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PROSPECTUS SUPPLEMENT Filed pursuant to Rule 424(b)(3)
(To Prospectus Dated October 21, 1994) File No. 033-44511
WAXMAN INDUSTRIES, INC.
$12,000,000 Principal Amount of 12.25% Fixed Rate
Senior Secured Notes due September 1, 1998
$7,500,000 Principal Amount of Floating Rate
Senior Secured Notes due September 1, 1998
950,000 Common Stock Purchase Warrants
950,000 Shares of Common Stock
Introduction
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This Prospectus Supplement is a supplement to the Prospectus dated October 21,
1994, as supplemented by a Prospectus Supplement dated September 5, 1995 (the
"Prospectus"), relating to the public offering of (i) $12,000,000 principal
amount of 12.25% Fixed Rate Senior Secured Notes due September 1, 1998 (the
"Fixed Rate Notes") of Waxman Industries, Inc. (the "Company"), (ii) $7,500,000
principal amount of Floating Rate Senior Secured Notes due September 1, 1998
(the "Floating Rate Notes") of the Company, (iii) 950,000 Common Stock Purchase
Warrants (the "Warrants") and (iv) 950,000 shares of the Company's Common
Stock, $.01 par value, issuable upon exercise of the Warrants. The Fixed Rate
Notes and Floating Rate Notes are collectively referred to herein as the
"Notes." This Prospectus Supplement is part of, and should be read in
conjunction with, the Prospectus.
Results of Operations for Fiscal Year 1995
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As previously reported, on August 29, 1995, the Company announced that it has
decided to sell the business conducted by its Waxman Consumer Products Group
Inc. subsidiary ("Consumer Products") in order to enhance the Company's capital
structure and allow the Company to focus on its fast growing Barnett Inc.
("Barnett") mail order and telemarketing business. Accordingly, Consumer
Products is reported as a discontinued operation and the consolidated financial
statements of the Company have been reclassified to report separately Consumer
Product's net assets and results of operations. On September 28, 1995, the
Company issued a press release announcing its results of operations for the
fiscal year and quarter ended June 30, 1995, a copy of which is attached hereto
and incorporated by reference herein. As reflected in the attached press
release, the Company recorded a $11.0 million charge, without tax benefit,
which represents the estimated loss to be incurred upon completion of the sale
of the Consumer Products business.
____________________________________________________________________
The date of this Prospectus Supplement is September 28, 1995
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WAXMAN EXHIBIT 99
WAXMAN INDUSTRIES, INC. N E W S R E L E A S E NYSE: WAX
FOR ADDITIONAL INFORMATION, CONTACT:
At The Company: At The Financial Relations Board, Inc.:
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Armond Waxman, President Kathleen M. Brunson
216-439-1830 312-266-7800 (Chicago)
Neal R. Restivo, V.P. Finance Regina K. Ryan
216-439-1830 212-661-8030 (New York)
FOR IMMEDIATE RELEASE
WAXMAN INDUSTRIES, INC. REPORTS
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RESULTS FOR FISCAL 1995;
------------------------
OUTLOOK FOR FIRST QUARTER OF FISCAL 1996
----------------------------------------
BEDFORD HEIGHTS, Ohio -- September 28, 1995 -- Waxman Industries,
Inc. (NYSE-WAX), a leading supplier to the U.S. repair and remodeling market,
today reported results for the Company's fourth quarter and fiscal year ended
June 30, 1995 as well as the outlook for the first quarter of fiscal year 1996.
As previously announced, the Company has entered into a letter of intent to
sell, for $50 million in cash, 75% of its Consumer Products business, together
with certain supporting operations, to a group consisting of HIG Capital
Management of Miami, Florida along with certain members of Consumer Products'
existing management team. The Company anticipates that the proceeds from any
such sale will be used, in part, to retire its $39.2 million of Senior Secured
Notes due September 1998 thereby eliminating the mandatory sinking fund
requirements relating to these notes which are scheduled to commence in
September 1996. As a result of its decision to sell the Consumer Products
business, the Company is required, for financial reporting purposes, to treat
Consumer Products as a discontinued operation. Consumer Products continues to
operate on a normal basis without any disruptions to its customer and vendor
relationships.
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Waxman Industries, Inc. 24460 Aurora Road Bedford Heights, Ohio 44146
<PAGE> 2
For the fiscal year ended June 30, 1995, sales from continuing
operations totaled $156.0 million compared with $139.9 million in the prior
year period, an increase of 11.5%. Excluding the results of H. Belanger
Plumbing Accessories (Belanger), which was sold by the Company in October 1993,
sales from continuing operations for the year increased by 12.7%.
Operating income from continuing operations for fiscal 1995 totaled
$11.1 million compared with $10.4 million in the prior year, an increase of
6.3%.
Interest expense from continuing operations totaled $20.1 million in
fiscal year 1995 compared with $16.4 million in the prior year, an increase of
22.3%. Cash interest expense from continuing operations was, however,
significantly lower than total interest expense for fiscal 1995 primarily as a
result of the issuance of the Company's Deferred Coupon Notes in May 1994.
Cash interest expense for fiscal 1995 totaled $11.7 million. The Company's
operating cash flow from continuing operations for fiscal 1995 totaled $15.1
million and was more than sufficient to cover cash interest requirements. In
addition, the Company had availability of $6.1 million under its revolving
credit facility at June 30, 1995.
Loss from continuing operations totaled $8.7 million for fiscal 1995
compared with $4.3 million in the prior year primarily as a result of the
increase in non-cash interest expense.
Sales from continuing operations for the fourth quarter totaled $39.1
million compared with $36.1 million in the prior year, an increase of 8.2%.
Barnett's sales increased 10.6% for the fourth quarter compared to the prior
year period.
As a result of weak market conditions in April and May, operating
income from continuing operations for the fourth quarter
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totaled $1.2 million compared with $2.1 million in the prior year period.
Also contributing to the lower fourth quarter operating income were decreased
production levels at the Company's Mexican manufacturing operation. The
reduced production levels were caused by the Company's inventory reduction
efforts and are not expected to be recurring.
Interest expense from continuing operations totaled $5.7 million for
the fourth quarter compared to $4.4 million in the prior year period, an
increase of 32%.
Loss from continuing operations totaled $4.8 million for the fourth
quarter compared with a loss of $2.3 million in the prior year period, as a
result of the increase in interest expense as well as the factors discussed
above.
Discontinued Operations
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During the current year fourth quarter, the Company recorded an $11.0
million charge which represents the estimated loss to be incurred upon
completion of the sale of the Consumer Products business. The operating loss
from discontinued operations for the fourth quarter totaled $3.9 million
compared with operating income of $.2 million in the prior year period. The
current quarter operating loss includes interest expense of $1.9 million and a
$2.8 million charge relating to the downsizing of Consumer Products'
distribution network from four locations to three.
For the fiscal year ended June 30, 1995, the operating loss from
discontinued operations totaled $3.3 million and included interest expense of
$6.3 million as well as the restructuring charge discussed above. The prior
year operating loss from discontinued operations totaled $2.5 million.
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Summary of Results
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For the quarter ended June 30, 1995, the Company incurred a net loss
of $19.7 million or $1.68 per share which included $14.9 million or $1.27 per
share relating to discontinued operations. In the prior year fourth quarter,
the Company incurred a net loss of $2.3 million or $.20 per share which
included operating income of $.02 per share relating to discontinued
operations. For fiscal year 1995, the Company incurred a net loss of $23.1
million or $1.97 per share which included $14.3 million or $1.22 per share
relating to discontinued operations. The prior fiscal year's net loss totaled
$51.9 million or $4.44 per share which included $40.8 million or $3.49 per
share relating to discontinued operations as well as an extraordinary charge of
$6.8 million or $.58 per share relating to the early retirement of debt.
Although the Company incurred a significant loss in fiscal year 1995,
the majority of such loss related to discontinued operations and was non-cash.
The Company generated positive operating cash flow during fiscal 1995 and
these funds, along with availability under its revolving credit agreement,
provide the liquidity the Company needs to meet its vendor obligations, as well
as operating and cash interest requirements.
Outlook for First Quarter of Fiscal 1996
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The Company expects sales from continuing operations to increase
approximately 9 to 10% for the quarter ended September 30, 1995. Barnett's
sales for the quarter are expected to increase approximately 15%.
Commenting on the Company's announcement, Armond Waxman, Co-Chairman
of the Board and Co-Chief Executive Officer, said, "We are optimistic about the
Company's future as, going forward, Barnett will
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represent approximately 70% of sales from our continuing operations. We
believe that once the sale of Consumer Products has been completed, the Company
will be better positioned to take advantage of Barnett's growth opportunities
as we will have eliminated all significant debt maturities for the next several
years. Also, in connection with the sale we expect to enter into a new secured
credit facility which will improve liquidity through greater working capital
availability.
The sale of Consumer Products is proceeding well and we are
optimistic that we will be able to consummate the transaction with HIG Capital
Management."
Waxman Industries, Inc. is a leading supplier to the repair and
remodeling market in the United States. Through it's Barnett mail order and
telemarketing business as well as its other smaller operations, the Company
markets and distributes a broad range of plumbing, electrical and hardware
products to over 49,000 customers in the United States. Through their
nationwide network of warehouses and distribution centers, the Company's
operations provide their customers with a single source for an extensive line
of competitively priced quality products.
# # #
Financial Tables Follow
To receive additional information on the Company via facsimile at no
cost, please dial 1-800-PRO-INFO and enter the company code number 166.
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WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
(For the Year and Three Months Ended June 30, 1995 and 1994)
<TABLE>
<CAPTION>
Year Ended Three Months Ended
June 30, June 30,
1995 1994 1995 1994
------- ------- ------- -----
<S> <C> <C> <C> <C>
Net sales $155,990 $139,897 $ 39,101 $ 36,141
Cost of sales 105,239 93,663 26,695 24,433
------- ------- ------- -------
Gross profit 50,751 46,234 12,406 11,708
Operating expenses 39,676 35,812 11,182 9,640
------- ------- ------- -------
Operating income 11,075 10,422 1,224 2,068
Other income (loss) 558 2,043 (149) 340
Interest expense, net (20,086) (16,427) (5,382) (4,387)
------- ------- ------- -------
Loss from continuing operations before
income taxes (8,453) (3,962) (4,307) (1,979)
Provision for income taxes 288 301 495 340
------- ------- ------- -------
Loss from continuing operations (8,741) (4,263) (4,802) (2,319)
Discontinued Operations:
Loss from discontinued
operations (3,332) (2,458) (3,867) 187
Loss on disposal, without tax benefit (11,000) (38,343) (11,000) -
------- ------- ------- -------
Loss before extraordinary charge (23,073) (45,064) (19,669) (2,132)
Extraordinary charges, early retirement
of debt, without tax benefit - (6,824) - (199)
------- ------- ------- -------
Net loss $(23,073) $(51,888) $(19,669) $ (2,331)
======= ======= ======= =======
Primary and fully diluted earnings
(loss) per share:
From continuing operations $ (.75) $ (.37) $ (.41) $ (.20)
Discontinued operations:
Loss from discontinued operations (.28) (.21) (.33) .02
Loss on disposal ( .94) (3.28) (.94) -
Extraordinary charges - (.58) - (.02)
------- ------- ------- -------
Net loss $ (1.97) $ (4.44) $ (1.68) $ (.20)
======= ======= ======= =======
Average shares outstanding 11,712 11,666 11,712 11,674
======= ======= ======= =======
</TABLE>
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WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
June 30, 1995 and 1994
(In Thousands)
ASSETS
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<TABLE>
<CAPTION>
June 30, June 30,
1995 1994
----- ------
<S> <C> <C>
Current assets:
Cash $ 1,496 $ 981
Accounts receivable, net 22,346 19,366
Inventories 38,436 39,448
Prepaid expenses 1,956 1,648
Net current assets of discontinued
operations 53,865 51,530
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Total current assets 118,099 112,973
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Property and equipment, net 12,882 12,525
Net long-term assets of discontinued
operations - 13,373
Cost of business in excess of
net assets acquired, net and
other assets 29,679 31,374
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$160,660 $170,245
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</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<S> <C>
Current liabilities:
Current portion of long-tern debt $ 4,424 $ 2,894
Senior Secured Notes, to be retired
with proceeds from the sale of Consumer
Products 38,786 -
Accounts payable 16,258 13,177
Accrued liabilities 3,875 3,203
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Total current liabilities 63,343 19,274
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Long-term debt, net of current portion 54,089 53,224
Senior Secured Notes - 38,675
Senior Secured Deferred Coupon Notes 54,875 48,031
Subordinated Debt 48,750 48,750
Stockholders' Equity (60,397) (37,709)
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$160,660 $170,245
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</TABLE>
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