Moore-Handley, Inc.

                                                                                                                                                                               

 

April 18, 2005
 

To Our Shareholders:

Last year, as in the preceding two years, we described our business plan, which continues to consist of three
elements:

  1. Improving our logistics function (the heart of our business) by continuing to add automation and
    electronic equipment while providing job training and incentives, all aimed at increasing productivity,
    while reducing costs and errors.
     

  2. Global sourcing to provide our customers with high-quality product lines they can sell at retails
    comparable to the "big boxes" while maintaining better than normal margins.
     

  3. Taking our business national.

    These remain the central elements of our business plan. In 2004 we took several steps to further
    implement each of the elements of this plan:
     

  4. We entered into a new four-year contract with our warehouse and delivery associates which will provide
    them substantial wage and benefit increases and continued interruption-free service to our customers.
    Substantial continuing investment in equipment, along with intensive job training and clear incentives,
    have enabled us to continue to control our unit logistics costs while making Moore-Handley a better
    place to work thereby reducing turnover.
     

  5. We strengthened our globally-sourced "Hardware House" brands by adding a seasoned import executive
    who is responsible for global sourcing. He brought with him an experienced team on the ground in the
    Far East. This team is responsible for maintaining daily contact and monitoring quality control with our
    manufacturing sources.
     

  6. We hired a seasoned sales executive to establish rep organizations nationwide for Hardware House
    products, to accelerate national penetration with these brands. We expect 2005 to show first results
    from this effort.

While carrying out these steps to increase the growth and profit potential of Moore Handley, we have
continued to emphasize our primary mission--providing a wide range of national brands to our core
customers in the Southeast, accompanied by headache-free purchasing and delivery, along with broad
marketing assistance.

/s/ WILLIAM RILEY
/s/ MICHAEL J. GAINES

WILLIAM RILEY
Chairman and Chief Executive Officer

MICHAEL J. GAINES
President and Chief Operating Officer