~~774~~022			3031,~~184~~604
Noncurrent Assets
Equipment and leasehold improvements, net		6,563			8,271
Property, plant and equipment, net		6,155			6,254
Other assets		21,~~268~~936			2,~~673~~137
Total Noncurrent Assets		8,~~831~~091			108,~~944~~391
	$	42,~~605~~113		$	4139,~~128~~995
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	1210,~~274~~078		$	115,~~204~~794
Accrued expenses		1,853			1,873
Amounts due to customers		1,905			2,342
Current portion long term debt		—			1,356
Accrued expenses		1,590			1,723
Total Current Liabilities		14,127			14,433
Cash overdraft		1,267			1,632
Deferred Income Taxes		925			—
Current portion of long-term debt		3,560			—
Long Term Debt		3,443			3,970
Total Current Liabilities		18,400			11,491
Deferred Income Taxes		855			855
Accrued Pension		465			233
Long Term Debt		—			4,281
Shareholders’ Equity
Preferred stock, no shares outstanding		—			—
Common stock—$.01 par value;
Shares authorized—10,000
Shares authorized – 10,000
Shares issued—3,246		32			32
Shares issued – 3,246 in 2003 and 2002		32			32
Capital in excess of par value		21,507			21,548
Additional paid-in capital		21,522			21,513
Note receivable		(~~312~~326	)		(~~298~~316	)
Retained earnings		3,382			2,263
Accumulated other comprehensive loss		(1,095	)		(1,095	)
		24,609			23,545
Retained earnings		2,760			3,501
Less treasury shares, at cost, 56 and 92 shares		(499	)		(820	)
		22,893			23,635
Total Shareholders’ Equity		24,110			22,725
Less treasury shares, at cost, 56 shares in 2003 and 2002.		(500	)		(500	)
	$	42,605		$	41,128
Total Shareholders’ Equity		22,393			23,135
	$	42,113		$	39,995

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

MOORE MEDICAL CORP. & ~~SUBSIDIARIES~~SUBSIDIARY

Consolidated Statements of Operations For The Three Months Ended

(Unaudited)

(Amounts in thousands, except per share data)	~~September~~June 28, ~~2002~~2003			~~September 29, 2001~~	June 29, 2002
Net sales	$	3735,~~032~~911		$	~~34,685~~$	33,441
Cost of products sold		26,~~777~~026			~~25,598~~	24,267
Gross profit		109,~~255~~885			~~9,087~~	9,174
Sales and marketing expenses		23,~~699~~608			~~2,943~~	2,703
General and administrative expenses		67,~~437~~136			~~6,277~~	5,991
Operating income (loss)		1,119			(133	)
Operating (loss) income		(859	)			480
Interest expense, net		~~113~~43			67	40
Income (loss) before income taxes		1,006			(200	)
(Loss) income before income taxes		(902	)			440
Income tax provision (benefit)		363			(74	)
Income tax (benefit) provision		(325	)			159
Net income (loss)	$	643		$	(126	)
Net (loss) income	$	(577	)		$	281
Basic net income (loss) per share	$	0.20		$	(0.04	)
Basic net (loss) income per share	$	(0.18	)		$	0.09
Diluted net income (loss) per share	$	0.20		$	(0.04	)
Diluted net (loss) income per share	$	(0.18	)		$	0.09
Basic common shares outstanding*		3,~~173~~190			~~3,154~~	3,156
Diluted common shares outstanding*		3,~~177~~190			~~3,154~~	3,181

* weighted average

2001 Net Sales and Gross Profit reflect reclassifications due to the impact of EITF 00-10 “Accounting for Shipping and Handling Fees and Costs”.

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

MOORE MEDICAL CORP. & SUBSIDIARIES

Consolidated Statements of Operations For The Nine Months Ended

(Unaudited)

(Amounts in thousands, except per share data)	September 28, 2002		September 29, 2001
Net sales	$	102,909	$	99,670
Cost of products sold		74,484		73,563
Gross profit		28,425		26,107
Sales and marketing expenses		7,968		9,877
General and administrative expenses		18,508		19,230
Operating income (loss)		1,949		(3,000	)
Interest expense, net		201		140
Income (loss) before income taxes		1,748		(3,140	)
Income tax provision (benefit)		629		(1,157	)
Net income (loss)	$	1,119	$	(1,983	)
Basic net income (loss) per share	$	0.35	$	(0.63	)
Diluted net income (loss) per share	$	0.35	$	(0.63	)
Basic common shares outstanding*		3,161		3,141
Diluted common shares outstanding*		3,179		3,141

*weighted average

2001 Net Sales and Gross Profit reflect reclassifications due to the impact of EITF 00-10 “Accounting for Shipping and Handling Fees and Costs”.

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

MOORE MEDICAL CORP. & ~~SUBSIDIARIES~~SUBSIDIARY

Consolidated Statements of ~~Cash~~Operations ~~Flows~~ For The ~~Nine~~Six Months Ended

(Unaudited)

(Amounts in thousands)	September 28, 2002			September 29, 2001
(Amounts in thousands, except per share data)	June 28, 2003			June 29, 2002
Cash Flows From Operating Activities
Net sales	$	69,524		$	65,878
Net income (loss)	$	1,119		$	(1,983	)
Cost of products sold		50,545			47,708
Adjustments to reconcile net income (loss) to net cash flows provided by (used in) operating activities:
Gross profit		18,979			18,170
Depreciation and amortization		2,294			2,306
Sales and marketing expenses		6,478			5,269
Provision for bad debt		667			212
General and administrative expenses		13,573			12,071
Loss on disposal of equipment		55			—
Operating (loss) income		(1,072	)		830
Changes in operating assets and liabilities:
Interest expense, net		86			87
Accounts receivable		(3,355	)		(4,337	)
(Loss) income before income taxes		(1,158	)		743
Inventories		(796	)		(325	)
Income tax (benefit) provision		(417	)		267
Other assets		489			(364	)
Net (loss) income	$	(741	)	$	476
Accounts payable		1,070			3,441
Basic net (loss) income per share	$	(0.23	)	$	0.15
Accrued expenses		(20	)		(1,944	)
Diluted net (loss) income per share	$	(0.23	)	$	0.15
Net cash flows provided by (used in) operating activities		1,523			(2,994	)
Basic common shares outstanding*		3,190			3,155
Cash Flows From Investing Activities
Diluted common shares outstanding*		3,190			3,179
Equipment and leasehold improvements acquired		(642	)		(997	)
Net cash flows used in investing activities		(642	)		(997	)
Cash Flows From Financing Activities
Net borrowings (repayments) revolving line of credit		3,443			(404	)
Sale of Treasury stock		17			34
Repayments of long-term debt		(5,076	)		—
Net cash flows used in financing activities		(1,616	)		(370	)
Decrease in cash		(735	)		(4,361	)
Cash at the beginning of year		835			5,233
Cash At End Of Period	$	100		$	872

weighted average

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

MOORE MEDICAL CORP. & ~~SUBSIDIARIES~~SUBSIDIARY

Consolidated Statements of ~~Shareholders’~~Cash ~~Equity~~Flows For The ~~Nine~~Six Months Ended

(Unaudited)

	Common Stock$.01 par value					Capital in Excess of Par Value						Treasury Stock					Note Receivable
(Amounts in thousands)	June 28, 2003				June 29, 2002
(Amounts in thousands)	Shares Issued		Par Value						Retained Earnings			Shares		Cost
Cash Flows From Operating Activities
Balance at December 30, 2000	3,246		$	32		$	21,700		$	3,913		(145	)	$	(1,287	)	$	—
Net (loss) income	$	(741	)		$	476
Net (loss)	—			—			—			(1,983	)	—			—			—
Adjustments to reconcile net (loss) income to net cash flows provided by operating activities:
Stock issuance/stock compensation	—			—			(157	)		17		53			467			(294	)
Depreciation		1,269				1,506
Balance at September 29, 2001	3,246		$	32		$	21,543		$	1,947		(92	)	$	(820	)	$	(294	)
Provision for bad debt		806				460
Balance at December 29, 2001	3,246		$	32		$	21,548		$	2,263		(92	)	$	(820	)	$	(298	)
Loss on disposal of equipment		74				—
Net income	—			—			—			1,119		—			—			—
Changes in operating assets and liabilities:
Stock issuance/stock compensation	—			—			(41	)		—		36			321			(14	)
Accounts receivable		(3,299	)			(683	)
Balance at September 28, 2002	3,246		$	32		$	21,507		$	3,382		(56	)	$	(499	)	$	(312	)
Inventories		(114	)			667
Other assets		390				(630	)
Accounts payable		4,284				(523	)
Other liabilities		(338	)			185
Net cash flows provided by operating activities		2,331				1,458
Cash Flows From Investing Activities
Acquisition of property, plant and equipment		(1,245	)			(456	)
Net cash flows used in investing activities		(1,245	)			(456	)
Cash Flows From Financing Activities
Net (repayments) borrowings on revolving line of credit		(721	)			2,765
Sale of treasury stock		—				16
Reduction of cash overdraft		(365	)			—
Repayments of long-term debt		—				(4,618	)
Net cash flows used in financing activities		(1,086	)			(1,837	)
Change in cash		—				(835	)
Cash at the beginning of period		100				835
Cash At End Of Period	$	100			$	—

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

MOORE MEDICAL CORP. & ~~SUBSIDIARIES~~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~~ 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 ~~over~~29 26 customer community affiliates. We market to and serve our ~~customers~~ 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 ~~over~~55 50 years. The Company operates principally from ~~three~~ 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 ~~with~~ 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~~six ~~month~~months ~~periods~~ ended ~~September~~June 28, ~~2002~~2003 do not necessarily indicate the results to be expected for the fiscal year ended December 2827, ~~2002~~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 ~~2001~~2002 Annual Report filed on Form 10-K. Certain prior year amounts have been reclassified to conform ~~with~~to the current year presentation.

~~Note~~In December 2002, the FASB issued 2Statement of Financial Accounting Standards No. ~~Goodwill~~ 148, “Accounting for Stock-Based Compensation—Transition and ~~Intangible~~Disclosure” ~~Assets~~(“SFAS 148”), an amendment of SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”). 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 six months ended June 28, 2003 and June 29, 2002. See Note 5 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).

~~Effective,~~Note ~~January 1, 2001, the Company adopted~~2 ~~Statement~~– ofBusiness ~~Financial~~Combination Accounting Standard No. 142, (“SFAS No. 142”) “Goodwill and Other Intangible Assets.” The standard changes the accounting for goodwill and intangible assets with an indefinite life 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. At September 28, 2002 and December 29, 2001 the Company had no intangible assets other than goodwill. SFAS No. 142 requires an initial evaluation of goodwill impairment upon adoption. Such evaluation was performed as of January 1, 2002 resulting in no impairment in the value of the Company’s goodwill.

In July 2002, the Company completed its purchase of the remaining 49% interest it did not previously own in Podiatry Online, an ~~on-line~~online information site and electronic newsletter. The ~~total~~ purchase ~~price~~ of ~~$750,000~~Podiatry ~~was~~Online ~~made~~created ~~with~~a ~~cash~~sales ofchannel ~~$500,000~~to ~~and~~serve ~~33,566~~podiatrists ~~shares of the Company’s common stock valued at $250,000~~nationwide. The ~~acquisition was recorded~~ astotal a purchase, ~~with~~price of $750,000 ~~recorded~~was asmade ~~goodwill. Included in~~

~~other~~with ~~assets~~cash ~~are~~in ~~goodwill~~the ~~balances~~amount of $~~1.7 million and $1.0 million at September 28~~500,000 ~~2002~~ and ~~December 29~~33,566 ~~2001,~~shares ~~respectively, which represent the excess~~ of the ~~purchase~~Company’s ~~price~~common ~~paid~~stock ~~over~~with ~~the~~an ~~fair~~ aggregate value of $250,000. ~~the~~The ~~net~~acquisition ~~assets~~was ~~acquired~~recorded inas ~~the~~a ~~acquisitions~~purchase oftransaction, ~~Podiatry~~with ~~Online~~$750,000 ~~and~~recorded ~~MERGInet~~as ~~Medical Resources~~goodwill.

~~Comparative~~Note ~~information~~3. Goodwill ~~as if goodwill had not been amortized in the three~~ and ~~nine~~Intangible ~~months~~Assets ~~ended for all periods presented on a comparable basis.~~

	Three Months Ended					Nine Months Ended
(in thousands, except per share information)	September 28, 2002		September 29, 2001			September 28, 2002		September 29, 2001
Reported net income (loss)	$	643	$	(126	)	$	1,119	$	(1,983	)
Goodwill amortization, net of tax		—		21			—		65
Adjusted net income (loss)	$	643	$	(105	)	$	1,119	$	(1,918	)
Basic and diluted earnings per share:
Reported basic and diluted earnings (loss) per share	$	0.20	$	(0.04	)	$	0.35	$	(0.63	)
Goodwill amortization		—		0.01			—		0.02
Adjusted basic and diluted earnings (loss) per share	$	0.20	$	(0.03	)	$	0.35	$	(0.61	)

Effective January 1, 2002, the Company adopted SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”). 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 six months ended June 28, 2003 and during fiscal 2002.

~~Note~~Included 3in other noncurrent assets are goodwill balances of $1. ~~Long-Term~~7 ~~Debt~~million at June 28, 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.

OnNote ~~January 26, 2001, the Company entered into a collateralized bank financing agreement, which provides a revolving line of credit of up to $15 million through January 26, 2004~~4. Long-Term ~~Interest~~Debt ~~is charged at the prime rate or, at the option of the Company, at the LIBOR rate plus a margin ranging from 0% to 2.75% depending on the financial leverage of the Company.~~

On ~~February~~January 1326, ~~2002~~2001, the Company ~~utilized~~entered ~~approximately~~into ~~$4.6~~a ~~million~~collateralized ofbank financing ~~its~~agreement, which provides up to a $15 million revolving line of credit todue ~~pay~~on ~~off~~January 26, 2004. Interest is charged at the ~~government~~prime ~~settlement note.~~rate Asor, at the option of ~~September~~the 28Company, ~~2002,~~at the LIBOR rate plus a margin ranging from 0% to 2.75% depending on the financial leverage of the Company. ~~had~~The $3Company pays a commitment fee ranging from 0.425% ~~million~~to ~~outstanding~~0.35% per annum on the ~~revolving~~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 collateralized revolving credit facility.

~~On February~~In ~~15,~~consideration ~~2002,~~for the ~~Company~~revolving ~~purchased~~line aof 30credit, ~~month~~the ~~Interest~~Company ~~Rate~~has ~~Cap~~collateralized inall of the ~~notional~~Company’s ~~amount~~assets of(current ~~$3.0~~and ~~million~~future ~~with~~existence) aover ~~cap~~the term ~~rate~~ of ~~4.0%~~the tocredit ~~hedge~~facility. ~~against~~Pursuant anto ~~increase~~the inrevolving ~~interest~~line ~~rates.~~of ~~The~~credit ~~Company paid a $56~~agreement,~~000~~ ~~premium to enter into~~ the ~~cap.~~Company ~~The premium~~covenants ~~payment~~that ~~was recorded~~ as anlong ~~asset in accordance with SFAS No. 133,~~ as ~~amended,~~it ~~“Accounting~~has ~~for~~any ~~Derivatives~~obligations ~~and~~or ~~Hedging~~commitments ~~Activity”.~~to ~~Under~~the ~~this standard~~lender, ~~all~~the ~~derivative~~Company ~~instruments~~will ~~are~~be ~~recorded~~subject atto ~~fair~~financial ~~value~~covenants oninvolving ~~the balance sheet and~~consolidated ~~all~~tangible ~~changes~~net inworth, ~~fair~~minimum ~~value are recorded to~~ earnings orrequirements toand ~~shareholders’~~a ~~equity~~leverage ~~through~~ratio ~~other comprehensive income~~calculation. ~~The~~These ~~fair~~covenant ~~value~~targets offluctuate over the ~~interest~~course ~~rate~~of ~~cap at September 28, 2002 was approximately $6,000, which is recorded in other assets on~~ the ~~balance~~ ~~sheet~~term ~~with~~of the ~~change~~collateralized inbank ~~fair~~financing ~~value recorded in interest expense~~agreement.

~~Note~~At 4December 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 revolving line of credit agreement for the fourth quarter of fiscal 2002. ~~Earnings~~ ~~Per~~On ~~Share~~March 27, 2003, the Company and its lender amended certain financial covenants and conditions of the revolving line of credit 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.

~~Earnings~~The Company ~~per~~was ~~share (“EPS”) amounts are calculated~~ in ~~accordance~~violation ~~with~~of ~~SFAS~~the ~~No.~~EBIT ~~128,~~financial ~~“Earnings Per~~covenant ~~Share”.~~contained ~~Basic~~in ~~EPS~~its isamended ~~based~~revolving online ~~the weighted average number~~ of ~~common~~credit ~~shares~~agreement ~~outstanding~~ for the ~~period,~~quarter ~~excluding~~ended ~~any~~June ~~dilutive~~28, ~~common share equivalents~~2003. ~~Diluted~~The ~~EPS~~Company ~~reflects~~received ~~the~~a ~~potential~~waiver ~~dilution~~from ~~that~~its ~~could occur if securities to issue common stock were exercised~~lender.

Note 5. 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 six months ended June 28, 2003 and June 29, 2002 respectively, follows (in thousands):

A reconciliation of shares used in calculating basic and diluted EPS for the three and nine months ended September 28, 2002 and September 29, 2001, respectively, follows (in thousands):

	Three Months Ended
	June 28, 2003	June 29, 2002
Basic EPS	3,190	3,156
Effect of assumed conversion of employee stock options	—	25

Diluted EPS	3,190	3,181

	Three Months Ended		Nine Months Ended
	Six Months Ended
	September 28, 2002	September 29, 2001	September 28, 2002	September 29, 2001
	June 28, 2003	June 29, 2002
Basic EPS	3,~~173~~190	3,~~154~~155	~~3,161~~	~~3,141~~
Effect of assumed conversion of employee stock options	4—	—24	18	—
Diluted EPS	3,~~177~~190	3,~~154~~179	~~3,179~~	~~3,141~~

Employee stock options to purchase approximately ~~200~~215,000 and ~~277~~ 225,000 shares of common stock were outstanding during the three and six months ended ~~September~~June 28, ~~2002 and September 29~~2003, ~~2001,~~ respectively, and approximately ~~141~~100,000 and ~~288~~110,000 were outstanding during the ~~nine~~three ~~months~~and ~~ended~~six ~~September~~months ~~28, 2002 and~~ended ~~September~~June 29, ~~2001~~2002, respectively. 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.

~~Note~~Had 5compensation 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. ~~Recent~~ ~~Accounting~~123, ~~Pronouncements~~net income (loss) and basic and diluted earnings (loss) per share would have been as indicated in the table below.

In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations.” The statement, effective for fiscal years beginning after June 15, 2002, requires companies to record a liability for asset retirement obligations in the period in which they are incurred, which typically could be upon completion of construction or shortly thereafter. The Company does not believe that the adoption of this standard will have a material impact on its consolidated financial statements.

	Three Months Ended
(in thousands, except per share amounts)	June 28, 2003			June 29, 2002
Net (loss) income:
As reported	$	(577	)	$	281
Impact of stock-based compensation expense		(23	)		(35	)

Pro forma	$	(600	)	$	246

Basic and diluted (loss) earnings per share:
As reported	$	(0.18	)	$	0.09
Pro forma	$	(0.19	)	$	0.08

In August 2001, the FASB issued SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets.” The statement is effective for fiscal years beginning after December 15, 2001. SFAS No. 144 changes the criteria for classifying an asset as held-for-sale. The Company does not believe that the adoption of this standard will have a material impact on its consolidated financial statements.

In April 2002, the FASB issued SFAS No. 145 “Rescission of FASB Statement No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” The Statement is effective for fiscal years beginning after May 15, 2002. SFAS No. 145 rescinds certain guidance for reporting extinguishments of debt and provides guidance to determine if the transactions are part of recurring operations or if they meet the criteria for classification as an extraordinary item. Additionally, SFAS No. 145 requires that certain lease modifications be accounted for in the same manner as sales-leaseback transactions. The Company does not believe that the adoption of this standard will have a material impact on its consolidated financial statements.

In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities”. SFAS No. 146, nullifies Emerging Issues Task Force Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” The Company does not believe that the adoption of this standard will have a material impact on its consolidated financial statements.

MOORE MEDICAL CORP. & SUBSIDIARIES

	Six Months Ended
(In thousands, except per share amounts)	June 28, 2003			June 29, 2002
Net income (loss):
As reported	$	(741	)	$	476
Impact of stock-based compensation expense		(47	)		(72	)

Pro forma	$	(788	)	$	404

Basic and diluted earnings (loss) per share:
As reported	$	(0.23	)	$	0.15
Pro forma	$	(0.25	)	$	0.13

~~Item 2~~Note 6. Recent ~~Management’s~~Accounting ~~Discussion~~Pronouncements ~~and Analysis of Financial Condition and Results of Operations~~

~~OVERVIEW~~In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities” (“SFAS 149”). 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 June 30, 2003.

~~Prior~~In toMay ~~1998~~2003, ~~Moore~~the ~~Medical~~FASB ~~generated~~issued ~~approximately~~SFAS ~~60% of its revenues from its wholesale drug distribution business to pharmacies~~No. ~~The~~150, ~~Company~~“Accounting ~~exited~~for ~~the less profitable wholesale drug distribution business in October~~Certain ~~1997~~Financial toInstruments ~~focus~~with onCharacteristics ~~its~~of ~~medical,~~both ~~surgical~~Liabilities and ~~pharmaceutical~~Equity” ~~supply~~(“SFAS ~~business~~150”). toThis ~~health~~statement ~~care~~requires ~~practices~~that ~~and~~an ~~facilities~~issuer inclassify ~~non-hospital~~financial ~~settings.~~instruments ~~Today,~~that ~~Moore~~are ~~Medical~~within isits anscope ~~Internet-enabled~~as ~~multi-channel~~a ~~marketer~~liability. ~~and~~Many ~~distributor~~ of ~~medical,~~those ~~surgical~~instruments ~~and~~were ~~pharmaceutical~~classified ~~products~~as toequity ~~approximately~~under ~~100,000~~previous ~~health~~guidance. ~~care~~Most ~~practices~~of ~~and~~the ~~facilities~~guidance in ~~non-hospital~~SFAS ~~settings~~150 ~~nationwide,~~is ~~including:~~effective ~~physicians,~~for ~~emergency~~all ~~medical~~financial ~~technicians,~~instruments ~~schools,~~entered ~~correctional~~into ~~institutions,~~or ~~municipalities, occupational/industrial~~modified ~~health~~after ~~doctors~~May ~~and~~31, ~~nurses~~2003, and ~~other~~otherwise ~~specialty~~effective ~~practice~~at ~~communities. Moore Medical also serves~~ the ~~medical/surgical~~beginning ~~supply needs~~ of ~~over~~the 26first ~~customer~~interim ~~community~~period ~~affiliates. We market to and serve our customers through direct~~beginning ~~mail,~~after ~~industry-specialized~~June ~~telephone support staff~~15, ~~field sales representatives, and the Internet~~2003. ~~Our direct marketing and distribution business has been in operation for over 50 years. The Company operates principally from three distribution facilities located in the United States.~~

The ~~transformation of the~~ Company ~~into~~does anot ~~multi-channel~~expect ~~marketer has resulted in improved revenues, gross profit and net income for~~ the ~~three and nine months ended September 28, 2002 as compared to the same periods in the prior year. Net sales for the quarter ended September 28, 2002 of $37.0 million represent the~~adoption highest quarterly amount since the Company exited the wholesale drug distribution business in October 1997. Internet based sales continue to show improvement, and currently represent approximately 10.2% of ~~overall~~these ~~net~~statements ~~sales for the nine months ended September 28, 2002. Internet based sales for the third quarter of 2002 compared~~ to ~~2001,~~have as a ~~percentage~~material ofimpact ~~net~~on ~~sales,~~its ~~increased~~consolidated ~~from~~financial ~~8.6%~~position, toconsolidated ~~10.0%.~~results ~~The gross profit margin increase~~ of ~~1.5%~~operations inor ~~the~~consolidated ~~third~~cash ~~quarter of 2002 compared to 2001 is a reflection of the continued improvement in product mix and supply chain efficiencies~~flows. ~~The Company’s improved targeted marketing campaigns have contributed to lower sales and marketing expenses while positively impacting net income for the periods presented.~~

~~Additionally,~~Note ~~the improved cash flows from operations have allowed the Company to reduce outstanding indebtedness at December 29, 2001 by approximately $1~~7.9 Subsequent ~~million~~Event ~~during the first three quarters of 2002.~~

~~MATERIAL~~On ~~CHANGES~~July 31, 2003, the Company received an unfavorable court judgment related to a plaintiff’s attorney’s fees from a lawsuit filed by the estate INof ~~RESULTS~~a OFformer ~~OPERATIONS~~employee, related to employee benefits administration in 1993. It is probable that the Company will incur a loss in the range of $217,000—$250,000. The Company recorded $217,000 of general and administrative expense in the three months ended June 28, 2003 related to this judgment.

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

	Three Months Ended				Nine Months Ended
	September 28, 2002		September 29, 2001		September 28, 2002		September 29, 2001
Net sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of products sold	72.3		73.8		72.4		73.8
Gross profit	27.7		26.2		27.6		26.2
Sales and marketing expenses	7.3		8.5		7.7		9.9
General and administrative expenses	17.4		18.1		18.0		19.3
Operating income (loss)	3.0	%	(0.4	)%	1.9	%	(3.0	)%

~~Third~~ MOORE ~~Quarter~~MEDICAL ~~Ended~~CORP. ~~September~~& ~~28,~~SUBSIDIARY ~~2002 Compared to September 29, 2001~~

~~Net sales for the third quarter were $37.0 million, the Company’s highest quarterly sales since exiting the wholesale pharmaceutical~~Item ~~distribution business in October 1997~~2. ~~Net sales increased 6.6% from $34.7 million in the same period a year ago. The Company~~ Management’s ~~sales~~Discussion ~~growth occurred primarily in its public sector (i.e. corrections, schools, federal, state~~ and ~~local~~Analysis ~~entities) and occupational health markets, which had growth rates~~ of ~~approximately~~Financial ~~11.0%~~Condition and ~~14.5%,~~Results ~~respectively, over the prior year’s third quarter. This revenue growth was driven by consistent application~~ of ~~multi-channeled~~Operations ~~marketing and distribution initiatives. Internet-based revenue grew approximately 24.3% over the prior year quarter and represented 10.0% of net sales for the current quarter.~~

~~Gross~~Reclassifications ~~profit~~– ~~increased~~Certain byfiscal ~~$1.2~~2002 ~~million,~~amounts orhave ~~13.2%,~~been reclassified to ~~$10.3~~conform ~~million from $9.1 million for the same period a year ago. Overall gross profit margins improved~~ to ~~27.7% in~~ the ~~third~~current ~~quarter~~periods ~~of 2002 from 26~~presented.2% ~~in the third quarter of 2001. The increase is primarily attributable to increased sales volume in higher margin products and realization of benefits from our supply chain initiatives.~~

~~Sales~~Overview and marketing expenses decreased by $0.2 million, or 6.9%, to $2.7 million in the third quarter of 2002 from $2.9 million in the third quarter of 2001. Sales and marketing expenses as a percentage of net sales decreased from 8.5% in the third quarter of 2001 to 7.3% in the third quarter of 2002. The decreases are the results of continued efforts to establish and implement more effective targeted marketing campaigns and increased efforts to develop vendor co-operative programs.

~~General~~Moore ~~and~~Medical ~~administrative~~is ~~expenses increased~~an ~~by $0.1 million~~Internet-enabled, ormulti-channel ~~1.6%,~~marketer toand ~~$6.4~~distributor ~~million~~of inmedical, ~~the~~surgical ~~third~~and ~~quarter~~pharmaceutical products ofto ~~2002~~approximately ~~from~~100,000 ~~$6.3~~health ~~million~~care inpractices ~~the~~and ~~same~~facilities ~~period~~in anon-hospital ~~year~~settings ~~ago.~~nationwide, ~~However~~including: physicians, asemergency amedical ~~percentage~~technicians, ofschools, ~~net~~correctional ~~sales~~institutions, ~~general~~municipalities, occupational/industrial health doctors and ~~administrative~~nurses, ~~expenses~~and ~~decreased~~other tospecialty 17practice communities.4% inMoore Medical also serves the ~~third~~medical/surgical ~~quarter~~supply needs of ~~2002~~ ~~from~~29 18customer community affiliates.1% ~~for~~We ~~the~~market ~~same~~to ~~period~~and aserve ~~year~~our ~~ago.~~customers ~~The~~through ~~decrease~~direct ~~from~~mail, ~~the~~industry-specialized ~~prior~~telephone support ~~year~~staff, ~~resulted~~field ~~from~~sales representatives, and the ~~positive~~Internet. ~~combination~~Our ofdirect ~~increases~~marketing and distribution business has been in ~~net~~operation ~~sales~~for ~~and~~55 ~~the~~years. ~~leveraging~~The ofCompany ~~earlier~~operates ~~cost~~principally ~~containment~~from ~~activities.~~three distribution facilities located in the United States.

~~Interest~~Towards ~~expense~~the ~~for~~end of the ~~third~~second quarter ofended ~~2002~~June ~~increased~~28, 2003, the Company began to ~~$113~~experience ~~thousand~~the ~~from~~benefit ~~$67~~of ~~thousand~~its ~~for~~expanded field sales force and expanded product portfolio, which were initiated in the ~~same~~fourth ~~period~~quarter aof ~~year~~fiscal ~~ago~~2002 and continued through the first and second quarters of fiscal 2003. ~~This~~Net ~~increase~~sales ~~was~~increased ~~primarily~~by ~~attributable~~7.5% as compared to ~~recording~~the ~~$50~~second ~~thousand~~quarter of ~~interest~~fiscal ~~expense~~2002 ~~for~~and ~~the~~increased ~~decrease~~by in6.8% as compared to the ~~fair~~first ~~value~~quarter ofin ~~the~~fiscal 2003. The Company’s ~~interest~~believes ~~rate~~that ~~cap~~sales ~~agreement~~and ingross ~~accordance~~profit ~~with~~will ~~SFAS~~continue ~~No.~~to ~~133,~~increase ~~Accounting~~from the new field sales representatives for ~~Derivatives~~the ~~and~~remainder ~~Hedging~~of ~~Activities~~fiscal 2003.

~~The~~As ~~effective~~a ~~income~~result of ~~tax~~the ~~rate~~expanded ~~was~~field ~~36.1%~~sales ~~for~~force ~~the~~and ~~third~~additions ~~quarter~~to ofsales ~~2002~~and ~~compared~~marketing management to support the ~~prior fiscal year~~Company’s ~~effective~~ ~~income~~multi-channel ~~tax~~marketing ~~benefit~~and ~~rate~~distribution, ofsales 37and marketing expenses increased by 33.04% to $3.6 ~~The~~million ~~difference~~and ~~between~~22.9% ~~the~~to ~~Company’s~~$6.5 ~~effective~~million ~~tax~~for the ~~rate~~three and ~~the~~six ~~Federal~~months ~~statutory~~ended ~~rate~~June is28, ~~due~~2003, ~~primarily~~respectively, compared to ~~state~~the ~~income~~same ~~taxes~~periods a year ago.

~~Net~~Increases ~~income~~in ~~was~~general ~~$0.6~~and ~~million,~~administrative orexpenses ~~$0.20~~for ~~per~~the ~~diluted~~three ~~share~~and ~~for~~six ~~the~~months ~~third~~ended ~~quarter~~June ~~2002~~28, an2003, ~~improvement~~were ofprimarily ~~$0.7~~related ~~million~~to orincreases ~~$0.24~~in ~~per~~pension ~~diluted~~expense, professional ~~share~~service ~~over~~fees, ~~the~~bad ~~prior~~debt ~~year~~expense ~~quarter~~and insurance expense. In addition, ~~compared~~ tothe aCompany ~~net~~was ~~loss~~negatively ofimpacted (by a $0.1)2 million orcourt ~~($0.04)~~judgment ~~per~~related ~~diluted~~to ~~share~~a inplaintiff’s ~~the~~attorney’s ~~third~~fees ~~quarter~~from ofan ~~2001~~employee benefits administration lawsuit in 1993.

~~Nine~~The ~~Months~~combination ~~Ended~~of ~~September~~sales ~~28,~~levels falling short of ~~2002~~expectations ~~Compared~~and increases in operating expenses to ~~September~~support 29the Company’s strategic infrastructure resulted in a net loss of ($0.6) million and ($0.7) million for the three and six months ended June 28, ~~2001~~2003.

~~Net~~The ~~sales~~Company ~~for~~was ~~the~~in ~~nine~~violation ~~months ended September 28, 2002 were $102.9 million, an increase~~ of ~~$3.2 million or 3.2% from net sales of $99.7 million for~~ the ~~comparable~~earnings ~~period~~before ofinterest ~~2001. The revenue base that was established during 2001 has been maintained~~ and ~~supplemented through the development and implementation of more~~taxes ~~effective~~financial ~~targeted~~covenant ~~marketing~~contained ~~campaigns. The Company’s sales growth occurred primarily~~ in its ~~public~~amended ~~sector~~revolving ~~and~~line ~~podiatry~~of ~~markets.~~credit ~~The~~agreement ~~overall net sales growth reflects strong revenue growth~~ for the ~~Company’s~~quarter ~~Internet-based~~ended ~~revenue~~June ~~as more customers took advantage of the Company’s enhanced web-based channel. Internet-based revenue increased $2.7 million~~28, ~~or 34.6%~~2003, tobut ~~$10.5 million for~~ the ~~first~~Company ~~nine~~received ~~months~~a ofwaiver ~~the~~from ~~fiscal~~its ~~year, compared to $7~~lender.8 ~~million for the same period a year ago.~~

Gross profit increased $2.3 million, or 8.8%, to $28.4 million for the nine months ended September 28, 2002 compared to $26.1 million for the same period a year ago. Overall gross profit margins increased to

~~27.6%~~Material ~~from~~Changes ~~26.2%~~ in ~~2001.~~Results ~~The increase is primarily attributable to increased sales volume in higher margin products and realization~~ of ~~benefits~~Operations ~~from our supply chain initiatives.~~

~~Sales~~Three and ~~marketing~~Six ~~expenses~~Months ~~decreased~~Ended byJune ~~$1.9 million~~28, or2003 ~~19.2%,~~versus toJune ~~$8.0~~29, ~~million in~~ 2002 from $9.9 million in 2001. Sales and marketing expenses as a percentage of net sales decreased from 9.9% for the nine months ended 2001 to 7.7% for the nine months ended 2002. The decreases are due to continued efforts to establish and implement more effective targeted marketing campaigns and increased efforts to develop vendor co-operative programs.

~~General~~The ~~and~~following ~~administrative~~table ~~expenses decreased~~represents byselected ~~$0.7~~financial ~~million~~information, orexpressed ~~3.6%,~~as ~~to $18.5 million in 2002 from $19.2 million in 2001. As~~ a percentage of net sales,: general and administrative expenses decreased from 19.3% to 18.0% for the nine months ended September 28, 2002 compared to the same period a year ago. The decreases are due to the continued realization of benefits from cost containment initiatives. The Company believes its existing cost structure continues to be adequate to support future growth.

Interest expense for the first nine months of 2002 increased to $201 thousand from $140 thousand for the same period a year ago. This increase was primarily attributable to recording $50 thousand 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.

	Three months ended				Six months ended
	June 28, 2003		June 29, 2002		June 28, 2003		June 29, 2002
Net sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of products sold	72.5		72.6		72.7		72.4

Gross profit	27.5		27.4		27.3		27.6
Sales and marketing expenses	10.0		8.1		9.3		8.0
General and administrative expenses	19.9		17.9		19.5		18.3

Operating income (loss)	(2.4	%)	1.4	%	(1.5	%)	1.3	%

~~The~~Net ~~effective~~sales ~~income~~for ~~tax~~the three ~~rate~~months ~~was~~ended 36June 28, 2003 were $ 35.09 million, an increase of 7.5% ~~for~~from $33.4 million in the ~~three~~same ~~quarters~~period ofa ~~2002~~year ~~compared~~ago. toFor the ~~prior~~six ~~fiscal~~months ended June 28, 2003, net sales were $69.5 million, an increase of 5.5% from $65.9 million in the same period a year ago. The Company’s ~~effective~~sales ~~income~~growth ~~tax~~in ~~benefit~~both ~~rate~~periods occurred primarily in its public sector (i.e., corrections, schools, federal, state and local government markets) and physicians markets, offset by decreases in the occupational health and resellers markets. This revenue growth was driven by a consistent application of 36multi-channeled marketing campaigns combined with the benefits from the expanded field sales force and product portfolio offerings, which were introduced in the fourth quarter of fiscal 2002 and continued through the first and second quarters of fiscal 2003.8 Internet-based revenue increased 26.5% to $4.3 ~~The~~million ~~difference~~and ~~between~~25.4% to $8.4 million for the ~~Company’s~~three ~~effective~~and ~~tax~~six ~~rate~~months ended June 28, 2003, respectively, compared to $3.4 million and $6.7 million, respectively, for the ~~Federal~~same ~~statutory~~periods ~~rate~~a isyear ~~due~~ago, ~~primarily~~as tomore ~~state~~customers ~~income~~took ~~taxes~~advantage of the Company’s enhanced e-business channel.

~~Net~~Gross ~~income~~margins ~~was~~increased ~~$1.1~~to ~~million, or $0~~27.355% ~~per~~and ~~diluted~~decreased ~~share~~to 27.3% for the ~~nine~~three and six months ended ~~September~~June 28, ~~2002~~2003, anrespectively, ~~improvement~~as compared ofto $327.14% ~~million~~and ~~or $0~~27.986% ~~per~~for ~~diluted~~the ~~share~~three ~~over~~and six months ended June 29, 2002, respectively. The decrease for the ~~first~~ ~~three~~six ~~quarters~~months ofended ~~2001~~June 28, 2003 compared to athe ~~net~~same ~~loss~~period ofa ~~($2.0)~~year ~~million~~ago oris ~~($0.63)~~primarily ~~per~~attributable ~~diluted~~to ~~share~~increased competitive pricing pressures in ~~the~~certain ~~first~~markets, ~~three~~aggressive ~~quarters~~pricing ofassociated ~~2001~~with gaining entry into competitively held new accounts, and product mix.

~~LIQUIDITY~~Sales ~~AND~~and ~~CAPITAL~~marketing ~~RESOURCES~~expenses increased by 33.3% to $3.6 million and 22.6% to $6.5 million for the three and six months ended June 28, 2003, respectively, compared with $2.7 million and $5.3 million for the same periods a year ago. Sales and marketing expenses as a percentage of net sales increased to 10.0% and 9.3% for the three and six months ended June 28, 2003, respectively, as compared to 8.1% and 8.0% for the three and six months ended June 29, 2002, respectively. The quarterly and 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 through the first and second quarters of fiscal 2003.

OnGeneral ~~January~~and ~~26,~~administrative ~~2001,~~expenses ~~the~~increased ~~Company~~by ~~entered~~18.3% ~~into~~to a$7.1 ~~three-year bank~~million ~~financing~~and ~~agreement~~12.4% ~~which provides up~~ to $1513.6 million infor athe ~~collateralized~~three ~~revolving~~and ~~credit~~six months ~~facility.~~ended ~~Management~~June ~~believes~~28, ~~the~~2003, ~~credit~~respectively, ~~facility~~compared ~~provides~~to ~~the~~$6.0 ~~Company~~million ~~with~~and ~~the~~$12.1 ~~latitude~~million itfor ~~needs~~the tosame ~~implement~~periods ~~strategic~~a ~~initiatives~~year ~~as they arise~~ago. ~~During the~~As ~~first~~a ~~quarter~~percentage of ~~2002~~net sales, ~~the~~general ~~Company~~and ~~utilized~~administrative ~~its~~expenses ~~collateralized~~increased ~~revolving~~to ~~credit~~19.9% ~~facility~~and to19.5% ~~payoff~~for the ~~government~~three ~~settlement~~and ~~note~~six inmonths ~~full~~ended June to28, ~~take~~2003, ~~advantage~~respectively, ofas ~~the~~compared ~~low~~to ~~interest~~17.9% ~~rate~~and ~~environment~~18.3% ~~The~~for ~~Company’s~~the ~~cash~~three and ~~cash~~six ~~equivalents~~months ~~at September~~ended 28June 29, 2002, ~~totaled $0~~respectively.1 ~~million~~The inincreases from the ~~form~~prior ofyear’s aperiods ~~certificate~~were ofprimarily ~~deposit.~~related ~~With~~to ~~the~~increases ~~exception~~in ofpension ~~the~~expense, ~~$0.1~~professional services ~~million~~fees, ~~certificate~~insurance ~~of deposit~~expense, ~~all amounts of cash~~ and ~~cash~~bad ~~equivalents~~debt ~~are~~expense. ~~offset~~During ~~against outstanding draw downs on~~ the ~~collateralized revolving~~first ~~credit~~two ~~facility.~~quarters As of ~~September~~fiscal 282003, ~~2002,~~ the Company ~~had~~experienced ~~$3.4~~difficulties ~~million~~in ~~outstanding on~~ its ~~collateralized~~collection ~~revolving~~of ~~credit~~accounts ~~facility.~~receivable efforts,

Net cash provided by operating activities was $1.5 million for the nine months ended September 28, 2002 and resulted primarily from net income of $1.1 million and non-cash charges of $3.0 million, offset by a net increase in cash used in operating items of working capital of $2.6 million. The increase in working capital needs was primarily due to a $3.4 million increase in accounts receivable, a $0.8 million increase in inventory partially offset by an increase in accounts payable and accrued expenses by $1.1 million and a decrease in other assets of $0.5 million. The sales growth during 2002 has contributed to the increase in accounts receivable, inventory levels and accounts payable.

Net cash used in investing activities was $0.6 million for the nine months ended September 28, 2002. The Company expects to invest nearly $0.9 million during the year ended December 28, 2002 in capital projects on computer infrastructure systems and operating efficiency initiatives which will produce future benefits to the Company.

~~Net~~particularly ~~cash~~in ~~used~~smaller dollar volume customer accounts, which contributed to the increase in ~~financing~~bad ~~activities~~debt ofexpense. In addition, the Company recorded $~~1.6~~217,000 ~~million~~of ~~for~~legal expense in the ~~nine~~three months ended ~~September~~ June 28, ~~2002~~2003 isrelated ~~the~~to ~~net~~a oflawsuit. On July 31, 2003, the ~~government~~Company ~~settlement~~received ~~note~~an ~~and~~unfavorable ~~incremental~~court ~~borrowings~~judgment onrelated ~~the~~to ~~Company~~a plaintiff’s ~~collateralized~~attorney’s ~~revolving~~fees ~~credit~~from ~~facility.~~a lawsuit ~~Outstanding~~filed ~~indebtedness~~by ~~was~~the $1estate of a former employee, related to employee benefits administration in 1993.9 ~~million~~It ~~less~~is atprobable ~~September~~that ~~28,~~the ~~2002~~Company ~~compared~~will toincur ~~December~~a 29loss in the range of $217, ~~2001~~000—$250,000.

~~The~~Interest ~~Company~~expense ~~believes~~for ~~that~~the ~~cash~~three ~~flows~~and six months ended June 28, 2003 increased to $43,000 and decreased to $86,000, respectively, from ~~operations~~$40,000 and ~~available~~$87,000, ~~cash~~respectively, in the same periods a year ago. This increase and ~~cash~~decrease ~~equivalents~~were ~~are~~attributable ~~adequate~~ to ~~fund~~the principal amount of borrowings under the Company’s ~~operations~~revolving ~~for~~line ~~the~~of credit, ~~foreseeable~~with ~~future~~interest rates remaining consistent during both periods.

~~CRITICAL~~The ~~ACCOUNTING~~Company’s ~~POLICIES~~effective income tax rate was 36.0% for the three and six months ended June 28, 2003 compared to the effective income tax rates of 36.1% and 35.9%, respectively, for the three and six months ended June 29, 2002. The difference between the Company’s effective tax rate and the federal statutory rate is due primarily to state income taxes.

~~The~~Net ~~Company’s~~loss ~~critical~~was ~~accounting~~($0.6) ~~policies~~million, ~~are~~or as($0.18) ~~follows:~~per basic and diluted share, and ($0.7) million, or ($0.23) per basic and diluted share for the three and six months ended June 28, 2003, respectively, compared to net income of $0.3 million, or $0.09 per basic and diluted share, and $0.5 million, or $0.15 per basic and diluted share, respectively, for the three and six months ended June 29, 2002.

~~Principles~~Liquidity ~~of Consolidation—The consolidated financial statements include the accounts of the Company~~ and ~~its~~Capital ~~subsidiaries~~Resources using the fiscal year-ends discussed below. 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.

~~Fiscal~~On ~~Year—The~~January 26, 2001, the Company’s ~~fiscal~~entered ~~year~~into ~~ends~~a oncollateralized ~~the~~bank financing ~~Saturday~~agreement ~~closest~~which provides up to ~~December~~a ~~31. Fiscal~~$15 ~~year~~million ~~end~~revolving ~~2002~~credit ~~ends~~facility (“credit facility”), due on ~~December~~January 2826, ~~2002~~2004. ~~The~~Management ~~2001~~believes ~~fiscal~~the ~~year~~credit ~~ended~~facility onprovides ~~December~~the 29Company with the latitude it needs to implement strategic initiatives as they arise. Due to the credit facility expiring in January 2004, ~~2001~~the Company expects to re-finance the credit facility during fiscal 2003.

~~Estimates—The~~At ~~preparation~~December of28, ~~financial~~2002, ~~statements~~the Company was in ~~conformity~~violation ~~with~~of ~~accounting~~the ~~principles~~consolidated ~~generally~~tangible ~~accepted~~net inworth ~~the~~and ~~United~~earnings ~~States~~before ofinterest ~~America~~and ~~requires~~taxes ~~management~~(“EBIT”) financial tocovenants ~~make~~contained ~~estimates~~in ~~and~~its ~~assumptions~~credit ~~that~~facility ~~affect~~for the ~~reported amounts~~fourth quarter of ~~assets~~fiscal ~~and~~2002. ~~liabilities~~On March 27, 2003, the Company and ~~disclosure~~its oflender ~~contingent~~amended ~~assets~~certain financial covenants and ~~liabilities~~conditions atof the ~~date~~credit offacility effective for the ~~financial~~period ~~statements~~ended December ~~and~~28, 2002, including the ~~reported~~consolidated ~~amounts~~tangible ofnet ~~revenues~~worth and ~~expenses~~EBIT ~~during~~financial ~~the~~covenants. ~~reporting~~As ~~period.~~of ~~Subsequent~~December ~~actual~~28, ~~outcomes~~2002, ~~could~~the ~~differ~~Company ~~from those~~was ~~estimated~~in ~~and~~compliance ~~assumed~~with the financial covenants, as amended.

~~Inventories—Inventories,~~The ~~consisting~~Company was in violation of ~~products~~the ~~purchased~~EBIT ~~for~~financial ~~resale, are~~covenant ~~stated~~contained atin ~~the~~its amended ~~lower~~credit offacility ~~average~~for ~~cost~~the orquarter ~~market~~ended ~~value.~~June 28, ~~Market~~2003, ~~values~~but ~~are~~the ~~based~~Company onreceived ~~estimated~~a ~~sales~~waiver ~~prices~~from ofits ~~products~~lender.

~~Sales~~The ~~Recognition~~Company’s ~~Policy—Sales~~cash ~~are~~and ~~recorded~~cash ~~upon~~equivalents ~~shipment~~at June 28, 2003 totaled $0.1 million in the form of ~~products~~a tocertificate ~~customers~~of deposit. ~~Accounts~~With ~~receivable~~the ~~have~~exception ~~been~~of ~~reduced~~the by$0.1 million ~~estimated~~certificate of deposit, all amounts ~~for~~of ~~allowances~~cash ~~related~~and cash equivalents are required to ~~future~~be ~~charges~~offset ~~for~~against ~~uncollected~~outstanding ~~accounts~~borrowings ~~and~~on ~~product returns~~the credit facility. As of June 28, 2003, the Company had $3.6 million outstanding on its credit facility.

~~Advertising—The~~Net ~~cost~~cash provided by operating activities was $2.3 million for the six months ended June 28, 2003 and resulted primarily from a net loss of ~~direct~~($0.7) ~~response~~million ~~catalog~~and ~~advertising~~the iscombination ~~deferred~~of non-cash charges of $2.1 million and ~~amortized~~a ~~over~~decrease in uses of operating items of working capital of $0.9 million. Non-cash charges ~~the~~consisted ~~period~~primarily of ~~expected~~depreciation ~~revenues~~expense of $1.3 ~~Direct~~million ~~response~~and ~~catalog~~bad ~~advertising~~debt ~~consists~~expense of $0.8 million. The decrease in working capital needs was primarily due to a $3.9 million increase in accounts payable and other liabilities, a $0.4 million decrease in other assets, partially offset by an increase in accounts receivable by $3.3 million and an increase in inventory of ~~catalog~~$0.1 ~~production~~million. ~~expenses~~The increase in accounts payable and ~~related~~other ~~postage~~liabilities ~~costs~~was primarily due to timing of inventory receipts and payment of invoices. ~~Catalogs~~The ~~are~~increase ~~effective~~in ~~for~~accounts ~~varying~~receivable ~~time~~was ~~periods~~due ~~but~~primarily to an increase in net sales of approximately $2.7 million in the ~~largest~~last ~~catalogs~~half ~~are~~of ~~generally~~the ~~effective~~second ~~for~~quarter of fiscal 2003 compared to the last half of the fourth quarter of fiscal ~~less~~2002, combined with customers paying the Company more slowly in fiscal 2003 than ain ~~year~~fiscal 2002.

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.

RECENT ACCOUNTING PRONOUNCEMENTS

Effective January 1, 2002, the Company adopted SFAS No. 142, “Goodwill and Other Intangible Assets.” The standard changes the accounting for goodwill and intangible assets with an indefinite life whereby such assets are no longer amortized; however, the standard does require evaluation for impairment and a corresponding writedown, if appropriate. SFAS No. 142 requires an initial evaluation upon adoption. Such evaluation was performed as of January 1, 2002 resulting in no impairment in the value of Company’s goodwill or intangible assets.

~~for~~Net ~~asset~~cash ~~retirement~~used ~~obligations~~ in ~~the~~investing ~~period~~activities inwas ~~which~~$1.2 ~~they~~million ~~are~~for ~~incurred~~the six months ended June 28, ~~which~~2003. ~~typically~~The primary ~~could~~investment bewas ~~upon~~progress ~~completion~~payments ofmade ~~construction~~on ora ~~shortly~~project ~~thereafter~~to replace the existing communications infrastructure within the Company. The Company ~~does~~expects ~~not~~to ~~believe~~invest ~~that~~nearly $2.0 million during the ~~adoption~~ offiscal ~~this~~year ~~standard~~ended ~~will~~December ~~have~~27, a2003 ~~material~~in ~~impact~~capital projects on ~~its~~communication ~~consolidated~~and ~~financial~~computer ~~statements~~infrastructure systems and operating efficiency initiatives which are expected to produce future benefits to the Company.

InNet ~~August~~cash ~~2001, the~~used ~~FASB~~in ~~issued~~financing ~~SFAS~~activities ~~No. 144 “Accounting for the Impairment or Disposal~~ of ~~Long-Lived Assets~~$1.”1 ~~The~~million ~~statement is effective~~ for ~~fiscal~~the ~~years~~six ~~beginning~~months ~~after~~ended ~~December~~June 1528, ~~2001.~~2003 ~~SFAS~~is ~~No. 144 changes~~ the ~~criteria~~aggregate ~~for~~of ~~classifying~~paying andown ~~asset~~borrowings ~~as held-for-sale.~~on ~~The~~ the Company’s ~~does~~credit ~~not~~facility ~~believe~~and ~~that~~a ~~the~~reduction ~~adoption~~in ~~of this standard will have~~ a ~~material~~cash ~~impact on its consolidated financial statements~~overdraft.

~~In April 2002, the FASB issued SFAS No. 145 “Rescission of FASB Statement No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” The Statement is effective for~~Cash ~~fiscal~~Requirements years beginning after May 15, 2002. SFAS No. 145 rescinds certain guidance for reporting extinguishments of debt and provides guidance to determine if the transactions are part of recurring operations or if they meet the criteria for classification as an extraordinary item. Additionally, SFAS No. 145 requires that certain lease modifications be accounted for in the same manner as sales-leaseback transactions. The Company does not believe that the adoption of this standard will have a material impact on its consolidated financial statements.

InThe ~~June~~Company ~~2002,~~believes ~~the~~that ~~FASB~~cash ~~issued~~flows ~~SFAS No. 146,~~from ~~“Accounting~~operations ~~for~~and ~~Costs~~available ~~Associated~~cash ~~with~~and ~~Exit~~cash orequivalents ~~Disposal~~are ~~Activities”.~~adequate ~~SFAS No. 146, nullifies Emerging Issues Task Force Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs~~ to ~~Exit~~fund ~~an Activity~~the ~~(including Certain Costs Incurred in a Restructuring).” The~~ Company’s ~~does~~operations ~~not~~for ~~believe that~~ the ~~adoption~~foreseeable ~~of this standard will have a material impact on its consolidated financial statements~~future.

~~Item~~The 3.following ~~Quantitative~~table &quantifies ~~Qualitative~~the ~~Disclosures~~Company’s ~~About~~future ~~Market~~contractual ~~Risk~~cash obligations as of June 28, 2003 (in millions):

Interest Rate Risk

	Payments Due in Fiscal
	2003		2004		2005		2006		2007		Thereafter		Total
Long-term debt	$	—	$	3.6	$	—	$	—	$	—	$	—	$	3.6
Operating leases		0.7		1.2		0.4		0.3		0.2		1.2		4.0

	$	0.7	$	4.8	$	0.4	$	0.3	$	0.2	$	1.2	$	7.6

AsApplication ~~described in the notes to the financial statements on Form 10-Q, the Company maintains a collateralized bank financing agreement, which provides up to $15 million revolving line~~ of ~~credit~~Critical ~~through January 26, 2004. Interest is~~Accounting ~~charged~~Policies at the prime rate or, at the option of the Company, at the LIBOR rate plus a margin ranging from 0% to 2.75% 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. The Company does not expect changes in interest rates to have a material effect on income or cash flows in fiscal 2002, although there can be no assurances that interest rates will not significantly change.

~~FORWARD-LOOKING~~The ~~INFORMATION~~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:

~~This~~Principles ~~report~~of Consolidation—The ~~contains~~consolidated ~~statements~~financial ~~about future events and expectations that constitute forward-looking~~ statements ~~within~~include the ~~meaning~~accounts of the ~~Private~~ ~~Securities~~Company ~~Litigation~~and ~~Reform~~its ~~Act~~wholly-owned ~~of 1995~~subsidiary. ~~Forward-looking~~All ~~statements~~intercompany ~~are~~accounts ~~based on management’s beliefs, assumptions~~ and ~~expectations~~transactions ofhave ~~the~~been ~~Company’s future economic performance, taking into account the information that is currently available to management~~eliminated. ~~These~~The ~~statements~~results ~~are~~of ~~not~~operations ~~statements~~ of ~~historical~~companies ~~fact.~~acquired ~~Forward-looking statements involve risks and uncertainties (including, but not limited to, economic, competitive, governmental and technological factors~~in ~~outside~~purchase ~~our~~business ~~control)~~transactions ~~that~~are ~~may~~included ~~cause~~in the ~~Company’s~~accompanying ~~actual~~consolidated ~~results, performance or~~ financial ~~condition~~statements ~~to differ materially~~ from the ~~expectations~~dates of ~~future results, performance or financial condition we express or imply in any forward-looking statements~~acquisition. ~~Factors that could contribute to these differences include, but are not limited to:~~

Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. 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.

~~Business~~Revenue ~~Strategy~~Recognition—Sales ~~Factors~~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 ~~inability~~cost toof ~~generate~~direct ~~adequate~~response catalog advertising is deferred and amortized over the period of expected revenues. Direct response catalog advertising consists primarily of catalog production expenses and ~~income~~related postage costs. Revenue from ~~our~~catalogs ~~transformation~~is ~~into~~earned aover ~~multi-channel~~varying ~~e-commerce~~time ~~enabled~~periods, ~~marketer~~but ~~and~~the ~~distributor~~largest catalogs are generally effective for less than a year.

·Income ~~Changes~~Taxes—The inliability ~~demand~~method ~~for~~is used to calculate deferred income taxes. Under this method, deferred income tax assets and liabilities are recognized on temporary differences between the ~~Company’s~~financial ~~products~~statement and tax bases of assets and liabilities, using applicable tax rates, and on tax carryforwards.

·Stock-Based ~~Pressures~~Compensation—The Company onrecords ~~revenues~~stock ~~resulting~~option ~~from~~awards in accordance with the provisions of Accounting Principles Board Opinion No. 25, “Accounting for ~~example,~~Stock ~~customer~~Issued ~~consolidations~~to orEmployees.” ~~changes~~The Company estimates the fair value of stock option awards in ~~customer~~accordance ~~buying~~with SFAS ~~patterns~~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 ~~Changes~~Year—The inCompany’s fiscal year ends on the ~~availability~~Saturday orclosest ~~salability~~to ofDecember ~~products~~31. ~~manufactured~~Fiscal byyear ~~our~~end ~~suppliers~~2003 ends on December 27, 2003. The 2002 fiscal year ended on December 28, 2002.

~~Operating~~Recent ~~Factors~~Accounting Pronouncements

·In ~~Unforeseen~~April 2003, ~~web~~the ~~site~~FASB ~~hosting~~issued orSFAS 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 ~~service~~contracts, ~~disruptions~~and for hedging activities under SFAS No. 133, or“Accounting ~~online~~for ~~credit~~Derivative ~~card~~Instruments ~~fraud~~and orHedging ~~security~~Activities.” ~~breaches~~SFAS inNo. ~~the~~149 ~~Company’s~~is ~~web~~effective ~~site~~for contracts entered into or modified after June 30, 2003.

·In ~~Failure~~May to2003, ~~keep~~the upFASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with ~~rapidly~~Characteristics ~~changing~~of ~~technologies~~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 ~~Internet~~modified ~~developments~~after May 31, 2003, and otherwise effective at the beginning of the first interim period beginning after June 15, 2003.

·The ~~Our~~Company ~~internal~~does ~~systems~~not ~~are~~expect ~~located~~the inadoption aof ~~single~~these ~~facility,~~statements to ~~the~~have ~~loss~~a ofmaterial ~~which~~impact ~~would~~on ~~significantly~~its ~~impact~~consolidated ~~our~~financial ~~continued~~position, ~~business~~consolidated results of operations or consolidated cash flows.

· Item ~~Disruptions~~3. Quantitative in& orQualitative ~~cost~~Disclosures ~~increases~~About ~~for~~Market ~~services~~Risk or systems on which we are dependent, such as the trucking companies that deliver products from our suppliers, common carriers (such as United Parcel Service and Federal Express) that deliver products to our customers, telecommunication services, computer systems services, and printing services.

~~Competitive~~Interest ~~Factors~~Rate Risk

·As ~~Intense~~described ~~competition~~in the notes to the financial statements included in ~~health~~this ~~care~~Form ~~product~~10-Q, ~~distribution~~the ~~from~~Company ~~distributor~~maintains ~~consolidations~~a collateralized bank financing agreement, ~~new~~which provides ~~online~~up ~~entrants~~to ~~and~~a ~~pricing~~$15 ~~pressures~~million revolving line of credit through January 26, 2004. Interest is charged at the prime rate or, at the option of the Company, at the LIBOR rate plus a margin ranging from ~~larger~~0% ~~distributors~~to ~~able~~2.75% 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 ~~benefit~~hedge ~~from~~against ~~economies~~an increase in interest rates. At June 28, 2003 and December 28, 2002, the fair value of ~~scale~~the interest rate cap was $0. The Company does not expect changes in interest rates to have a material effect on income or ~~other~~cash ~~operating~~flows ~~efficiencies~~in fiscal 2003, although there can be no assurances that interest rates will not significantly change.

Governmental Factors

· Changes in, or compliance with, laws regulating the distribution of drugs and medical devices.

· Changes in governmental support or insurance coverage of health care products or services, including potential governmental reductions in health care funding affecting our customers’ services or revenues.

· New governmental regulation of the Internet.

· New sales tax collection obligations.

General Economic Factors

· The effect of general economic conditions, inflation and interest rates.

· Changes in currency exchange rates and political and economic conditions nationwide.

Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, we can give no assurance that the Company’s expectations will be achieved. We qualify any forward-looking statements entirely by these cautionary factors, and readers are cautioned not to place undue reliance on forward-looking statements.

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

The forward-looking statements contained in this report only speak as of the date of this report. The Company disclaims any obligation or undertaking to provide any updates or revisions to any forward-looking statements to reflect any change in management’s expectations or any change in events, conditions or circumstances on which the forward-looking statements are based.

Item 4. Controls and Procedures

OnOur ~~October 31, 2002, our~~ Chief Executive Officer (“CEO”) and ~~Interim~~ Chief Financial Officer ~~performed~~(“CFO”) anhave ~~evaluation~~evaluated the effectiveness of our disclosure controls and procedures, ~~which~~(as ~~have~~defined ~~been~~in ~~designed~~Rules to13a-4(c) ~~permit~~and us15d-14(c) toof ~~effectively~~the Securities ~~identify~~Exchange ~~and~~Act ~~disclose~~of in1934, as amended) as of a ~~timely~~date ~~manner~~(“Evaluation ~~important~~Date”) ~~information~~within 90 days prior to the filing of this quarterly report. ~~They~~ Based on such evaluation, our CEO and CFO have each concluded that as of the Evaluation Date, our disclosure controls and procedures were effective. Weto ~~have~~ensure ~~made~~that information required to be disclosed by us in reports that we file or submit under the Securities and Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. There were no significant changes in our internal controls or in other factors that could significantly affect ~~our~~the internal controls ~~since~~subsequent ~~October~~to the ~~31,~~Evaluation ~~2002~~Date.

Part II. OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders

(a)

The 2003 Annual Meeting of Shareholders of the Company was held on May 22, 2003.

(b)

The following directors, constituting the entire Board of Directors, were elected at the Annual Meeting of Shareholders held on May 22, 2003.

Name of Nominee	For	Withheld
Linda M. Autore	2,423,497	231,487
Christopher Brody	2,454,997	199,987
Peter A. Derow	2,454,997	199,987
Steven Kotler	2,453,694	201,290
Robert H. Steele	2,453,697	201,287
Wlimer J. Thomas, Jr.	2,453,697	201,287
Dan K. Wassong	2,454,997	199,987

Item 6. Exhibits and Reports on Form 8-K

(a)

Exhibits

9931.1 Certification ~~Pursuant~~of toPrincipal 18Executive ~~U.S.C.~~Officer ~~Section~~required ~~1350~~by ~~Adopted~~Rule ~~Pursuant~~13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section ~~906~~302 of the Sarbanes – -Oxley Act of 2002 (filed herewith).

9931.2 Certification ~~Pursuant~~of toPrincipal 18Financial ~~U.S.C.~~Officer ~~Section~~required ~~1350~~by ~~Adopted~~Rule ~~Pursuant~~13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section ~~906~~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 (filed herewith).

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 (filed herewith).

(b)

Reports on Form 8-K

During the quarter ~~for~~ended ~~which~~June ~~this~~28, ~~report is filed~~2003, the Company filed athe following Current Reports on Form 8-K: ~~dated July 12, 2002, reporting information under Item 5 of Part II.~~

The Company filed a Form 8-K on April 28, 2003, as a result of the Company issuing a press release reporting financial results for the quarter ended March 29, 2003, which was included as an exhibit to the 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.

SIGNATURES

Pursuant to the requirements of ~~Section 13 or 15(d) 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
By:	/s/ LINDA M. AUTORE	By:	/s/ JOHN M. ZINZARELLA
Linda M. Autore, Presidentand Chief Executive OfficerNovember 7, 2002	John M. Zinzarella, Vice President, Controller and Interim Chief Financial Officer November 7, 2002
	Linda M. Autore, President and Chief Executive Officer August 12, 2003		John M. Zinzarella, Vice President of Finance, Treasurer and Chief Financial Officer August 12, 2003

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 officers 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 as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, 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 in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; 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; and

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: November 7, 2002

BY: /S/ LINDA M. AUTORE Linda M. Autore, President and Chief Executive Officer

I, John M. Zinzarella, certify that:

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

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

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

Date: November 7, 2002

BY: /S/ JOHN M. ZINZARELLA John M. Zinzarella, Vice President, Controller and Interim Chief Financial Officer

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Filing Compare · MOORE MEDICAL CORP