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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
Form 11-K
X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For The Fiscal Year Ended June 30, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-21728
A. Full title and address of the plan, if different from that of the
issuer named below:
BARNETT INC.
Profit Sharing and 401(K) Retirement Plan
3333 Lenox Avenue
Jacksonville, Florida 32254
(904) 384-6530
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
BARNETT INC.
3333 Lenox Avenue
Jacksonville, Florida 32254
(904) 384-6530
Required Information
The following financial statements and schedules have been prepared in
accordance with the financial reporting requirements of the Employee Retirement
Income Security Act of 1974, as amended:
1. Statements of Net Assets Available for Benefits - June 30, 1998
2. Statement of Changes in Net Assets Available for Benefits,
With Fund Information For the year Ended June 30, 1998.
BARNETT INC.
Profit Sharing and 401(K) Retirement Plan
FINANCIAL STATEMENTS AND SCHEDULES
AS OF JUNE 30, 1998
TOGETHER WITH
AUDITORS' REPORT
<PAGE> 2
Barnett Inc.
Profit Sharing and 401(k) Retirement Plan
Financial Statements and Schedules
As of June 30, 1998
Together With
Auditors' Report
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BARNETT INC.
PROFIT SHARING AND 401(K) RETIREMENT PLAN
FINANCIAL STATEMENTS AND SCHEDULES
JUNE 30, 1998
TABLE OF CONTENTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
FINANCIAL STATEMENTS
Statement of Net Assets Available for Benefits--June 30, 1998
Statement of Changes in Net Assets Available for Benefits, With Fund
Information, for the year ended June 30, 1998
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
SCHEDULES SUPPORTING FINANCIAL STATEMENTS
Schedule I: Item 27a--Schedule of Assets Held for Investment
Purposes--June 30, 1998
Schedule II: Item 27d--Schedule of Reportable Transactions for
the year ended June 30, 1998
<PAGE> 4
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Plan Administrator of
Barnett Inc. Profit Sharing &
401(k) Retirement Plan:
We have audited the accompanying statement of net assets available for benefits
of BARNETT INC. PROFIT SHARING AND 401(K) RETIREMENT PLAN as of June 30, 1998
and the related statement of changes in net assets available for benefits, with
fund information, for the year ended June 30, 1998. These financial statements
and the schedules referred to below are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit 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
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, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
June 30, 1998 and the changes in net assets available for benefits for the
year ended June 30, 1998 in conformity with generally accepted accounting
principles.
Our audit was 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 and reportable transactions 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 statement of changes in
net assets available for benefits is presented for purposes of additional
analysis rather than to present the changes in net assets available for plan
benefits of each fund. The supplemental schedules and fund information have been
subjected to the auditing procedures applied in the audit 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.
ARTHUR ANDERSEN LLP
Jacksonville, Florida
December 23, 1998
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<TABLE>
<CAPTION>
BARNETT INC.
PROFIT SHARING AND 401(K) RETIREMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
JUNE 30, 1998
<S> <C>
ASSETS:
INVESTMENTS, AT FAIR VALUE (NOTES 2 AND 3):
U.S. Stock Account $ 444,369
Guaranteed Interest Account 349,819
Bond & Mortgage Account 300,580
Vanguard Wellington 300,553
American Century: 20th Century 274,550
INVESCO Total Return 268,894
Small Company Blend Account 197,310
International Stock Account 181,109
Barnett Inc. Stock 115,935
Money Market Account 405
Participants loans 26,313
----------
Total investments 2,459,837
----------
RECEIVABLES:
Participant's contributions 20,224
Employer's contributions 6,849
Other 212
----------
Total receivables 27,285
----------
NET ASSETS AVAILABLE FOR BENEFITS $2,487,122
==========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 6
BARNETT INC.
PROFIT SHARING AND 401(K) RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND
INFORMATION,
FOR THE YEAR ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
American
Bond Century:
U.S. Guaranteed and 20th
STOCK Interest Mortgage Vanguard Century
Account Account Account Wellington Ultra
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Contributions:
Participants $ 137,390 $ 78,912 $ 50,775 $ 77,554 $ 74,405
Employer 40,951 23,937 16,006 24,492 21,765
---------- ---------- ---------- ---------- ----------
Total contributions 178,341 102,849 66,781 102,046 96,170
---------- ---------- ---------- ---------- ----------
Investment income (loss):
Net appreciation (depreciation) in fair value 51,030 0 19,677 33,815 41,081
Interest/dividends 0 16,990 0 0 0
---------- ---------- ---------- ---------- ----------
Net investment income 51,030 16,990 19,677 33,815 41,081
---------- ---------- ---------- ---------- ----------
Transfers in 237,200 259,463 189,515 191,633 145,489
---------- ---------- ---------- ---------- ----------
Total additions 466,571 379,302 275,973 327,494 282,740
---------- ---------- ---------- ---------- ----------
BENEFITS PAID TO PARTICIPANTS 17,822 6,299 10,215 7,665 8,084
---------- ---------- ---------- ---------- ----------
LOANS ISSUED TO PARTICIPANTS (5,529) (7,963) (3,232) (250) (250)
---------- ---------- ---------- ---------- ----------
LOAN PRINCIPAL REPAYMENTS 1,572 675 376 741 262
---------- ---------- ---------- ---------- ----------
ADMINISTRATIVE EXPENSES 945 133 800 592 0
---------- ---------- ---------- ---------- ----------
INTERFUND TRANSFERS 522 (15,763) 38,478 (19,175) (118)
---------- ---------- ---------- ---------- ----------
NET INCREASE 444,369 349,819 300,580 300,553 274,550
---------- ---------- ---------- ---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of period 0 0 0 0 0
---------- ---------- ---------- ---------- ----------
End of period $ 444,369 $ 349,819 $ 300,580 $ 300,553 $ 274,550
========== ========== ========== ========== ==========
<CAPTION>
Small
INVESCO Company International Money
Total Blend Stock Barnett Inc. Market
Return Account Account Stock Account
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Contributions:
Participants $ 63,509 $ 67,049 $ 59,226 $ 31,583 $ 1,738
Employer 19,260 18,249 15,956 19,825 45
---------- ---------- ---------- ---------- ----------
Total contributions 82,769 85,298 75,182 51,408 1,783
---------- ---------- ---------- ---------- ----------
Investment income (loss):
Net appreciation (depreciation) in fair value 31,294 7,168 15,578 (23,544) 868
Interest/dividends 0 0 0 0 0
---------- ---------- ---------- ---------- ----------
Net investment income 31,294 7,168 15,578 (23,544) 868
---------- ---------- ---------- ---------- ----------
Transfers in 162,401 110,772 97,250 94,718 0
---------- ---------- ---------- ---------- ----------
Total additions 276,464 203,238 188,010 122,582 2,651
---------- ---------- ---------- ---------- ----------
BENEFITS PAID TO PARTICIPANTS 6,256 2,359 4,596 6,957 0
---------- ---------- ---------- ---------- ----------
LOANS ISSUED TO PARTICIPANTS (250) (2,667) (1,616) (250) (1,401)
---------- ---------- ---------- ---------- ----------
LOAN PRINCIPAL REPAYMENTS 770 155 41 536 0
---------- ---------- ---------- ---------- ----------
ADMINISTRATIVE EXPENSES 0 227 266 0 5
---------- ---------- ---------- ---------- ----------
INTERFUND TRANSFERS (1,834) (830) (464) 24 (840)
---------- ---------- ---------- ---------- ----------
NET INCREASE 268,894 197,310 181,109 115,935 405
---------- ---------- ---------- ---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of period 0 0 0 0 0
---------- ---------- ---------- ---------- ----------
End of period $ 268,894 $ 197,310 $ 181,109 $ 115,935 $ 405
========== ========== ========== ========== ==========
<CAPTION>
Participant
Loans Receivables Total
---------- ---------- ----------
<S> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Contributions:
Participants $ 0 $ 20,224 $ 662,365
Employer 0 6,849 207,335
---------- ---------- ----------
Total contributions 0 27,073 869,700
---------- ---------- ----------
Investment income (loss):
Net appreciation (depreciation) in fair value 0 0 176,967
Interest/dividends 1,392 0 18,382
---------- ---------- ----------
Net investment income 1,392 0 195,349
---------- ---------- ----------
Transfers in 6,853 0 1,495,294
---------- ---------- ----------
Total additions 8,245 27,073 2,560,343
---------- ---------- ----------
BENEFITS PAID TO PARTICIPANTS 0 0 70,253
---------- ---------- ----------
LOANS ISSUED TO PARTICIPANTS 23,408 0 0
---------- ---------- ----------
LOAN PRINCIPAL REPAYMENTS (5,340) 212 0
---------- ---------- ----------
ADMINISTRATIVE EXPENSES 0 0 2,968
---------- ---------- ----------
INTERFUND TRANSFERS 0 0 0
---------- ---------- ----------
NET INCREASE 26,313 27,285 2,487,122
---------- ---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of period 0 0 0
---------- ---------- ----------
End of period $ 26,313 $ 27,285 $2,487,122
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 7
BARNETT INC.
PROFIT SHARING AND 401(K) RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
JUNE 30, 1998
1. DESCRIPTION OF THE PLAN
The following description of the Barnett Inc. Profit Sharing and 401(k)
Retirement Plan (the "Plan") of Barnett Inc. (the "Company") provides
general information only. More complete information regarding the Plan's
provisions may be found in the plan document.
GENERAL
The Plan is a defined contribution plan under the provisions of Section
401(a) of the Internal Revenue Code ("IRC"), which includes a qualified
deferred arrangement as described in Section 401(k) of the IRC. Prior to
the restatement of the Company's 401(k) plan, employees of the Company
participated in the Waxman Industries profit sharing and 401(k) plan.
These accounts were transferred to the Plan on July 1, 1997. The Plan
provides benefits to all employees of the Company. Employees of the
Company are eligible to participate in the Plan who are 21 years of age
or older, have completed one year of service with the Company, and have
worked 1,000 hours in that year. An employee may enter the Plan as of the
January 1, April 1, July 1, or October 1, following the date upon which
he/she becomes eligible to participate in the Plan.
CONTRIBUTIONS
Each year, participants may elect to contribute up to 15% of pre-tax
annual compensation, as defined in the Plan and subject to certain
limitations under the IRC. Employer matching and discretionary
contributions, net of forfeitures, may be contributed to the Plan at the
option of the Company's board of directors, subject to certain
limitations.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contribution
and allocations of plan earnings. Allocations of plan earnings are based
on account balances, as defined in the Plan.
INVESTMENT OPTIONS
Upon enrollment in the Plan, a participant may direct employee
contributions in any of nine investment options:
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GUARANTEED INTEREST ACCOUNT
The Guaranteed Interest Account investments are private market
bonds, commercial mortgages and mortgage backed securities. Money
placed in this account earns a guaranteed interest rate for a
specific number of years.
MONEY MARKET FUND
The Money Market Fund is no longer an investment option. It is a
rollover from the Waxman plan.
BOND & MORTGAGE ACCOUNT
The Bond & Mortgage Account invests primarily in
intermediate-term, investment-grade fixed income securities;
mainly private placement bonds, commercial mortgages, and
publicly traded bonds.
INVESCO TOTAL RETURN
The INVESCO Total Return Fund invests in stocks and bonds. It
owns stocks in conservative, well-known companies that have the
potential for continued strong profit growth and are selling
cheaply compared to their prospects and past prices. The fund
also holds short- and intermediate-term bonds.
VANGUARD WELLINGTON
The Vanguard Wellington Fund invests 60% to 70% of assets in
stocks and the remainder in bonds to provide a combination of
long-term growth and income. The fund may invest up to 10% of
assets in foreign securities.
U.S. STOCK ACCOUNT
The U.S. Stock Account invests money in stocks of U.S. companies
of all sizes. The strategy is to target stocks that are
considered good values when their prices are compared to their
long-term earnings potential.
AMERICAN CENTURY: 20TH CENTURY ULTRA
The American Century: 20th Century Ultra invests in stocks of
some of the fastest growing companies that are considered to have
better-than-average potential for earnings. The fund invests only
in the stocks of companies that have operated continuously for
three or more years.
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SMALL COMPANY BLEND ACCOUNT
The Small Company Blend Account invests in stocks of smaller,
seasoned companies where potential for long-term growth is
expected to be above average. The account looks at both "growth"
and "value" stocks, resulting in a "blend" portfolio.
INTERNATIONAL STOCK ACCOUNT
The International Stock Account invests in common stocks of
companies located outside the U.S., mainly in Western Europe and
Asia. Countries and industries are selected after evaluating the
economic, social, and political factors of each market.
BARNETT INC. STOCK
This investment option invests in the common stock of Barnett
Inc.
BENEFITS PAYMENTS
Participants in service may make hardship withdrawals from their voluntary
contributions upon demonstrating immediate and heavy financial need. No
withdrawals may be made from company contributions.
Upon termination of service due to death, disability or retirement, a
participant may elect to receive either a lump-sum amount equal to the
value of the participant's vested interest in his or her account, or
annual installments over a ten year period. For termination of service due
to other reasons, a participant may receive the value of the vested
interest in his or her account as a lump-sum distribution.
As of June 30, 1998, net assets available for benefits included benefits
of $72,000 due to participants who have withdrawn from participation in
the Plan.
PARTICIPANT LOANS
The Plan permits a participant to borrow a percentage of his/her vested
account balance subject to certain limitations. The interest rate for the
loan is determined to be the prime rate plus 2% as of the loan.
VESTING
Participants are immediately vested in their contributions plus actual
earnings thereon. Vesting in the Company's matching and discretionary
contribution portion of their accounts plus actual earnings thereon is
based on years of continuous service. Employees vest in Company
contributions ratably over five years of service based on the following
schedule:
<PAGE> 10
- 5 -
<TABLE>
<CAPTION>
YEARS OF VESTING
SERVICE PERCENTAGE
------------------------------------- ---------------
<S> <C>
Less than 1 year 0%
1 year but less than 2 20
2 years but less than 3 40
3 years but less than 4 60
4 years but less than 5 80
5 years or more 100
</TABLE>
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the accrual method
of accounting.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, and
changes therein, and disclosure of contingent assets and liabilities.
Actual results could differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value as determined by quoted
market prices on the last day of the plan year.
Purchases and sales of securities are recorded on a settlement date basis
which does not materially differ from the trade date. Interest income is
recorded on the accrual basis. Dividends are recorded on the ex-dividend
date.
PLAN EXPENSES
Substantially all administrative plan expenses are paid by the Company.
<PAGE> 11
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3. INVESTMENTS
The carrying values of individual investments that represent 5% or more of
the Plan's net assets as of June 30, 1998 are as follows:
<TABLE>
<CAPTION>
FAIR
VALUE
--------
Fair value as determined by quoted market value:
<S> <C>
Guaranteed Interest Account $349,819
Bond & Mortgage Account 300,580
U.S. Stock Account 444,369
Small Company Blend Account 197,310
International Stock Account 181,109
INVESCO Total Return 268,894
American Century: 20th Century Ultra 274,550
Vanguard Wellington 300,553
</TABLE>
4. PLAN TERMINATION
Although it has not been expressed any intent to do so, the Company has
the right under the Plan to discontinue its contributions at any time and
to terminate the Plan subject to the provisions of ERISA.
5. TAX STATUS
The Plan obtained its determination letter on April 16, 1998 in which the
Internal Revenue Service stated that the Plan, as then designed, was in
compliance with the applicable requirements of the IRC. The plan
administrator believes that the Plan is currently designed and is being
operated in compliance with the applicable requirements of the IRC and
that the trust continues to be tax-exempt under Section 501(a) of the IRC.
<PAGE> 12
SCHEDULE I
BARNETT INC.
PROFIT SHARING AND 401(K) RETIREMENT PLAN
ITEM 27A--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
JUNE 30, 1998
<TABLE>
<CAPTION>
FAIR
IDENTITY OF PARTY INVOLVED DESCRIPTION OF INVESTMENT COST VALUE
=============================================== ===================================== =========== ===========
<S> <C> <C> <C>
* PRINCIPAL LIFE INSURANCE COMPANY Guaranteed Interest Account $ 349,819 $ 349,819
Money Market Fund 392 405
Bond & Mortgage Account 281,599 300,580
U.S. Stock Account 395,327 444,369
Small Company Blend Account 190,533 197,310
International Stock Account 166,156 181,109
INVESCO INVESCO Total Return 246,820 268,894
AMERICAN CENTURY American Century: 20th Century Ultra 266,705 274,550
VANGUARD Vanguard Wellington 289,383 300,553
* BARNETT INC. Common Stock 138,388 115,935
* PLAN PARTICIPANTS Loans, interest rates at prime plus 2% 26,313 26,313
---------- ----------
$2,351,435 $2,459,837
========== ==========
</TABLE>
*Represents a party in interest.
The accompanying notes are an integral part of this schedule.
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SCHEDULE II
BARNETT INC.
PROFIT SHARING AND 401(K) RETIREMENT PLAN
ITEM 27D--SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
PURCHASES SALES
------------------------ ---------------------------
NUMBER NUMBER
IDENTITY OF ISSUER, BORROWER, OF PURCHASE OF SELLING
LESSOR, OR SIMILAR PARTY DESCRIPTION OF INVESTMENT TRANSACTIONS PRICE TRANSACTIONS PRICE
==================================== ==================================== ============ ========== ============ ===========
<S> <C> <C> <C> <C> <C>
* PRINCIPAL LIFE INSURANCE
COMPANY Guaranteed Interest Account 50 $ 363,341 23 $ 30,512
Money Market Fund 5 1,488,730 6 1,489,193
Bond & Mortgage Account 71 295,282 28 14,380
U.S. Stock Account 65 418,586 35 25,247
Small Company Blend Account 61 196,816 26 6,674
International Stock Account 52 172,819 27 7,286
INVESCO INVESCO Total Return 49 254,537 14 8,452
AMERICAN CENTURY American Century: 20th Century Ultra 49 275,814 16 8,809
VANGUARD Vanguard Wellington 52 316,391 19 28,310
* BARNETT INC. Common Stock 47 146,720 7 7,241
<CAPTION>
SALES
------------------------
COST NET
IDENTITY OF ISSUER, BORROWER, OF GAIN
LESSOR, OR SIMILAR PARTY DESCRIPTION OF INVESTMENT ASSET (LOSS)
==================================== ==================================== ========= ======
<S> <C> <C> <C>
* PRINCIPAL LIFE INSURANCE
COMPANY Guaranteed Interest Account $ 30,512 $ 0
Money Market Fund 1,488,338 855
Bond & Mortgage Account 13,683 697
U.S. Stock Account 23,259 1,988
Small Company Blend Account 6,283 391
International Stock Account 6,663 623
INVESCO INVESCO Total Return 7,717 735
AMERICAN CENTURY American Century: 20th Century Ultra 9,109 (300)
VANGUARD Vanguard Wellington 27,008 1,302
* BARNETT INC. Common Stock 8,332 (1,091)
</TABLE>
*Represents a party in interest.
The accompanying notes are an integral part of this schedule.
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this Annual Report to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Jacksonville, State of Florida, on
December 23, 1998.
BARNETT INC.
PROFIT SHARING AND 401(K) RETIREMENT PLAN
PAUL JANKE, TRUSTEE
By: /s/ Paul Janke
---------------------------------
Paul Janke
Vice President
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Exhibit 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference of our report included in this Form 11-K into Barnett
Inc.'s previously filed Registration Statement on Form S-8 File No. 333-23431.
ARTHUR ANDERSEN LLP
Jacksonville, Florida
December 23, 1998
