<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, 1998
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:
Amended and Restated Waxman Industries, Inc.
Profit Sharing & 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
AMENDED AND RESTATED WAXMAN INDUSTRIES, INC.
PROFIT SHARING & 401(K) RETIREMENT PLAN
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998, 1997 AND 1996
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
Amended and Restated Waxman Industries, Inc. Profit Sharing & 401(K) Retirement
Plan (the Plan) as of June 30, 1998 and 1997, and the related statements of
changes in participants' equity for each of the three years in the period ended
June 30, 1998, 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, 1998
and 1997, and the changes in participants' equity for each of the three years in
the period ended June 30, 1998, 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, 1998 (Schedule I) and reportable
transactions for the year ended June 30, 1998 (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.
As explained in Note 6, information certified by the custodian and presented in
Item 27a - Schedule of Assets Held for Investment Purposes (Schedule I) and Item
27d - Schedule of Reportable Transactions (Schedule II) does not disclose the
<PAGE> 4
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 8, 1998.
<PAGE> 5
AMENDED AND RESTATED WAXMAN INDUSTRIES, INC.
PROFIT SHARING & 401(K) RETIREMENT PLAN
INDEX
JUNE 30, 1998, 1997 AND 1996
Statements of Participants' Equity as of June 30, 1998 and 1997
Statements of Changes in Participants' Equity for the Years Ended
June 30, 1998, 1997 and 1996
Notes to Financial Statements
Consent of Arthur Andersen LLP - Exhibit 23
Schedule I - Item 27a - Schedule of Assets Held for Investment Purposes as of
June 30, 1998
Schedule II - Item 27d - Schedule of Reportable Transactions for the Year Ended
June 30, 1998
<PAGE> 6
AMENDED AND RESTATED WAXMAN INDUSTRIES, INC.
PROFIT SHARING & 401(K) RETIREMENT PLAN
STATEMENT OF PARTICIPANTS' EQUITY
JUNE 30, 1998
<TABLE>
<CAPTION>
June 30, 1998
-------------
<S> <C>
PARTICIPANT - DIRECTED INVESTMENTS,
at market values unless otherwise noted (Notes 2 and 3):
Waxman Industries, Inc. Common Stock $762,751
Aetna Funds:
Aetna Fixed Account, at contract value 283,403
Aetna Series Money Market Fund 59,322
Aetna Ascent Fund 179,719
Aetna Crossroads Fund 290,878
Aetna Legacy Fund 25,928
Aetna Index Plus Large Cap Fund 369,870
Fidelity Advisor Growth Opportunities Fund 242,340
Neuberger & Berman Genesis Trust 175,063
Neuberger & Berman Guardian Trust 86,769
Templeton Foreign Fund 145,868
Cash Account 0
Participant Loans 49,053
----------------
Participants' Equity $2,670,964
================
</TABLE>
The accompanying notes to financial statements are an integral
part of this statement.
<PAGE> 7
AMENDED AND RESTATED WAXMAN INDUSTRIES, INC.
PROFIT SHARING & 401(K) RETIREMENT PLAN
STATEMENT OF PARTICIPANTS' EQUITY
JUNE 30, 1997
<TABLE>
<CAPTION>
June 30, 1997
-------------
<S> <C>
PARTICIPANT - DIRECTED INVESTMENTS,
at market values:
Waxman Industries, Inc. Common Stock $1,113,418
CIGNA Funds:
Fidelity Contrafund 203,050
Fidelity Advisor Balanced Fund* 191,193
Guaranteed Long Term Fund 987,154
INVESCO Industrial Fund 56,407
Lifetime 20 Fund 78,185
Lifetime 30 Fund 206,009
Lifetime 40 Fund 273,016
Lifetime 50 Fund 214,546
Lifetime 60 Fund 12,516
20th Century Ultra Fund 187,356
Warburg Pincus Growth & Income Fund 169,070
Warburg Pincus International Equity Fund 180,781
Cash Account 707
Participant Loans 11,802
----------------
Participants' Equity $3,885,210
================
</TABLE>
The accompanying notes to financial statements are an integral
part of this statement.
*previously, Fidelity Income & Growth Fund
<PAGE> 8
AMENDED AND RESTATED WAXMAN INDUSTRIES, INC.
PROFIT SHARING & 401(K) RETIREMENT PLAN
STATEMENT OF CHANGES IN PARTICIPANTS' EQUITY
UNDER AETNA CUSTODIAL SERVICE
FOR THE PERIOD FROM AUGUST 14, 1997 TO JUNE 30, 1998
<TABLE>
<CAPTION>
|---------------------------------Participant - Directed Investments ---------------
Aetna Series Aetna
Aetna Money Aetna Aetna Index Plus
Fixed Market Aetna Crossroads Legacy Large Cap
Account Fund Ascent Fund Fund Fund Fund
--------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
INCREASES:
Contributions-
Waxman Industries, Inc. $ 9,142 $ 18,295 $ 14,828 $ 13,714 $ 3,811 $ 11,763
Participants 28,554 38,093 47,287 38,629 10,403 47,506
Transfer from Fidelity Custodial Service 280,863 142,891 248,804 11,992 230,616
Investment Income (Note 2) 13,913 1,473 19,958 31,491 1,771 71,796
Loan Repayment-
Principal 447 1,098 779 830 151 959
Interest 68 415 208 230 16 275
--------- -------- --------- -------- --------- --------
Total increases 332,987 59,374 225,951 333,698 28,144 362,915
DECREASES:
Distributions 37,088 1,062 31,506 43,129 744 11,885
Transaction costs 131 74 110 25 28 122
Loans to participants 5,006 1,647 7,710 2,000 1,227 3,019
Other
--------- -------- --------- -------- --------- --------
Total decreases 42,225 2,783 39,326 45,154 1,999 15,026
TRANSFERS BETWEEN FUNDS (7,359) 2,731 (6,906) 2,334 (217) 21,981
--------- -------- --------- -------- --------- --------
NET INCREASE 283,403 59,322 179,719 290,878 25,928 369,870
PARTICIPANTS' EQUITY, beginning
of period 0 0 0 0 0 0
--------- -------- --------- -------- --------- --------
PARTICIPANTS' EQUITY, end
of year $ 283,403 $ 59,322 $ 179,719 $290,878 $ 25,928 $369,870
========= ======== ========= ======== ========= ========
</TABLE>
The accompanying notes to financial statements are an integral
part of this statement.
<PAGE> 9
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------|
Fidelity
Advisor Neuberger Neuberger Waxman
Growth & Berman & Berman Templeton Industries, Inc.
Opportunities Genesis Guardian Foreign Common Cash Participant
Fund Trust Trust Fund Stock Account Loans Total
------------- ----------- ------------ ------------ ---------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 22,815 $ 15,436 $10,362 $ 11,611 $ 10,084 $ 0 $ 141,861
63,303 48,343 29,706 39,056 21,481 0 412,361
135,154 124,079 34,417 101,431 1,120,612 3,447 2,434,306
34,755 8,541 4,097 (6,152) (263,824) 0 (82,181)
752 863 424 458 0 (6,761) 0
345 483 224 258 0 2,522
-------- --------- ------- --------- ----------- ------ -------- ----------
257,124 197,745 79,230 146,662 888,353 0 (3,314) 2,908,869
12,219 11,400 2,820 7,619 76,981 0 236,453
89 99 81 6 680 0 1,445
3,688 3,803 1,909 316 22,049 0 (52,374) 0
7 7
-------- --------- ------- --------- ----------- ------ ---------- ----------
15,997 15,302 4,810 7,941 99,710 0 (52,367) 237,905
1,212 (7,380) 12,349 7,147 (25,892) 0 0
-------- --------- ------- --------- ----------- ------ -------- ----------
242,340 175,063 86,769 145,868 762,751 0 49,053 2,670,964
0 0 0 0 0 0 0 0
-------- --------- ------- --------- ----------- ------ -------- ----------
$242,340 $ 175,063 $86,769 $ 145,868 $ 762,751 $ 0 $ 49,053 $2,670,964
======== ========= ======= ========= =========== ====== ======== ==========
</TABLE>
<PAGE> 10
AMENDED AND RESTATED WAXMAN INDUSTRIES, INC.
PROFIT SHARING & 401(K) RETIREMENT PLAN
STATEMENT OF CHANGES IN PARTICIPANTS' EQUITY
UNDER FIDELITY CUSTODIAL SERVICE
FOR THE PERIOD FROM JULY 1, 1997 TO AUGUST 13, 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>
PARTICIPANTS' EQUITY, beginning
of year $ 203,050 $ 191,193 $ 987,154 $ 56,407 $ 78,185 $ 206,009 $ 273,016
Realized Gains (Losses) 10,546 5,124 2,685 2,352 1,721 5,461 7,250
Transfers Between Funds (24,081)
Distributions (95)
Transaction costs
--------- --------- --------- -------- --------- --------- ---------
TOTAL PARTICIPANTS' EQUITY
UNDER FIDELITY CUSTODIAL
SERVICES PRIOR TO TRANSFERS 213,596 196,317 965,663 58,759 79,906 211,470 280,266
--------- --------- --------- -------- --------- --------- ---------
Transfers to Barnett Plan (78,442) (55,253) (684,800) (24,342) (64,283) (84,202) (103,979)
Transfers to Aetna Custodial Service (135,154) (141,064) (280,863) (34,417) (15,623) (127,268) (176,287)
--------- --------- --------- -------- --------- --------- ---------
Total Transfers (213,596) (196,317) (965,663) (58,759) (79,906) (211,470) (280,266)
--------- --------- --------- -------- --------- --------- ---------
PARTICIPANTS' EQUITY UNDER
FIDELITY CUSTODIAL SERVICE,
end of period $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
========= ========= ========= ======== ========= ========= =========
</TABLE>
The accompanying notes to financial statements are an integral
part of this statement.
*previously, Fidelity Income & Growth Fund
<PAGE> 11
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------|
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
- ----------- ------------ ------------- --------------- ------------ ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$214,546 $12,516 $187,356 $1,113,418 $169,070 $180,781 $707 $11,802 $3,885,210
4,766 280 11,481 (16,092) 7,962 2,458 0 0 45,994
24,081 0
(418) (513)
(378) (707) (1,085)
- ----------- ------------ ------------- -------------- ------------ ------------- ------------- ------------- --------------
219,312 12,796 198,837 1,120,611 177,032 183,239 0 11,802 3,929,606
- ----------- ------------ ------------- -------------- ------------ ------------- ------------- ------------- --------------
(146,795) (805) (74,757) 0 (87,480) (81,806) (8,356) (1,495,300)
(72,517) (11,991) (124,080) (1,120,611) (89,552) (101,433) (3,446) (2,434,306)
- ----------- ------------ ------------- -------------- ------------ ------------- ------------- ------------- --------------
(219,312) (12,796) (198,837) (1,120,611) (177,032) (183,239) 0 (11,802) (3,929,606)
- ----------- ------------ ------------- -------------- ------------ ------------- ------------- ------------- --------------
$ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
=========== ============ ============= ============== ============ ============= ============= ============= ==============
</TABLE>
<PAGE> 12
AMENDED AND RESTATED WAXMAN INDUSTRIES, INC.
PROFIT SHARING & 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 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> 13
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------|
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
------- ------- ---------- ------------ ----------- ----------- --------- ----------- ----------
<S> <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>
<PAGE> 14
AMENDED AND RESTATED WAXMAN INDUSTRIES, INC.
PROFIT SHARING & 401(K) RETIREMENT PLAN
STATEMENT OF CHANGES IN PARTICIPANTS' EQUITY
FOR THE YEAR ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
| ---------------------------Participant - Directed Investments -------------------------------
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> 15
<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
------- ------- ------- ---------- ----------- ----------- ------- ----------- -----------
<S> <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> 16
AMENDED AND RESTATED WAXMAN INDUSTRIES, INC.
PROFIT SHARING & 401(K) RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998, 1997 AND 1996
1. SUMMARY OF PLAN:
- ---------------------
The following description of the Amended and Restated Waxman Industries, Inc.
(the Company) Profit Sharing & 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 and Custodian
- ---------------------
Effective July 1, 1997, the trustee and the custodian of the Plan were changed
from Connecticut General Trust Co. and Connecticut General Life Insurance
Company (CIGNA), respectively, to a committee designated by Waxman Industries,
Inc. and Aetna Life Insurance and Annuity Company (Aetna), 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 are eligible to
participate in the Plan provided they are at least 21 years of age and have
completed three months of service with the Company, as defined in the plan
agreement.
Effective July 1, 1997, the employees of Barnett Inc., a previous subsidiary and
current affiliate 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. As a result, a partial termination of the Plan was
deemed to have occurred. The Plan participants that were considered to be
terminated employees of the Company became fully vested in their participant
accounts as of July 1, 1997, and these accounts were transferred to the Barnett
Inc. Profit Sharing and 401(k) Retirement Plan, as reflected in the accompanying
statement of changes in participants' equity for the period July 1, 1997 to
August 13, 1997.
<PAGE> 17
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 various
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.
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 vested 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's administrator, plus one
percent. Interest rates on loans outstanding as of June 30, 1998 are 9.5%.
Principal and interest payments on participant loans are paid ratably through
monthly payroll deductions.
<PAGE> 18
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 $11,010.
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.
Investment Options
- ------------------
Investment options as of June 30, 1998 include the following:
AETNA FIXED ACCOUNT
Aetna Fixed Account is invested in interest-bearing contracts or other
arrangements issued by life insurance companies or other financial
institutions.
AETNA SERIES MONEY MARKET FUND
Aetna Series Money Market Fund is invested in high-quality money market
instruments.
AETNA ASCENT FUND
Aetna Ascent Fund is invested primarily in equity securities with some
fixed-income securities with the objective of capital appreciation.
AETNA CROSSROADS FUND
Aetna Crossroads Fund is invested primarily in equity securities with some
fixed-income securities with the objective of income and capital
appreciation (realized and unrealized).
AETNA LEGACY FUND
Aetna Legacy Fund is invested primarily in fixed-income securities with some
equity securities with the objective of providing a consistent return with
preservation of capital.
AETNA INDEX PLUS LARGE CAP FUND
Aetna Index Plus Large Cap Fund is invested in large cap equity securities with
the objective of outperforming the S&P 500.
<PAGE> 19
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND
Fidelity Advisor Growth Opportunities Fund is invested primarily in common
stocks and securities convertible into common stocks.
NEUBERGER & BERMAN GENESIS TRUST
Neuberger & Berman Genesis Trust is invested primarily in common stocks of
companies with small market capitalizations with the objective of capital
appreciation.
NEUBERGER & BERMAN GUARDIAN TRUST
Neuberger & Berman Guardian Trust is invested primarily in common stocks of
long-established, high-quality companies.
TEMPLETON FOREIGN FUND
Templeton Foreign Fund is invested primarily in equity securities and debt
obligations of companies and governments located outside the United States
with the objective of long-term capital growth.
WAXMAN INDUSTRIES, INC. COMMON STOCK
Waxman Industries, Inc. Common Stock is invested only in common stock of the
Company.
Investment Options
- ------------------
Investment options as of June 30, 1997 and 1996 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.
<PAGE> 20
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
20thCentury 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.
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.
<PAGE> 21
Investments
- -----------
The investments of the Plan are maintained by Aetna. Except for the Aetna Fixed
Account (Note 3), investments are valued at their market values in the
accompanying financial statements. In general, market values are estimated by
Aetna 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 Aetna 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. INVESTMENT CONTRACTS:
- --------------------------
The Aetna Fixed Account invests in investment contracts that are fully
benefit-responsive. In accordance with the American Institute of Certified
Public Accountants' Statement of Position 94-4, " Reporting of Investment
Contracts Held by Health and Welfare Benefit Plans and Defined Contribution
Pension Plans," the Plan values these investment contracts at contract value. As
of June 30, 1998, the contract value of these investment contracts approximates
fair value. The average yield for the investment contracts was 5.61% for the
period from August 14, 1997 to June 30, 1998 and the crediting interest rate as
of June 30, 1998 was 5.50%.
4. AMOUNTS DUE TO TERMINATED PARTICIPANTS:
- -----------------------------------------------
Participants' equity includes $0 and $113,904 of amounts due to terminated
participants at June 30, 1998 and 1997, 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.
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, 1998 and 1997:
<TABLE>
<CAPTION>
Benefits Participants' Participants'
Payable to Benefits Equity Equity
Participants Paid June 30, 1998 June 30, 1997
--------------------- ------------------- ------------------------- --------------------
<S> <C> <C> <C> <C>
Per financial
Statements $ - $ 236,453 $ 2,670,964 $ 3,885,210
Accrued benefit
Payments - - - (113,904)
Prior year
Reversal - (113,904) - -
--------------------- ------------------- ------------------------- --------------------
Per Form 5500 $ - $ 122,549 $ 2,670,964 $ 3,771,306
===================== =================== ========================= ====================
</TABLE>
<PAGE> 22
5. 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, 1998. Accordingly, income taxes have not been provided in the
accompanying financial statements. Annually, informational returns are prepared
and filed with the Internal Revenue Service.
6. INFORMATION CERTIFIED BY THE CUSTODIAN:
- --------------------------------------------
Information on investments held and their market/contract 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 the custodian as being accurate and complete.
7. PARTY-IN-INTEREST TRANSACTIONS:
- ----------------------------------
There were no prohibited transactions with a party in interest, as defined by
ERISA.
8. REPORTABLE TRANSACTIONS:
- -----------------------------
Schedule II summaries the Plan's reportable transactions for the year ended June
30, 1998. 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> 23
SCHEDULE I
AMENDED AND RESTATED WAXMAN INDUSTRIES, INC.
PROFIT SHARING & 401(K) RETIREMENT PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
JUNE 30, 1998
EMPLOYER IDENTIFICATION NUMBER: 34-0899894
PLAN NUMBER: 001
<TABLE>
<CAPTION>
IDENTITY OF MARKET/
ISSUER DESCRIPTION OF INVESTMENT CONTRACT VALUE(a)
- --------------------- ------------------------------------------------------------------------- ------------------
<S> <C> <C>
Waxman Waxman Industries, Inc. Common Stock $762,751
Industries:*
Aetna: * Aetna Fixed Account 283,403
Aetna Series Money Market Fund 59,322
Aetna Ascent Fund 179,719
Aetna Crossroads Fund 290,878
Aetna Legacy Fund 25,928
Aetna Index Plus Large Cap Fund 369,870
-- Fidelity Advisor Growth Opportunities Fund 242,340
-- Neuberger & Berman Genesis Trust 175,063
-- Neuberger & Berman Guardian Trust 86,769
-- Templeton Foreign Fund 145,868
Participant
Loans: * Participant Loans (9.5% interest rate) 49,053
---------
$2,670,964
==========
</TABLE>
(a) The Plan has requested historical cost information related to the above
investments; however, this information has not been provided by the custodian
due to the nature of its recordkeeping system.
* Indicates a party in interest
The accompanying notes to financial statements are an integral part of this
schedule.
<PAGE> 24
SCHEDULE II
AMENDED AND RESTATED WAXMAN INDUSTRIES, INC.
PROFIT SHARING & 401(K) RETIREMENT PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED JUNE 30, 1998
EMPLOYER IDENTIFICATION NUMBER: 34-0899894
PLAN NUMBER: 001
<TABLE>
<CAPTION>
Cost of
Asset/
Current Current
Value of Value of
Asset on Cost Asset on Net
Purchase Trans. Selling of Trans. Gain
Price Date price Asset Date (Loss)
- ------------------------- ----------------- ------------------ -------------- ----------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Aetna Fixed Account $ 335,270 $ 335,270 $ 65,780 (a) $ 65,780 (a)
Aetna Ascent Fund 205,992 205,992 46,231 (a) 46,231 (a)
Aetna Crossroads
Fund 357,727 357,727 98,340 (a) 98,340 (a)
Aetna Index Plus Large
Cap Fund 324,897 324,897 26,823 (a) 26,823 (a)
Fidelity Advisor
Growth
Opportunities
Fund 234,479 234,479 26,894 (a) 26,894 (a)
Neuberger & Berman
Genesis Trust 203,393 203,393 36,871 (a) 36,871 (a)
Waxman Industries,
Inc. Common Stock 124,539 124,539 195,290 (a) 195,290 (a)
Fidelity Contrafund -- -- 213,596 (a) 213,596 (a)
Fidelity Advisor
Balanced Fund -- -- 196,317 (a) 196,317 (a)
Guaranteed
Long Term Fund -- -- 989,839 (a) 989,839 (a)
Lifetime 30 Fund -- -- 211,470 (a) 211,470 (a)
</TABLE>
<PAGE> 25
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Lifetime 40 Fund -- -- 280,266 (a) 280,266 (a)
Lifetime 50 Fund -- -- 219,312 (a) 219,312 (a)
20th Century
Ultra Fund -- -- $198,837 (a) $198,837 (a)
</TABLE>
(a) The Plan has requested historical cost information related to the above
investments; however, this information has not been provided by the custodian
due to the nature of its recordkeeping system. As a result, the net gain or loss
cannot be determined.
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,
December 22, 1998.
