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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10 - K

For the fiscal year ended December 27, 2003

or

For the transition period from              to             

Commission file number 1-8903

MOORE MEDICAL CORP.

(Exact Name of Registrant as Specified in Its Charter)

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:

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 twelve months, and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).    Yes  ¨    No  x

As of March 8, 2004, 3,200,009 shares (exclusive of 46,030 Treasury Shares) of the registrant’s Common Stock were outstanding. The aggregate market value of the voting stock held by non-affiliates (i.e. other than shares held by identified 5% holders and executive officers and directors) of the registrant as of June 28, 2003 was approximately $ 9,900,000.

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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. Factors that could contribute to these differences include, but are not limited to:

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.

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Moore Medical Corp. & Subsidiary

2003 Annual Report on Form 10-K

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ITEM 1. Business

General

On January 19, 2004, Moore Medical Corp. (the “Company” or “Moore Medical”) entered into an Agreement and Plan of Merger (the “Merger”) with McKesson Corporation (“McKesson”). Pursuant to the terms of the Merger, McKesson will acquire each outstanding share of Moore Medical common stock for $12.00 in cash, or approximately $40 million in the aggregate. Moore Medical shareholder approval is required to consummate the Merger and a meeting to obtain shareholder approval has been scheduled for March 30, 2004. The acquisition is expected to be completed in the Company’s second fiscal quarter of 2004. Upon consummation of the Merger, Moore Medical will become a wholly-owned subsidiary of McKesson. The Company incurred legal and consulting fees of approximately $0.5 million during fiscal 2003 related to the proposed Merger between the Company and McKesson.

Moore Medical is an Internet-enabled, multi-channel marketer and distributor of medical, surgical and pharmaceutical products to 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. The Company markets and serves its customers through direct mail, industry-specialized telephone support staff, field sales representatives, customer community affiliates and the Internet. Its 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 with nearly 100% of its revenues from customers in the United States.

The Company is a Delaware corporation, organized in 1969. Its principal executive offices are located at 389 John Downey Drive, New Britain, Connecticut 06050, telephone (860) 826-3600.

Moore Medical’s Mission & Key Initiatives

Our mission is to empower health care professionals with the tools and resources they need to improve the health of their patients and save lives.

We strive to:

Maintain a strong customer focus

Our customers are the focal point of all that we do. We utilize a Corporate Customer Council, market-specific advisory groups and ongoing surveys to help us learn more about customer needs and how to best serve them.

Provide an enjoyable and efficient multi-channel customer experience

We offer our customers a variety of ways to communicate with us and have streamlined the process of providing the quality goods and services that they have come to expect. Our web site houses a sophisticated e-commerce application that allows customers to make real-time selections and purchases online. We complement the total buying experience with a gateway to industry associations and customer community affiliates, while continuing to maintain a traditional direct mail communication campaign through our market-specific sales flyers and catalogs.

Current Developments

On January 19, 2004, Moore Medical entered into an Agreement and Plan of Merger with McKesson. Pursuant to the terms of the Merger, McKesson will acquire each outstanding share of Moore Medical common stock for $12.00 in cash, or approximately $40 million in the aggregate. Moore Medical shareholder approval is required to consummate the Merger and a meeting to obtain shareholder approval has been scheduled for March 30, 2004. The acquisition is expected to be completed in the Company’s second fiscal quarter of 2004. Upon consummation of the Merger Moore Medical will become a wholly-owned subsidiary of McKesson. The Company incurred legal and consulting fees of approximately $0.5 million or $0.12 per share during fiscal 2003 related to the Merger.

On November 6, 2003, the Company amended its $15 million loan agreement with its lender 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. As of December 27, 2003, the Company was in violation of the earnings before interest, taxes, depreciation and amortization (“EBITDA”) financial covenant contained in its revolving line of credit agreement for the two quarters ending December 27, 2003. On March 23, 2004, the Company’s lender waived the EBITDA financial covenant violation for the two quarters

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ending December 27, 2003. Additionally, the Merger with McKesson allows the lender to exercise certain rights with respect to the loan agreement. In February 2004, the Company repaid the amounts outstanding on the loan agreement. McKesson does not intend to use the loan agreement subsequent to the completion of the Merger.

Health Care Products Distribution Competition

Competition: The trend of health care product distributor consolidation continues in an effort to realize economies of scale. Our competitors are large national distributors, regional distributors, and local distributors with the majority depending on field sales representatives to build customer relationships. Some primarily use direct mail and telemarketing, some rely on the Internet, and others make sales and deliveries to their customers with a dedicated sales force and a fleet of distributor-operated delivery vehicles.

The health care product industry is highly competitive and many of the Company’s customers utilize more than one health care product distributor to gain the best pricing. Generally, we compete with other distributors on breadth of product line, brand recognition, delivery speed, price, order completion rates, and other value-added customer service factors, such as the convenience of ordering through the Internet. As more health care practices consolidate, we expect that a growing number of large customers will require their distributor to reliably service many delivery locations in different regions across the country. By providing a multi-channel distribution network, we are able to meet the needs of our present and prospective customers.

Sales and Marketing

In fiscal 2003, the Company enhanced its multi-channel strategy to surround specialty health care customers with a convenient means of communication and commerce and to deliver expert service and customer care in every experience in which the Company engages the customer. The Company enhanced and integrated five channels by which our customers may communicate with Moore Medical. The five channels include: direct marketing, market-specific sales representatives, field and national account representatives, web sites and customer community affiliates. All of our customer gateways work together to foster a single voice to the customer and to be a receptive listener to the needs of specialty health care customers and prospective customers.

Direct Marketing: From Moore Medical’s inception, the cornerstone of our customer communication has been direct marketing – sending a printed catalog, flyer or promotional offer to our customers and receiving a response via the Web, a phone call, fax or letter to our Customer Support Center. Our customer support representatives are trained and organized by health care specialty and product knowledge to better serve our customers. This approach continued to be important in fiscal 2003 and the effectiveness of our targeted mail and its response rate improved significantly. An in-house creative department, equipped with a digital design studio, designs and produces Company marketing material, examples of which include catalogs and flyers, web graphics and animations, Moore Medical brand product packaging, trade show booth graphics, and vendor partner-sponsored pieces. The Company contracts printing services through outside printers. Marketing materials are mailed throughout the year, utilizing a schedule based on historic results, customer buying patterns, and specialty customer prospecting.

Market-Specific Sales Representatives and Field and National Account Representatives: The results produced by our direct marketing channel are augmented by the efforts of two coordinated sales channels: market-specific sales representatives (who provide service to assigned customers, generally by phone) and field and national account representatives (geographically located across the country, who thus far have focused primarily on the Occupational Health and Corrections markets). During the 4^th quarter of fiscal 2003, the Company implemented a partnered sales channel approach in the Primary Care Business Unit. This alignment of sales channels will allow the sales representatives to focus on larger contracted business while providing an improved customer experience. The Company expects increased sales and profitability in the Primary Care Business Unit in fiscal 2004 as a result of additional visits to current and prospective customers and due to the introduction of diagnostic testing product lines to this market. Health care specialty field and national account representatives in the Occupational Health and Corrections markets are located in California, Connecticut, Florida, Georgia, Illinois, Indiana, Massachusetts, Texas, Ohio, and Pennsylvania.

Our Web Site: Moore Medical’s third generation web site, www.mooremedical.com, raised our fourth channel of communication to a new level of performance with improved search functionality, enhancements to facilitate ease of use for customers and the creation of customer retention tools. More than 15,000 customers executed transactions on our web site during fiscal 2003, either as their preferred or only method of communication or as a “brick and click” customer, using the Internet in conjunction with our customer support representatives, market-specific representatives,

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or field and national account representatives. A small team of net agents, trained to facilitate live, online chats with customers, assists in the customer Internet purchase experience as requested by the customer. Our customer relations representatives are also conversant in web ordering so that a customer inquiry can be a one-stop ordering experience.

Customer Community Affiliates: Complementing the other channels created to support our customers’ needs customer community affiliates have joined Moore Medical to offer additional value-added services to their memberships and audiences. Moore Medical works with our affiliates to anticipate the needs of their customer communities and engages in an ongoing dialogue regarding their product requirements, business challenges and industry issues. The affiliate program exposes Moore Medical to thousands of association members who might otherwise not connect with or learn about Moore Medical.

Customers

The Company serves approximately 90,000 customers nationwide in health care practices in non-hospital settings. No single customer accounted for more than 1% of net sales in fiscal 2003. Customers are the focal point of Moore Medical’s marketing, sales and supply chain strategies, and the Company strives to provide value-added services to the health care specialties Moore Medical serves. The Company also maintains a number of Internet alliances to help new customers find Moore Medical more easily, encourage existing customers to choose us more frequently, and help Moore Medical understand customer community needs. Internet alliances include strategic partnerships, advertising sponsorships, and Internet affiliates. These alliances are designed to link sales from the affiliate’s web site to www.mooremedical.com, encourage direct sales through our web site and establish pre-conditioned sales through our Customer Support Center.

We continue to benefit from our Corporate Customer Council and Market Advertising Groups, where customers share their views on Moore Medical’s support, service, products, terms, pricing and delivery, and make suggestions on ways to improve their customer experience.

Supply Chain

Our core supply chain objective is to continuously identify new processes that improve customer satisfaction, eliminate non-value added processes and reduce costs.

During fiscal year 2003 Moore Medical enhanced a workflow tool to incorporate a process which streamlined new product setup from a multiple day process to a single day process. In addition, the Company deployed the Fulfillment Solutions^® distribution software from Pitney Bowes Corporation. This system greatly improves supply-chain efficiency by optimizing Moore Medical’s daily shipments across multiple freight carriers.

The Company has continued its use of a fully automated advanced forecasting and replenishment solution which automatically determines the appropriate inventory levels needed in our warehouses to meet our customers’ expectations. Our suppliers are able to adjust their shipping schedules based on our inventory demand projections. The forecasting and replenishment software has reduced manual labor, helped increase inventory turns and improved customer service levels for our Company, as measured by complete, on time orders and line fill rates.

Distribution: Moore Medical distributes products throughout the United States and U.S. territories from three distribution centers located in Connecticut, California, and Florida. The distribution network has been designed with the objectives of delivering a satisfying purchasing experience to the customer, providing broader second-day delivery coverage, and minimizing inventory and transportation costs. We provide consistent, time-sensitive and high-quality order fulfillment services through sophisticated product allocation strategies, maintaining high standards of accuracy and fulfillment.

Customer orders enter the enterprise resource planning (ERP) system via our web site, and through entry by our market-specific sales representatives, customer support center representatives, or field and national account representatives. Order fulfillment is completed the same day when the order is received by 4:00 p.m. local time. Moore Medical is a national account of United Parcel Services (UPS), our primary small package carrier. FedEx Ground provides small package service to our customers in the Midwest. Small package deliveries constitute over 90% of our package volume, with over 99% of orders filled to completion the same business day. With our national coverage, nearly 90% of our customers receive delivery within two business days.

We are continually benchmarking our service and fulfillment performance against our system of “Perfect Order Metrics,” which is the percentage of orders shipped complete, on time, from the customer’s assigned primary shipping

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warehouse (i.e., distribution center closest to customer’s ship-to location) and received by the customer error-free. We have also implemented a process mapping method to identify every one of the individual steps involved in taking and fulfilling an order, with a goal toward streamlining and/or eliminating steps to make the process flow more smoothly.

Product Line/Suppliers: Moore Medical’s product line consists of over 15,000 of the most popular medical/surgical supplies and pharmaceutical products, encompassing a broad and diversified selection. Over 9,200 stock keeping units (SKUs) are carried. We are one of the few distributors of medical/surgical products to health care practitioners in non-hospital settings who also offer pharmaceuticals to those practices. Although many of our products are consumables and disposables, we also sell medical/surgical equipment and a variety of diagnostic instrumentation and accessories. During fiscal 2003, the Company increased its instrumentation and exam office furniture product lines as a result of a focus on selling physicians in-office equipment. The Company also sells the necessary supplies to operate the medical equipment, and it is anticipated that the medical equipment will provide a consistent stream of revenue for the Company.

Moore Medical purchases products primarily from manufacturers and other distributors and does not manufacture or assemble any products, with the exception of medical and first aid kits. The Company maintains insurance coverage against potential losses due to product liability claims and believes such coverage is adequate. In fiscal 2003 our largest product suppliers were 3M, Aventis Pasteur, Bayer Diagonistics, Becton Dickinson, Glaxo SmithKline, Johnson & Johnson, Kendall Healthcare Products Co., Laerdal Medical Corp, Microflex Corporation (Microflex^® is a registered trademark of the Microflex Corporation), Graham Medical Products and Welch Allyn. The Company has several competing sources for many medical/surgical supplies and pharmaceuticals. Sales of products from our largest supplier in fiscal 2003 (Microflex Corporation) accounted for approximately 4.8% of net sales.

We have long-term purchase arrangements (i.e., 2 years or longer) with several of our suppliers (American Diagnostic Corp., ASO, Beckman/Colter Corporation). The Company has preferred supplier status in a number of markets and online health care communities for particular product offerings.

During fiscal 2003, the Company entered into multiple agreements to distribute various medical products nationwide. The Opus and Opus Plus System, an in-office blood analysis device used to detect various life-threatening disorders, is offered exclusively by Moore Medical to the POL (physicians’ office laboratories) market in a 10-state region including Delaware, Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New York, New Jersey and Pennsylvania, and is sold to the rest of the United States on a nonexclusive basis. Moore Medical also obtained the right to distribute Immulite and Immulite 1000, an in-office blood analysis device used to detect various life-threatening disorders to physician offices, nationwide on a nonexclusive basis.

Regulation

The health care delivery industry in the United States continues to be under intensive scrutiny as a result of a wide variety of political, economic and regulatory influences. Because of uncertainty regarding the ultimate features of any future reform initiatives, the Company cannot predict the impact such proposals, should they be adopted, will have on its business.

Moore Medical’s business is subject to regulation under various local, state, and federal laws governing the sale, marketing, packaging and distribution of prescription drugs, including controlled substances, regulated chemicals and medical devices, as well as licensing requirements.

Each of our distribution centers is registered with the Drug Enforcement Agency (DEA) and as a wholesale distributor of prescription drugs and devices in each state that requires registration and/or licensure. In addition, the Company is registered with the Food and Drug Administration (FDA) as a Drug Establishment and as a Device Establishment.

Moore Medical is mandated by the Prescription Drug Marketing Act of 1987 and the Controlled Substance Act to validate our customers for purchases of regulated products. We require documentary evidence of our customers’ regulatory authority to purchase regulated products and we are in material compliance with applicable federal and state statutes which protect against the diversion of those products. We maintain extremely tight standards and ensure that every transaction constitutes a legal sale prior to shipping.

In the Company’s capacity as a distributor of prescription pharmaceuticals, the Company is also subject to Medicare, Medicaid and state health care fraud, abuse and anti-kickback laws and regulations.

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In order to remain current with the regulatory environment, Moore Medical employs a pharmacist who serves as Senior Manager of Regulatory Affairs. This individual heads the department which is responsible for monitoring all pharmaceutical sales for compliance with state and federal regulations as well as with Company policy. He works closely with the U.S. Drug Enforcement Agency to help spot potential abuses, and serves as a source of information for our customers regarding regulations and recalls. He is also a past president of the Connecticut Pharmacists’ Association and remains a member of their executive committee as well as sitting on the board of directors for the Connecticut Pharmacists Foundation.

Information Technology

Moore Medical continued its investment in information technology during fiscal 2003. These investments resulted in both improved business process efficiency and greater customer service capabilities. Moore Medical’s information technology strategy demonstrated business benefit by investing in industry-proven, scalable, and re-usable toolsets. These technologies can be leveraged across multiple business processes and needs, as opposed to various point solutions that present limited capability and diminished return on investment.

Moore Medical’s information systems were largely unaffected by numerous internet-based attacks and personal computer viruses. During fiscal year 2003, Moore Medical implemented tools to maintain data confidentiality, availability and integrity. Through the use of various intrusion detection systems, anti-virus software, and web/e-mail filtering, the company ensured consistent system performance during a year of significant internet-based electronic threats.

In July 2003, the Company implemented the Avaya DEFINITY^® telephony platform for use in its corporate facilities and customer support centers. The system provides improved information and functionality which allows Moore Medical to optimize telephone call handling and staffing requirements. This system enables remote agent capability, allowing customer support representatives to assist Moore Medical’s customers from alternate locations during inclement weather events.

Moore Medical continued in its strategy to benefit from real-time business process integration with its Enterprise Resource Planning system. During fiscal 2003, the Company streamlined and automated its process for creating, entering, and propagating new product information into required information systems. Through the use of .NET^® technology from Microsoft Corporation, the Company was able to significantly reduce the timeframe from product inception to customer sale, while alleviating much of the manual processing effort for Moore Medical employees.

Employees

As of December 27, 2003, the Company had approximately 295 full time employees and 11 part time employees (or 300 full-time equivalents), none of whom had collective bargaining agreements. Overall, the Company considers its employee relations to be good.

Available Information

Moore Medical’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and Proxy Statements for its Annual Meeting of Stockholders are filed electronically with the Securities and Exchange Commission (“SEC”) (http://www.sec.gov). Such documents are made available on the Company’s web site (http://www.mooremedical.com) after they are electronically filed with the SEC.

ITEM 2. Properties

The Company owns no real property and it leases all of its operating facilities. Its distribution centers are located in New Britain, Connecticut (92,000 square feet), Jacksonville, Florida (60,000 square feet), and Visalia, California (55,000 square feet). The Company believes that its properties are generally in good condition.

The Company’s main offices are located in an industrial park in New Britain, Connecticut, where it occupies two buildings (44,000 square feet) adjacent to its main distribution center in a campus-like setting. In these offices, the business functions of order processing, telesales, marketing, purchasing, information services, finance, and administration are performed. Office space is adequate for the Company’s present needs.

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ITEM 3. Legal Proceedings

The Company is subject to various claims that arise in the ordinary course of business. Except as described below, the Company believes such claims, individually or in the aggregate, will not have a material adverse effect on the financial position, results of operations or cash flow of the Company.

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. In January 2004, the plaintiff filed a petition for a writ of certiorari with the United States Supreme Court to appeal the court judgment. On February 23, 2004, the Company was notified that the plaintiff’s petition for a writ of certiori was denied. The Company recorded $245,000 of general and administrative expense in the fiscal year ended December 27, 2003 related to this judgment. The Company does not expect any additional material adverse financial effect related to this judgment.

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

No matter was submitted to a vote of shareholders during the fourth quarter of fiscal 2003. A special meeting of stockholders is scheduled for March 30, 2004 for all shareholders to consider and vote upon a proposal to adopt the Agreement and Plan of Merger, dated as of January 19, 2004, among McKesson and Moore Medical.

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PART II

ITEM 5. Market for Registrant’s Common Equity and Related Stockholder Matters

The Company’s common stock is listed on the American Stock Exchange (trading symbol “MMD”). The following sets forth, for each quarter since the beginning of 2002, the high and low sale prices of the common stock on the American Stock Exchange Composite Tape.

The high and low sale prices of the common stock on March 8, 2004 were $11.96 and $11.95, respectively. The estimated number of holders (including estimated beneficial holders) of the Company’s common stock as of March 8, 2004 was approximately 1,000.

The Company has paid no cash dividends to date and, for the foreseeable future, anticipates that earnings will continue to be retained for use in the business. The Company’s loan agreement contains restrictions on dividend payments.

Information about the Company’s equity compensation plans at December 27, 2003 is as follows:

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ITEM 6. Selected Financial Data

The following selected financial data is derived from the Company’s audited consolidated financial statements. The data should be read in conjunction with the consolidated financial statements and notes thereto and other financial information included elsewhere in this Form 10-K.

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ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations for the Years Ended December 27, 2003, December 28, 2002 and December 29, 2001

FISCAL 2004 DEVELOPMENT

On January 19, 2004, Moore Medical Corp. (the “Company” or “Moore Medical”) entered into an Agreement and Plan of Merger (the “Merger”) with McKesson Corporation (“McKesson”). Pursuant to the terms of the Merger, McKesson will acquire each outstanding share of Moore Medical common stock for $12.00 in cash, or approximately $40 million in the aggregate. Moore Medical shareholder approval is required to consummate the Merger and a meeting to obtain shareholder approval has been scheduled for March 30, 2004. The acquisition is expected to be completed in the Company’s second fiscal quarter of 2004. Upon consummation of the Merger, Moore Medical will become a wholly-owned subsidiary of McKesson. The Company incurred legal and consulting fees of approximately $0.5 million during fiscal 2003 related to the proposed Merger between the Company and McKesson.

OVERVIEW

Moore Medical is an Internet-enabled, integrated multi-channel marketer and distributor of medical, surgical and pharmaceutical products to 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. The Company markets and serves its customers through direct mail, industry-specialized telephone support staff, field sales representatives, customer community affiliates and the Internet. Its 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 with nearly 100% of its revenues from customers in the United States.

The Company incurred legal and consulting fees of approximately $0.5 or $0.12 per share during fiscal 2003 related to the Merger during fiscal 2003. It is expected that the Company will incur approximately $1.5 million in additional legal and consulting expenses in fiscal 2004 related to the Merger.

On November 6, 2003, the Company amended its $15 million revolving line of credit agreement with its lender 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. As of December 27, 2003, the Company was in violation of the earnings before interest, taxes, depreciation and amortization (“EBITDA”) financial covenant contained in its revolving line of credit agreement for the two quarters ending December 27, 2003. On March 23, 2004, the Company’s lender waived the EBITDA financial covenant violation for the two quarters ending December 27, 2003. Additionally, the Merger with McKesson allows the lender to exercise certain rights with respect to the loan agreement. In February 2004, the Company repaid the amounts outstanding on the loan agreement. The Company has been notified by McKesson that McKesson does not intend to use the loan agreement subsequent to the completion of the Merger.

On February 13, 2002, as a result of favorable interest rates on the Company’s revolving line of credit, the Company utilized approximately $4.6 million of its revolving line of credit to pay off the government settlement note. The government settlement note related to a settlement with the U.S. Government over a pricing error by our former wholesale division under Federal supply contracts entered into in 1991. The government settlement note was to be repaid over a five year period at higher interest rates. The interest rate on borrowings in fiscal 2002 on the revolving line of credit averaged 5.25% while the government settlement note had interest rates ranging from 5.30% to 7.30% over five years.

In July 2002, the Company completed its purchase of the remaining 49% interest it did not previously own in Podiatry Online, an on line information site and electronic newsletter. 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.

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CHANGES IN RESULTS OF OPERATIONS

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

Net Sales

Net sales for fiscal 2003 were $141.7 million, an increase of $3.9 million or 2.8% from net sales of $137.8 million for the comparable period of fiscal 2002. The increase was primarily attributable to increased volumes in certain specialty markets, new product introductions and increased prices. In the aggregate, sales growth fell short of the Company’s expectations for the year; however, the Company expects to realize sales growth in fiscal 2004 in several of its specialty markets that were the focus of investments in the fourth quarter of fiscal 2002 and in fiscal 2003. The Company’s sales growth occurred primarily in its public sector and podiatry markets, offset by decreases in the occupational health and reseller markets. The overall net sales growth was supported by the Company’s growth in Internet-based revenue. Internet-based revenue increased $3.4 million, or 23.8%, to $17.7 million in fiscal 2003 compared to $14.3 million for the same period a year ago. Internet revenue as a percentage of net sales increased to 12.5% in fiscal 2003 from 10.4% in fiscal 2002.

Net sales for fiscal 2002 were $137.8 million, an increase of $5.0 million or 3.8% from net sales of $132.8 million for the comparable period of fiscal 2001. The increase was equally attributable to increases in prices and in sales volume. The development and implementation of more effective targeted marketing campaigns contributed to the volume increase. The Company’s sales growth occurred primarily in its public sector and podiatry markets. The overall net sales growth was supported by the Company’s Internet-based revenue as more customers took advantage of the Company’s enhanced web-based channel. Internet-based revenue increased $3.5 million, or 32.4%, to $14.3 million in fiscal 2002 compared to $10.8 million for the same period a year ago.

Gross Margin

Gross margin remained relatively level at 27.4% in fiscal 2003, compared to 27.2% in fiscal 2002. The level gross margin percentage in fiscal 2003 as compared to fiscal 2002 was due in part to less sales volume in relatively lower margin vaccines and continued realization of benefits from our supply chain initiatives, partially offset by competitive pricing pressures in certain markets and aggressive pricing associated with gaining entry into competitively held new accounts.

Gross profit increased $1.3 million, or 3.5%, to $38.7 million for fiscal 2003 compared to $37.4 million for the same period a year ago. The increase is primarily attributable to increased sales volume in higher margin products and continued realization of benefits from our supply chain initiatives, offset by increased sales in lower margin vaccines.

The gross profit margin percentage increased to 27.2% in fiscal 2002 from 26.6% in fiscal 2001. The increase was primarily attributable to increased sales volume in higher margin products and continued realization of benefits from our supply chain initiatives, offset by increased sales in lower margin vaccines.

Sales and Marketing Expenses

Sales and marketing expenses increased by $1.0 million, or 9.3%, to $11.8 million in fiscal 2003 from $10.8 million in fiscal 2002. Sales and marketing expenses as a percentage of net sales increased to 8.3% in fiscal 2003 from 7.9% in fiscal 2002. The fiscal 2003 increase was attributable to increased sales and marketing salaries and benefits expenses

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to support the Company’s multi-channel marketing and distribution strategy, and a result of the expansion of the field sales force in the fourth quarter of fiscal 2002, which continued into fiscal 2003. This increase was offset by continued efforts to establish and implement more effective targeted marketing campaigns, which resulted in a decrease in advertising expense in fiscal 2003 compared to fiscal 2002 of approximately $0.7 million, and growth in vendor advertising programs. The Company reduced advertising expense by approximately $0.3 million more in 2003 than in the prior year due to an increase in vendor advertising programs.

Sales and marketing expenses decreased by $1.1 million, or 9.2%, to $10.8 million in fiscal 2002 from $11.9 million in fiscal 2001. Sales and marketing expenses as a percentage of net sales decreased to 7.9% in fiscal 2002 from 9.0% in fiscal 2001. The decreases were due to continued efforts to establish and implement more effective targeted marketing campaigns and growth in vendor advertising programs. The Company recorded approximately $0.4 million more in revenue from vendor advertising programs in fiscal 2002 than in fiscal 2001. During the second half of fiscal 2002, the Company made a strategic decision to increase its field sales force by adding experienced capital equipment representatives for the Primary Care Market. As a result of the additional field sales force hired to support the new strategy of selling physician in-office testing equipment, the Company made significant investments in the fourth quarter of 2002 in field sales representatives’ training.

General and Administrative Expenses

General and administrative expenses increased by $3.6 million, or 14.4%, to $28.6 million in fiscal 2003 from $25.0 million in fiscal 2002. As a percentage of net sales, general and administrative expenses increased to 20.2% in fiscal 2003 compared to 18.1% in the same period a year ago. The increase from fiscal 2002 was primarily related to increases in professional service and legal fees, bad debt expense and employee benefit expenses.

The Company incurred legal and consulting fees of approximately $0.5 million during fiscal 2003 related to the proposed Merger between the Company and McKesson. 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 recorded $0.2 million of general and administrative expense in fiscal 2003 related to this judgment. During fiscal 2003, the Company experienced difficulties in its collection of accounts receivable recorded in prior years, particularly in smaller dollar volume customer accounts, which contributed to the increase in bad debt expense of $1.0 million. As a result of continued increases in medical insurance costs and the actuarially calculated net periodic pension expense, health and welfare expense and pension expense both increased by $0.3 million in fiscal 2003 compared to fiscal 2002.

General and administrative expenses decreased by $0.6 million, or 2.3%, to $25.0 million in fiscal 2002 from $25.6 million in fiscal 2001. As a percentage of net sales, general and administrative expenses decreased to 18.1% in fiscal 2002 compared to 19.3% in fiscal 2001. The decreases were due to the continued realization of benefits from cost containment initiatives

Interest Expense

Interest expense for fiscal 2003 decreased to $158 thousand from $241 thousand for the same period a year ago, a decrease of 34.4%. The fair value of the interest rate cap at December 27, 2003 and December 28, 2002 was $0. Interest expense decreased primarily due to a reduction in the principal amount of borrowings under the Company’s revolving line of credit.

Interest expense for fiscal 2002 increased to $241 thousand from $209 thousand for the same period a year ago, an increase of 15.3%. The Company recorded $56 thousand of interest expense attributable to recording the fair value of the premium payment on the Company’s interest rate cap agreement. Notwithstanding the $56 thousand expense recorded on the Company’s interest rate cap agreement, interest expense decreased primarily due to lower interest rates in fiscal 2002 on the Company’s borrowing under its revolving line of credit compared to higher interest rates in fiscal 2001 on the government settlement note.

Income Taxes

The effective income tax benefit rate was 20.1% for fiscal 2003 compared to the prior fiscal year’s effective income tax rate of 28.6%. The difference between the Company’s effective tax rate benefit and the federal statutory rate is due primarily to an increase in the valuation allowance for state income taxes and tax credits and the non-deductibility of certain merger related expenses.

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The effective income tax rate was 28.6% for fiscal 2002 compared to the prior fiscal year’s effective income tax benefit rate of 32.9%. The difference between the Company’s effective tax rate and the federal statutory rate is due primarily to state income taxes, a reduction in valuation allowances on state net operating loss carryforwards and adjustments to estimates on previously recorded income taxes.

Net Income (Loss)

Net loss was $1.5 million, or $0.46 per diluted share in fiscal 2003 compared with net income of $1.0 million, or $0.31 per diluted share for fiscal 2002.

Net income was $1.0 million, or $0.31 per diluted share for fiscal 2002, an improvement of $2.6 million or $0.83 per diluted share over fiscal 2001 in which the Company experienced a net loss of $1.6 million or $0.52 per diluted share.

LIQUIDITY AND CAPITAL RESOURCES

On January 26, 2001, the Company entered into a three-year bank financing agreement which provides up to $15 million in a collateralized revolving credit facility (“loan agreement”). On November 6, 2003, the Company amended its $15 million loan agreement with its lender and extended the maturity date to June 30, 2006. During the first fiscal quarter of 2002, the Company utilized its collateralized revolving credit facility to pay off the government settlement note in full to take advantage of the low interest rate environment. As of December 27, 2003, the Company was in violation of the earnings before interest, taxes, depreciation and amortization (“EBITDA”) financial covenant contained in its revolving line of credit agreement for the two quarters ending December 27, 2003. On March 23, 2004, the Company’s lender waived the EBITDA financial covenant violation for the two quarters ending December 27, 2003. Additionally, the Merger with McKesson allows the lender to exercise certain rights with respect to the loan agreement. In February 2004, the Company repaid the amounts outstanding on the loan agreement. The Company has been notified by McKesson that McKesson does not intend to use the loan agreement subsequent to the completion of the Merger.

The Company’s cash and cash equivalents at December 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 offset against outstanding borrowings on the loan agreement. As of December 27, 2003, the Company had $2.6 million outstanding on its loan agreement, a reduction of $1.7 million from outstanding borrowings of $4.3 million at December 28, 2002. This reduction is due to utilizing cash being generated from operations to pay down the outstanding borrowings on the loan agreement.

Net cash provided by operating activities was $4.8 million for fiscal 2003 and resulted primarily from net loss of $1.5 million and on non-cash charges of $4.7 million and a decrease in operating items of working capital of $1.6 million. Non-cash charges consisted primarily of depreciation expense of $2.7 million and bad debt expense of $2.2 million. The decrease in working capital needs was primarily due to a $0.6 million decrease in accounts receivable and a $0.4 decrease in other assets, but was offset by a $0.8 increase in accounts payable and a $0.4 million increase in inventory. The decrease in accounts receivable was primarily due to greater efforts in collecting accounts receivable in a more timely manner, but was offset by increases in net sales. The increase in accounts payable and accrued liabilities was primarily due to accrued legal and consulting fees at December 27, 2003 of $0.5 million related to the Merger with McKesson.

Net cash used in investing activities was $1.9 million in fiscal 2003 and consisted principally of the replacement of the communications infrastructure within the Company, the development of an enhanced work-flow tool and the purchase of computer equipment. The Company expects to invest approximately $0.5 million during fiscal 2004 in capital projects on computer infrastructure systems and operating efficiency initiatives.

Net cash used in financing activities of $2.9 million for fiscal 2003 is net of reduced borrowings on the Company’s loan agreement by $1.7 million and a cash overdraft reduction of $1.3 million, offset by proceeds of $0.1 million from options exercised.

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.

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

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 consolidated financial statements:

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.

Allowance for Doubtful Accounts – The Company is required to use substantial judgment in estimating the collectibility of its accounts receivable. This estimate is based on various factors, including the length of time receivables are past due, economic conditions and historical experience.

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. Estimates are used in the determination of the reserves for excess and obsolete inventories.

Goodwill - As a result of adopting Statement of Financial Accounting Standard (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” goodwill is no longer amortized, and the future economic benefit of the carrying value of goodwill is reviewed annually and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable based on a fair value measurement. An impairment loss would be recorded in the period so determined.

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. Inherent in the measurement of these deferred balances are certain judgments and interpretations of existing tax law and other published guidance as applied to the Company’s operations. The Company’s effective tax rate considers management’s judgment of expected tax liabilities in the various taxing jurisdictions within which it is subject to tax.

Pension - The determination of the Company’s obligation and expense for pension is dependent on the Company’s selection of certain assumptions used by actuaries in calculating such amounts. Those assumptions are described in Note 7 to the consolidated financial statements and include, among others, the discount rate, expected long-term rate of return on plan assets, and rates of increase in compensation. In accordance with accounting principles generally accepted in the United States, actual results that differ from the Company’s assumptions are accumulated and amortized over future periods and therefore, generally affect the Company’s recognized expense and recorded obligation in such future periods. While the Company believes that the assumptions are appropriate, significant differences in actual experience or significant changes in assumptions may materially affect pension obligations and the Company’s future expense. Additionally, the Company has approved the freezing of benefits under the pension plan upon consummation of the McKesson Merger. The Company has not yet determined the impact of this action on future funding, expense or other items.

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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. On November 5, 2003 the FASB issued FSP 150-3 which deferred the effective date of SFAS No. 150 indefinitely for certain monetarily redeemable non controlling interests. In addition, on November 7, 2003, the FASB issued FSP No. 150-4, which states that employee stock ownership plan shares (“ESOP”) which are mandatorily redeemable or free-standing agreements to repurchase ESOP shares are not within the scope of Statement 150.

In November 2002, the FASB issued FASB Interpretation (“FIN”) No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN No. 45 clarifies and expands existing disclosure requirements for guarantees, including loan guarantees. The provisions of FIN No. 45 are effective for financial statements issued after December 15, 2002.

In January 2003, the FASB issued FIN No. 146, “Consolidation of Variable Interest Entities – an Interpretation of Accounting Research Bulletin No. 51” (Revised in December 2003). FIN No. 46(R) clarifies rules for consolidated of special purpose entities.

In December 2003, the FASB issued SFAS No. 132 (Revised 2003), “Employers Disclosures about Pensions and Other Postretirement Benefits, an amendment of FASB Statements No. 87, 88 and 106.” This statement revises employers’ disclosures about pension plans and other postretirement benefit plans.

The adoption of these statements did not have a material impact on the Company’s consolidated financial position, consolidated results of operations or consolidated cash flows.

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

As described in the notes to the financial statements included in this Form 10-K, 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 December 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 2004, since the Company repaid the amount outstanding on the revolving line of credit in February 2004.

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Item 8. Financial Statements and Supplementary Data

Index to Consolidated Financial Statements and Financial Statement Schedule

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INDEPENDENT AUDITORS’ REPORT

To the Board of Directors of

Moore Medical Corp.

New Britain, Connecticut

We have audited the accompanying consolidated balance sheet of Moore Medical Corp. and subsidiary (the “Company”) as of December 27, 2003, and the consolidated statements of operations, changes in shareholders’ equity and other comprehensive loss and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such 2003 consolidated financial statements present fairly, in all material respects, the financial position of Moore Medical Corp. and subsidiary as of December 27, 2003, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

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REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders of Moore Medical Corp.

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the consolidated financial position of Moore Medical Corp. and its subsidiary at December 28, 2002, and the consolidated results of their operations and their cash flows for each of the two years in the period ended December 28, 2002, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule at December 28, 2002 and for each of the two years in the period ended December 28, 2002 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan ands perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.

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MOORE MEDICAL CORP. & SUBSIDIARY

Consolidated Balance Sheets

See notes to consolidated financial statements.

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MOORE MEDICAL CORP. & SUBSIDIARY

Consolidated Statements of Operations

See notes to consolidated financial statements.

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MOORE MEDICAL CORP. & SUBSIDIARY

Consolidated Statements of Shareholders’ Equity and Other Comprehensive Loss

Years Ended December 27, 2003, December 28, 2002 and December 29, 2001

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MOORE MEDICAL CORP. & SUBSIDIARY

Consolidated Statements of Cash Flows for the Years