<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
X Annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934 (Fee Required)
For the fiscal year ended: June 30, 1997
OR
- - Transition report pursuant to Section 15(d) of the Securities Exchange
Act of 1934 (No Fee Required)
For the transition period from:
Commission file number 0-5888
A. Full title of the Plan and the address of the Plan, if different from
that of the issuer named below:
Waxman Industries, Inc.
Profit Sharing and 401(K) Retirement Plan
B. Name of issuer of the Securities held pursuant to the Plan and the
address of its principal executive office:
Waxman Industries, Inc.
24460 Aurora Road
Bedford Heights, Ohio 44146
<PAGE> 2
WAXMAN INDUSTRIES, INC.
PROFIT SHARING AND 401(K) RETIREMENT PLAN
FINANCIAL STATEMENTS
AS OF JUNE 30, 1997, 1996 AND 1995
TOGETHER WITH REPORT OF
INDEPENDENT PUBLIC ACCOUNTANTS
<PAGE> 3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Waxman Industries, Inc.:
We have audited the accompanying statements of participants' equity of the
Waxman Industries, Inc. Profit Sharing and 401(K) Retirement Plan (the Plan) as
of June 30, 1997 and 1996, and the related statements of changes in
participants' equity for each of the three years in the period ended June 30,
1997, as listed in the accompanying index. These financial statements and the
schedules referred to below are the responsibility of the Plan's administrator.
Our responsibility is to express an opinion on these financial statements and
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 the
Plan's administrator, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the participants' equity of the Plan as of June 30, 1997
and 1996, and the changes in participants' equity for each of the three years in
the period ended June 30, 1997, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes as of June 30, 1997 (Schedule I) and reportable
transactions for the year ended June 30, 1997 (Schedule II), are presented for
purposes of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974. The fund information in the
statements of changes in participants' equity is presented for purposes of
additional analysis rather than to present the changes in participants' equity
of each fund. The supplemental schedules and fund information have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated, in all material
respects, in relation to the basic financial statements taken as a whole.
<PAGE> 4
As explained in Note 5, information certified by the custodian and presented in
Item 27-a -- Schedule of Assets Held for Investment Purposes (Schedule I) and
Item 27-d -- Schedule of Reportable Transactions (Schedule II) does not disclose
the historical cost of certain investments. Disclosure of this information is
required by the Department of Labor Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974.
/s/ ARTHUR ANDERSEN LLP
Cleveland, Ohio,
December 13, 1997.
<PAGE> 5
WAXMAN INDUSTRIES, INC.
PROFIT SHARING AND 401(K) RETIREMENT PLAN
INDEX
JUNE 30, 1997, 1996 AND 1995
Statements of Participants' Equity as of June 30, 1997 and 1996
Statements of Changes in Participants' Equity for the Years Ended
June 30, 1997, 1996 and 1995
Notes to Financial Statements
Consent of Arthur Andersen LLP - Item 23
Schedule I - Item 27a - Schedule of Assets Held for Investment Purposes as of
June 30, 1997
Schedule II - Item 27d - Schedule of Reportable Transactions for the Year Ended
June 30, 1997
<PAGE> 6
WAXMAN INDUSTRIES, INC.
PROFIT SHARING AND 401(K) RETIREMENT PLAN
STATEMENTS OF PARTICIPANTS' EQUITY
JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
June 30, 1997 June 30, 1996
------------- -------------
<S> <C> <C>
PARTICIPANT - DIRECTED INVESTMENTS,
at market values:
Waxman Industries, Inc. Common Stock $1,113,418 $1,412,700
CIGNA Funds:
Fidelity Contrafund 203,050 111,018
Fidelity Advisor Balanced Fund* 191,193 100,060
Guaranteed Long Term Fund 987,154 526,730
INVESCO Industrial Fund 56,407 23,177
Lifetime 20 Fund 78,185 46,824
Lifetime 30 Fund 206,009 130,001
Lifetime 40 Fund 273,016 173,182
Lifetime 50 Fund 214,546 140,283
Lifetime 60 Fund 12,516 7,744
20th Century Ultra Fund 187,356 85,603
Warburg Pincus Growth & Income Fund 169,070 111,730
Warburg Pincus International Equity Fund 180,781 120,263
Cash Account 707 42,955
Participant Loans 11,802 5,369
---------- ----------
Participants' Equity $3,885,210 $3,037,639
========== ==========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
*previously, Fidelity Income & Growth Fund
<PAGE> 7
WAXMAN INDUSTRIES, INC.
PROFIT SHARING AND 401(K) RETIREMENT PLAN
STATEMENT OF CHANGES IN PARTICIPANTS' EQUITY
FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
Participant - Directed Investments
-------------------------------------------------------------------------------------------
Fidelity
Advisor INVESCO
Fidelity Balanced Guaranteed Industrial Lifetime Lifetime Lifetime
Contrafund Fund* Long Term Fund Fund 20 Fund 30 Fund 40 Fund
----------- ----------- ------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
INCREASES:
Contributions-
Waxman Industries, Inc. $ 14,208 $ 13,199 $ 55,100 $ 4,791 $ 7,522 $ 17,357 $ 18,264
Participants 48,304 49,063 160,774 14,589 21,122 48,962 49,497
Investment Income (Note 2) 34,157 32,054 32,936 9,062 9,295 24,443 32,342
Loan Repayment-
Principal 154 347 943 120 169
Interest 6 32 267 4 7
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total increases 96,829 94,695 250,020 28,566 37,939 90,938 100,103
DECREASES:
Distributions 9,714 5,245 74,490 3,627 4,699 6,144 2,381
Transaction costs 80 40 2,834 400 280 189
Loans to participants 7,191
Other
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total decreases 9,794 5,285 84,515 3,627 5,099 6,424 2,570
TRANSFERS BETWEEN FUNDS 4,997 1,723 294,919 8,291 (1,479) (8,506) 2,301
----------- ----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) 92,032 91,133 460,424 33,230 31,361 76,008 99,834
PARTICIPANTS' EQUITY, beginning
of year 111,018 100,060 526,730 23,177 46,824 130,001 173,182
----------- ----------- ----------- ----------- ----------- ----------- -----------
PARTICIPANTS' EQUITY, end
of year $ 203,050 $ 191,193 $ 987,154 $ 56,407 $ 78,185 $ 206,009 $ 273,016
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
* previously, Fidelity Income & Growth Fund
<PAGE> 8
<TABLE>
<CAPTION>
Participant - Directed Investments
-------------------------------------------------------------------------------
Warburg Warburg
20th Waxman Pincus Pincus
Lifetime Lifetime Century Industries, Inc. Growth & International Cash Participant
50 Fund 60 Fund Ultra Fund Common Stock Income Fund Equity Fund Account Loans Total
-------- -------- ---------- ---------------- ----------- ------------- ------- ----------- -----
<C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 10,547 $ 1,290 $ 12,334 $ 10,926 $ 16,087 $ 13,132 $ 194,757
39,093 3,743 57,706 23,990 47,233 39,497 603,573
25,421 1,286 27,715 36,286 20,140 22,856 307,993
547 144 165 328 ($ 2,917) 0
134 5 10 41 506
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
75,742 6,319 97,904 71,202 83,635 75,854 (2,917) 1,106,829
2,315 136 6,305 74,321 6,317 8,505 204,199
106 40 40 8,718 7 77 12,811
1,302 396 223 238 (9,350) 0
42,248 42,248
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
3,723 176 6,345 83,435 6,547 8,820 42,248 (9,350) 259,258
2,244 (1,371) 10,194 (287,049) (19,748) (6,516) 0
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
74,263 4,772 101,753 (299,282) 57,340 60,518 (42,248) 6,433 847,571
140,283 7,744 85,603 1,412,700 111,730 120,263 42,955 5,369 3,037,639
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 214,546 $ 12,516 $ 187,356 $ 1,113,418 $ 169,070 $ 180,781 $ 707 $ 11,802 $ 3,885,210
=========== =========== =========== =========== =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
* previously, Fidelity Income & Growth Fund
<PAGE> 9
WAXMAN INDUSTRIES, INC.
PROFIT SHARING AND 401(K) RETIREMENT PLAN
STATEMENT OF CHANGES IN PARTICIPANTS' EQUITY
FOR THE YEAR ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
Waxman
Industries, Inc. Fidelity INVESCO
Common Stock Fidelity Income & Guaranteed Industrial Lifetime Lifetime
Fund Contrafund Growth Fund CIGNA Fund Fund 20 Fund 30 Fund
---------------- ---------- ----------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCREASES:
Contributions-
Waxman Industries, Inc. $ 917 $ 1,050 $ 1,132 $ 5,440 $ 318 $ 589 $ 1,577
Participants 24,423 37,673 43,621 161,965 8,574 16,967 48,881
Loan Repayment-
Principal -- 72 72 12 68 -- 21
Interest income -- 9 8 6 7 -- 10
Market value changes of
investments 1,054,946 16,887 3,147 26,477 2,658 6,608 18,107
---------- -------- --------- -------- ------- -------- --------
Total increases 1,080,286 55,691 47,980 193,900 11,625 24,164 68,596
---------- -------- --------- -------- ------- -------- --------
DECREASES:
Distributions to former
participants 70,841 13,904 5,858 77,946 1,697 4,414 25,388
Transaction costs 3,442 21 180 1,270 17 440 659
Loans to Participants -- 260 682 1,834 211 -- 191
---------- -------- --------- -------- ------- -------- --------
Total decreases 74,283 14,185 6,720 81,050 1,925 4,854 26,238
---------- -------- --------- -------- ------- -------- --------
TRANSFERS BETWEEN FUNDS 751 5,863 (5,100) 4,402 367 (287) 857
---------- -------- --------- -------- ------- -------- --------
NET INCREASE (DECREASE) 1,006,754 47,369 36,160 117,252 10,067 19,023 43,215
PARTICIPANTS' EQUITY, beginning
of year 405,946 63,649 63,900 409,478 13,110 27,801 86,786
---------- -------- --------- -------- ------- -------- --------
PARTICIPANTS' EQUITY, end
of year $1,412,700 $111,018 $ 100,060 $526,730 $23,177 $ 46,824 $130,001
========== ======== ========= ======== ======= ======== ========
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
<PAGE> 10
<TABLE>
<CAPTION>
Warburg Warburg
20th Pincus Pincus
Lifetime Lifetime Lifetime Century Growth & International Cash Participant
40 Fund 50 Fund 60 Fund Ultra Fund Income Fund Equity Fund Account Loans TOTAL
-------- -------- -------- ---------- ----------- ------------- ------- ----------- -----
<C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1,501 $ 1,000 $ 126 $ 659 $ 1,408 $ 1,504 $ 3,359 $ -- $ 20,580
50,342 40,927 2,840 26,629 48,885 40,934 39,437 -- 592,098
582 211 -- 64 72 166 141 (141) 1,340
7 66 -- 8 9 39 18 -- 187
20,448 15,229 799 11,850 7,521 20,483 -- -- 1,205,160
-------- -------- -------- ------- --------- --------- ------- ------- ----------
72,880 57,433 3,765 39,210 57,895 63,126 42,955 (141) 1,819,365
-------- -------- -------- ------- --------- --------- ------- ------- ----------
4,181 5,137 6,877 12,963 20,731 21,910 -- -- 271,847
235 213 120 19 20 125 -- -- 6,761
589 1,656 -- 230 244 953 -- (5,510) 1,340
-------- -------- -------- ------- --------- --------- ------- ------- ----------
5,005 7,006 6,997 13,212 20,995 22,988 -- (5,510) 279,948
-------- -------- -------- ------- --------- --------- ------- ------- ----------
459 1,103 (22) 15,657 (17,039) (7,011) -- -- --
-------- -------- -------- ------- --------- --------- ------- ------- ----------
68,334 51,530 (3,254) 41,655 19,861 33,127 42,955 5,369 1,539,417
104,848 88,753 10,998 43,948 91,869 87,136 -- -- 1,498,222
-------- -------- -------- ------- --------- --------- ------- ------- ----------
$173,182 $140,283 $ 7,744 $85,603 $ 111,730 $ 120,263 $42,955 $ 5,369 $3,037,639
======== ======== ======== ======= ========= ========= ======= ======= ==========
</TABLE>
<PAGE> 11
<TABLE>
<CAPTION>
WAXMAN INDUSTRIES, INC.
PROFIT SHARING AND 401(K) RETIREMENT PLAN
STATEMENT OF CHANGES IN PARTICIPANTS' EQUITY
FOR THE YEAR ENDED JUNE 30, 1995
Fidelity INVESCO
Fidelity Income & Guaranteed Industrial Lifetime Lifetime Lifetime Lifetime Lifetime
Contrafund Growth Fund CIGNA Fund Fund 20 Fund 30 Fund 40 Fund 50 Fund 60 Fund
---------- ----------- ---------- ---------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASES:
Contributions-
Waxman Industries, Inc. $ 9,328 $ 11,463 $ 53,741 $ 2,566 $ 6,240 $15,784 $ 14,995 $ 9,866 $ 1,296
Participants 25,386 35,581 137,052 5,794 15,760 41,272 35,821 35,699 4,209
Transfer from previous
trustee 20,068 15,721 218,817 3,506 3,979 23,996 48,075 37,769 4,825
Investment Income-
Dividend income -- -- -- -- -- -- -- -- --
Interest income -- -- -- -- -- -- -- -- --
Realized appreciation
of investments -- -- -- -- -- -- -- -- --
Market value changes of
investments 9,144 2,932 10,944 1,173 2,216 6,940 8,119 6,909 668
------- -------- -------- ------- ------- ------- --------- ------- -------
Total increases 63,926 65,697 420,554 13,039 28,195 87,992 107,010 90,243 10,998
------- -------- -------- ------- ------- ------- --------- ------- -------
DECREASES:
Distributions to former
participants 322 1,177 14,190 -- 347 1,025 1,838 1,410 --
Transfer to new trustee -- -- -- -- -- -- -- -- --
Transaction costs -- -- 1,061 -- 47 200 160 80 --
Market value changes of
investments -- -- -- -- -- -- -- -- --
Realized depreciation
of investments -- -- -- -- -- -- -- -- --
------- -------- -------- ------- ------- ------- --------- ------- -------
Total decreases 322 1,177 15,251 -- 394 1,225 1,998 1,490 0
------- -------- -------- ------- ------- ------- --------- ------- -------
TRANSFERS BETWEEN FUNDS 45 (620) 4,175 71 -- 19 (164) -- --
------- -------- -------- ------- ------- ------- --------- ------- -------
NET INCREASE (DECREASE) 63,649 63,900 409,478 13,110 27,801 86,786 104,848 88,753 10,998
PARTICIPANTS' EQUITY, beginning
of year -- -- -- -- -- -- -- -- --
------- -------- -------- ------- ------- ------- --------- ------- -------
PARTICIPANTS' EQUITY, end
of year $63,649 $ 63,900 $409,478 $13,110 $27,801 $86,786 $ 104,848 $88,753 $10,998
======= ======== ======== ======= ======= ======= ========= ======= =======
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
<PAGE> 12
<TABLE>
<CAPTION>
Waxman Warburg Warburg
20th Industries, Inc. Pincus Pincus Waxman Fixed Money
Century Common Stock Growth & International Diversified Industries Income Market
Ultra Fund Fund Income Fund Equity Fund Fund Fund Fund Fund TOTAL
---------- ---------------- ----------- ------------- ----------- ---------- ------ ------ -----
<C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 6,127 $ 8,973 $ 12,771 $ 15,506 $ -- $ -- $ -- $ -- $ 168,656
17,117 18,639 36,030 41,841 15,069 2,361 6,444 18,147 492,222
13,227 581,748 39,260 37,531 -- -- -- -- 1,048,522
-- -- -- -- 631 -- -- -- 631
-- -- -- -- 2,578 52 1,522 165 4,317
-- -- -- -- 2,699 -- -- -- 2,699
6,648 -- 5,847 -- -- -- -- -- 61,540
------- --------- -------- -------- --------- --------- --------- --------- ----------
43,119 609,360 93,908 94,878 20,977 2,413 7,966 18,312 1,778,587
------- --------- -------- -------- --------- --------- --------- --------- ----------
515 6,362 760 922 28,892 44,406 6,720 607 109,493
-- -- -- -- 191,687 634,958 99,579 122,298 1,048,522
-- 2,394 -- 12 -- -- -- -- 3,954
-- 194,387 -- 3,488 -- -- -- -- 197,875
-- -- -- -- -- 81,122 -- -- 81,122
------- --------- -------- -------- --------- --------- --------- --------- ----------
515 203,143 760 4,422 220,579 760,486 106,299 122,905 1,440,966
------- --------- -------- -------- --------- --------- --------- --------- ----------
1,344 (271) (1,279) (3,320) -- -- -- -- --
------- --------- -------- -------- --------- --------- --------- --------- ----------
43,948 405,946 91,869 87,136 (199,602) (758,073) (98,333) (104,593) 337,621
-- -- -- -- 199,602 758,073 98,333 104,593 1,160,601
------- --------- -------- -------- --------- --------- --------- --------- ----------
$43,948 $ 405,946 $ 91,869 $ 87,136 $ -- $ -- $ -- $ -- $1,498,222
======= ========= ======== ======== ========= ========= ========= ========= ==========
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
<PAGE> 13
WAXMAN INDUSTRIES, INC.
PROFIT SHARING AND 401(K) RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997, 1996 AND 1995
1. Summary Of Plan:
- ------------------
The following description of the Waxman Industries, Inc. (the Company) Profit
Sharing and 401(k) Retirement Plan (the Plan) provides only general information.
Participants should refer to the plan agreement for a more comprehensive
description of the Plan's provisions.
General
- -------
The Plan is a defined contribution profit sharing plan. It is subject to the
provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
Trustee
- -------
Effective October 1, 1994, the trustee and the custodian of the Plan were
changed from National City Bank to Connecticut General Trust Co. and Connecticut
General Life Insurance Company (CIGNA), respectively. The Plan's custodian
maintains all records of investment transactions and determines the valuation of
the investment portfolio.
Eligibility
- -----------
Certain employees of the Company and its subsidiaries and affiliate are eligible
to participate in the Plan provided they are at least 21 years of age and have
completed one year of service with the Company, as defined in the plan
agreement.
Participant and Employer Contributions
- --------------------------------------
Participants may defer up to 15% of their pretax compensation by making
contributions to the Plan, subject to certain limitations. Participants may
direct the allocation of their post-September 1994 contributions to thirteen
investment options. Participants have the option to transfer cumulative
balances, except those relating to prior Company contributions, between
investment options.
Effective October 1, 1994, the Company may make discretionary matching
contributions to the Plan. Currently, the match is $.50 per every $1.00
contributed by the participant with the maximum Company match being 4% of the
participant's compensation. The amount of the Company contributions made to the
Plan is limited by the Internal Revenue Code and is determined at the
discretion of the Board of Directors of the Company. Company contributions are
allocated to the accounts of eligible participants, on a monthly basis, as
established in Section 4.2 of the Plan.
<PAGE> 14
Participant Accounts and Vesting
- --------------------------------
The Plan provides for the establishment and maintenance of several accounts for
each participant which represent, in total, the participants' equity in the net
assets of the Plan. The individual participant accounts distinguish funds
attributable to participant deferral contributions and Company contributions
made on the participant's behalf. Participant accounts are credited with the
participant's allocation of investment earnings and are charged with the
participant's allocation of transaction costs. Allocations are based on the
ratio of the participant's balance in the fund to the total fund balance.
Participants are immediately vested in the value of their contributions plus
earnings. Participants are vested in the Company contributions plus earnings
ratably over five years of service and fully vest after five years of service,
as defined.
Distribution of Benefits
- ------------------------
Distributions to participants generally commence at age 60 or earlier in cases
of death or disability. The form of payment is designated by the participant.
Earlier distributions of vested benefits may be made for participants who leave
the Company prior to retirement.
Participant Loans
- -----------------
Participants may borrow from their accounts a maximum amount equal to the lesser
of $50,000 or 50 percent of their account balance. Loan transactions are treated
as a transfer to (from) the investment fund from (to) the Participant Loans
Fund. Loan terms range from one to five years or up to twenty-five years for the
purchase of a primary residence. The loans are secured by the balance in the
participant's account and bear interest at a rate commensurate with local
prevailing rates, as determined quarterly by the plan administrator, plus one
percent. Interest rates on loans outstanding as of June 30, 1997 are 8.5%.
Principal and interest payments on participant loans are paid ratably through
monthly payroll deductions.
Forfeitures
- -----------
Forfeitures are used to reduce the contributions of the Company or to pay the
administrative expenses of the Plan, at the Company's discretion. In the current
year, forfeitures amounted to $3,146.
Plan Termination
- ----------------
Although it has not expressed any intent to do so, the Company may amend or
terminate the Plan at its discretion, subject to applicable Internal Revenue
Service and ERISA regulations. The rights of all participants to benefits
accrued prior to any such termination are nonforfeitable.
<PAGE> 15
Investment Options
- ------------------
Investment options as of June 30, 1997, 1996 and 1995 include the following:
Fidelity Contrafund
- -------------------
Fidelity Contrafund is invested primarily in common stock and securities
convertible into common stocks of both domestic and foreign companies.
Fidelity Advisor Balanced Fund (previously, Fidelity Income & Growth Fund)
- ------------------------------
Fidelity Advisor Balanced Fund is invested in a diversified portfolio of equity
and fixed-income securities.
Guaranteed Long Term Fund
- -------------------------
Guaranteed Long Term Fund is invested primarily in commercial mortgages and
private bond placements.
Invesco Industrial Fund
- -----------------------
INVESCO Industrial Fund is invested primarily in dividend-paying common stocks
of domestic companies. It may also invest in fixed-income securities.
Lifetime 20, 30, 40, 50 & 60 Funds ("Cigna Lifetime Funds")
- -----------------------------------------------------------
CIGNA LIFETIME FUNDS are a family of five distinct investment portfolios
structured to maximize return and minimize risk over a specific time period
based on the participant's approximate age. Each fund primarily is invested
in a diversified mix of stock and bond funds, designed to fit the time
horizons and risk tolerances of investors at different stages of their
lives.
20th Century Ultra Fund
- -----------------------
20th Century Ultra Fund is invested primarily in common stocks of medium-sized
companies that meet certain technical and fundamental criteria.
Waxman Industries, Inc. Common Stock
- ------------------------------------
Waxman Industries, Inc. Common Stock is invested only in common stock of the
Company.
Warburg Pincus Growth & Income Fund
- -----------------------------------
Warburg Pincus Growth & Income Fund is invested primarily in common stocks and
securities which derive their value from common stocks.
Warburg Pincus International Equity Fund
- ----------------------------------------
Warburg Pincus International Equity Fund is invested primarily in common stocks
of companies that are generally non-U.S. based.
<PAGE> 16
2. Summary Of Significant Accounting Policies:
- ---------------------------------------------
Basis of Accounting
- -------------------
The accompanying financial statements are prepared on the accrual basis of
accounting.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires the plan administrator to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases during the
reporting period. Actual results could differ from those estimates.
Administrative Expenses
- -----------------------
Fees of the trustee, custodian, legal counsel, and auditors of the Plan are paid
by the Company and thus are not reflected in the accompanying financial
statements. Costs specific to various investment transactions are paid directly
by the Plan and are reflected in the accompanying statements of changes in
participants' equity.
Investments
- -----------
The investments of the Plan are maintained by CIGNA. The investments are valued
at their market values in the accompanying financial statements. In general,
market values are estimated by CIGNA based on market conditions and the
characteristics of the funds' holdings, such as quality ratings. The investment
vehicles are credited with actual earnings on the underlying investments and
charged for distributions and transaction costs on a daily basis. As a result,
the records of CIGNA are based solely on the market values of the investments.
Therefore, the accompanying statements of changes in participants' equity do not
reflect separate accounting for unrealized appreciation or depreciation of
investments and realized gains or losses. In addition, Schedules I and II do not
include information on the historical costs of the investments as required by
ERISA.
3. Amounts Due To Terminated Participants:
- -----------------------------------------
Participants' equity includes $113,904 and $21,632 of amounts due to terminated
participants at June 30, 1997 and 1996, respectively. These amounts are recorded
as a liability in the Plan's Form 5500 for the respective year. However, these
amounts are not recorded as a liability in the accompanying statements of
participants' equity in accordance with generally accepted accounting
principles.
<PAGE> 17
The following table reconciles participants' equity per the accompanying
financial statements to the Form 5500 as filed by the Company for the years
ended June 30, 1997 and 1996:
<TABLE>
<CAPTION>
Benefits Participants' Participants'
Payable to Benefits Equity Equity
Participants Paid June 30, 1997 June 30, 1996
--------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Per financial
statements $ -- $ 204,199 $ 3,885,210 $ 3,037,639
Accrued benefit
payments 113,904 113,904 (113,904) (21,632)
Prior year
reversal -- (21,632) -- --
-------- --------- ----------- -----------
Per Form 5500 $113,904 $ 296,471 $ 3,771,306 $ 3,016,007
======== ========= =========== ===========
</TABLE>
4. Income Tax Status:
- --------------------
The Plan obtained its latest determination letter on November 21, 1996, in which
the Internal Revenue Service stated that the Plan, as amended and restated, was
in compliance with the applicable requirements of the Internal Revenue Code.
The plan administrator believes that the Plan is currently designed and being
operated in compliance with the applicable requirements of the Internal Revenue
Code and that the Plan was qualified and the related trust was tax exempt as of
June 30, 1997. Accordingly, income taxes have not been provided in the
accompanying financial statements. Annually, informational returns are prepared
and filed with the Internal Revenue Service.
5. Information Certified By The Custodian:
- -----------------------------------------
Information on investments held and their market values as presented in the
accompanying statements of participants' equity and on investment income as
presented in the accompanying statements of changes in participants' equity has
been certified by CIGNA as being accurate and complete.
6. Party-In-Interest Transactions:
- ---------------------------------
There were no prohibited transactions with a party in interest, as defined by
ERISA.
7. Reportable Transactions:
- --------------------------
Schedule II summaries the Plan's reportable transactions for the year ended June
30, 1997. As defined, a reportable transaction is a transaction or series of
transactions in one fund involving amounts in excess of 5% of the market value
of the Plan's assets at the beginning of the plan year.
<PAGE> 18
8. Subsequent Events:
- --------------------
Effective July 1, 1997, the employees of Barnett Inc., a previous subsidiary of
the Company, were considered terminated employees of the Company for purposes of
participation in the Plan. As of that date, these employees became eligible to
participate in the Barnett Inc. Profit Sharing and 401(k) Retirement Plan.
Subsequent to the Plan year-end, the trustee of the Plan was changed from
Connecticut General Trust Co. to a committee designated by Waxman Industries,
Inc. and the custodian of the Plan was changed from CIGNA to AETNA Retirement
Services. All record keeping, custodial services and investment activities are
now managed by AETNA Retirement Services.
<PAGE> 19
SCHEDULE I
WAXMAN INDUSTRIES, INC.
PROFIT SHARING AND 401(K) RETIREMENT PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
JUNE 30, 1997
EMPLOYER IDENTIFICATION NUMBER: 34-0899894
PLAN NUMBER: 001
<TABLE>
<CAPTION>
IDENTITY OF MARKET
ISSUER DESCRIPTION OF INVESTMENT VALUE(a)
- -------------- ----------------------------------------------------------- -----------
<S> <C> <C>
Waxman 234,404 Shares of Waxman Industries, Inc. $1,113,418
Industries: Common Stock
CIGNA: 3,628 Units of Fidelity Contrafund 203,050
7,356 Units of Fidelity Advisor Balanced Fund 191,193
33,100 Units of Guaranteed Long Term Fund 987,154
2,802 Units of INVESCO Industrial Fund 56,407
5,024 Units of Lifetime 20 Fund 78,185
13,447 Units of Lifetime 30 Fund 206,009
18,371 Units of Lifetime 40 Fund 273,016
14,652 Units of Lifetime 50 Fund 214,546
932 Units of Lifetime 60 Fund 12,516
4,972 Units of 20th Century Ultra Fund 187,356
8,833 Units of Warburg Pincus
Growth & Income Fund 169,070
6,716 Units of Warburg Pincus
International Equity Fund 180,781
Cash Account 707
Participant
Loans: Participant Loans 11,802
----------
$3,885,210
==========
</TABLE>
(a) The Plan has requested historical cost information related to the above
investments; however, this information has not been provided because of the
nature of the custodian's recordkeeping system.
The accompanying notes to financial statements are an integral part of this
schedule.
<PAGE> 20
SCHEDULE II
WAXMAN INDUSTRIES, INC.
PROFIT SHARING AND 401(K) RETIREMENT PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED JUNE 30, 1997
EMPLOYER IDENTIFICATION NUMBER: 34-0899894
PLAN NUMBER: 001
<TABLE>
<CAPTION>
Current
Value of
Number of Asset on
Trans Purchase Selling Historic Transaction Gain/
-actions Price Price Cost Date (Loss)
- ------------------------ --------------- ------------- ------------ ------------- --------------- ------
<S> <C> <C> <C> <C> <C> <C>
PURCHASES -
CIGNA Guaranteed --
Long Term Fund (b) $538,607 -- $538,607 $538,607
Waxman Industries,
Inc. Common Stock 25 38,239 -- 38,239 38,239 --
SALES-
CIGNA Guaranteed
Long Term Fund (b) -- $111,098 (a) $111,098 (a)
Waxman Industries,
Inc. Common Stock 47 -- 377,478 (a) 377,478 (a)
</TABLE>
(a) The Plan has requested historical cost information related to the above
investments; however, this information has not been provided because of the
nature of the custodian's recordkeeping system. As a result, the gain or loss
cannot be determined.
(b) The Plan has requested the number of transactions information, but
currently it is not available.
The accompanying notes to financial statements are an integral part of this
schedule.
<PAGE> 1
ARTHUR ANDERSEN LLP
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report included in this Form 11-K, into the Company's previously filed Form
S-8 Registration Statement No. 33-57477.
/s/ Arthur Andersen LLP
Cleveland, Ohio,
January 22, 1998
