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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    Form 10-K405

             X     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           -----            SECURITIES EXCHANGE ACT OF 1934

                     For The Fiscal Year Ended June 30, 2000

                                       OR
              TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

               For the transition period from          to

                         Commission File Number 0-21728

                                  BARNETT INC.
                                  ------------
             (Exact Name of Registrant as Specified in its Charter)

         Delaware                                            59-1380437
         --------                                            ----------
(State or other jurisdiction of                            (I.R.S. Employer
 incorporation or organization)                            Identification No.)

3333 Lenox Avenue, Jacksonville, Florida                         32254
(Address of Principal Executive Offices)                       (Zip Code)

       Registrant's telephone number, including area code: (904) 384-6530

           Securities registered pursuant to Section 12(b) of the Act:
                                      NONE

           Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock, $.01 par value
                              (Title of each Class)

         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past ninety (90) days.
Yes   X      No
    -----       -----

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X

         Aggregate market value of voting stock held by non-affiliates of the
Registrant based on the closing price at which such stock was sold on the NASDAQ
National Market on September 18, 2000: $114,574,178

         Number of shares of Common Stock outstanding as of September 18,
2000: 16,103,205


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<PAGE>


                       DOCUMENTS INCORPORATED BY REFERENCE

None.

                                     PART I


CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This Annual Report on Form 10-K contains certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 that
are based on the beliefs of the Company and its management, as well as
assumptions made by and information currently available to the Company and its
management. When used in this document, the words "anticipate," "believe,"
"continue," "estimate," "expect," "intend," "may," "should" and similar
expressions are intended to identify forward-looking statements. Such statements
reflect the current view of the Company with respect to future events and are
subject to certain risks, uncertainties and assumptions, including, but not
limited to, the risk that the Company may not be able to implement its growth
strategy in the intended manner, price competition, risks associated with
currently unforeseen competitive pressures and risks affecting the Company's
industry such as increased distribution costs and the effects of general
economic conditions. In addition, the Company's business, operations and
financial condition are subject to the risks, uncertainties and assumptions
which are described in the Company's reports and statements filed from time to
time with the Securities and Exchange Commission, including this Report. Should
one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from these
described herein as anticipated, believed, estimated, expected or intended.


ITEM 1. BUSINESS

Overview

         Barnett Inc. (the "Company") is a direct marketer and distributor of an
extensive line of plumbing, electrical, hardware and security hardware products
to approximately 71,500 active customers throughout the United States, the
Caribbean and South America. Effective January 1, 1999, the Company acquired
U.S. Lock, a division of WOC, Inc., a wholly-owned subsidiary of Waxman
Industries, Inc., for a cash purchase price of $33.0 million and the assumption
of liabilities estimated at approximately $2.0 million. The Company offers
approximately 21,300 name brand and private label products through its
industry-recognized Barnett(R) and U.S. Lock(R) catalogs and telesales
operations. The Company markets its products through six distinct, comprehensive
catalogs that target professional contractors, independent hardware stores,
maintenance managers, liquid propane gas ("LP Gas") dealers and locksmiths. The
Company's staff of over 146 knowledgeable telesales, customer service and
technical support personnel work together to serve customers by assisting in
product selection and offering technical advice. To provide rapid delivery and a
strong local presence, the Company has established a network of 42 distribution
centers strategically located in 34 major metropolitan areas throughout the
United States and Puerto Rico. Through these local distribution centers,
approximately 70% of the Company's orders are shipped to the customer on the
same day the order is received. The remaining 30% of the orders are picked up by
the customer at one of the Company's local distribution centers. The Company's
strategy of being a low-cost, competitively priced supplier is facilitated by
its volume of purchases and offshore sourcing of a significant portion of its
private label products. Products are purchased from over 650 domestic and
foreign suppliers.

         The Company believes that its distinctive business model has enabled it
to become a high-volume, cost-efficient direct marketer of competitively priced
plumbing, electrical, hardware and security hardware products. The Company's
approximately 1,000-page catalogs offer an extensive selection of products in an
easy to use format enabling customers to consolidate purchases with a single
vendor. The Company provides an updated version of its catalogs to its customers
an average of three times




                                       1
<PAGE>


a year. To attract new customers and offer special promotions to existing
customers, the Company supplements its catalogs with monthly promotional flyers.
The Company's experienced and knowledgeable inbound telesales staff, located at
the Company's centralized headquarters in Jacksonville, Florida, uses the
Company's proprietary information systems to take customer orders as well as
offer technical advice. The Company's highly trained outbound telesales staff
maintains frequent customer contact, makes telesales presentations, encourages
additional purchases and solicits new customers. The Company's high in-stock
position and extensive network of local distribution centers enable it to
fulfill approximately 96% of the items included in each customer order and
provide rapid delivery. As a result of its emphasis on customer service, the
Company's customer retention rate (i.e., customers who place orders in the
following year) has consistently remained in the 80% range for the past four
years.

         The Company has actively pursued increased sales of its private label
products sourced primarily from foreign suppliers. During the fiscal year ended
June 30, 2000, approximately 30.0% of the Company's net sales were attributable
to sales of private label products. Many of the Company's private label products
provide the customer with lower cost, high quality alternatives to brand name
products, as well as providing the Company with higher profit margins. The
Company's private label products are sold under brand names such as
Premier(R),ProPlus(R),Barnett(R),Legend(TM),Electracraft(R),Lumina(TM),U.S.
Lock(R), and Big Duty Deadbolt(R).

Industry Overview

         The Company competes in a large and highly fragmented industry. The
Company broadly defines its industry as the sale of plumbing, electrical,
hardware and security hardware products primarily to plumbing and electrical
repair and remodeling contractors, maintenance managers, independent hardware
stores, LP Gas dealers and locksmiths. Plumbing and electrical contractors are
primarily responsible for making repairs on a daily basis and generally do not
have time to shop with multiple vendors. Plumbing and electrical contractors,
therefore, value extensive product selection, convenient ordering, reliable,
rapid delivery and other value-added services. In addition, such contractors
typically operate with limited working capital, making competitive pricing
important. Plumbing, electrical and hardware contractors have traditionally
purchased supplies through a variety of distribution channels including:

         Local or Regional Broad-Line Suppliers. There are numerous broad-line
suppliers offering product categories similar to those found in the Company's
catalogs. Most of these suppliers are local or regional in scope. Although these
competitors typically use a direct sales force, often supported by a
manufacturer's catalog, they are smaller and therefore tend to offer brand name
products only, and fewer services than offered by the Company. However, many of
these suppliers offer a greater breadth of products than the Company.

         Specialty Suppliers. Specialty suppliers focus on a single product
category, such as plumbing or electrical supplies, and often offer a greater
number of products within their product categories. Specialty suppliers are
typically local or regional in scope and cannot provide the one-stop shopping
sought by many of the Company's customers.

         Industrial Suppliers. There are a few industrial suppliers that include
a limited selection of plumbing, electrical and hardware products in their
merchandise mix but do not focus on the Company's target markets.

         Mail Order Distributors. There are several mail order catalog
distributors that offer a broad selection of repair and maintenance products,
have multiple distribution centers and offer rapid delivery services. However,
these companies generally do not have a significant telesales staff or the
Company's geographic scope and typically focus on fewer customer segments.

Business Strengths

         The Company's strategy is to continue to be a high-volume, cost
efficient direct marketer of competitively priced plumbing, electrical, hardware
and security hardware products, providing superior customer service. The Company
believes that the following business strengths are the key elements of this
strategy:


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<PAGE>



         Direct Marketing Sales Approach. The Company displays and promotes its
products through six comprehensive catalogs: The Barnett Professional Catalog,
Maintenance USA, Hardware Express, Barnett of the Caribbean, LeRan Gas Products
and U.S. Lock. These catalogs are targeted, respectively, to such major customer
groups as professional plumbing and electrical repair and remodeling
contractors, maintenance managers, hardware stores, LP Gas dealers and
locksmiths. The Company mailed its first catalog in 1958 and currently mails its
principal catalog to the 71,500 active customers on its proprietary mailing
list. These mailings are supplemented with direct mail promotional flyers to
existing and potential customers on a monthly basis. Typical catalogs mailed by
the Company contain over 13,000 items in the Barnett catalogs and 8,300 in the
U.S. Lock catalog and are approximately 1,000 pages in length. The Company's
objective is to leverage its direct sales experience to sell a broader array of
products to a larger number of customers. The Company's comprehensive catalogs
provide its customers with the opportunity to purchase a substantial portion of
their plumbing, electrical, hardware and security hardware supplies from a
single vendor.

         Sophisticated Data Based Telesales. During fiscal 2000, approximately
69.5% of the Company's net sales were generated through the Company's 146
outbound and inbound telesalespersons. Outbound telesalespersons are assigned
account management responsibilities for existing customers with an emphasis on
customer service, new product introductions and new product lines. Inbound
telesalespersons are trained to quickly process orders from existing customers.
All telesalespersons are highly knowledgeable and are required to go through
extensive product and sales training before they begin to work with customers.
The Company's proprietary telesales software provides the telesales staff with
detailed customer profiles and information about products, pricing, promotions
and competition. This data enables the Company to segment its customer base,
analyze mailing effectiveness on a weekly basis, closely track and manage
inventory on a real-time basis and quickly react to, and capitalize on, business
opportunities.

         National Network of Distribution Centers. To provide more rapid
delivery and a strong local presence, the Company has established a network of
42 distribution centers strategically located in 34 major metropolitan areas
throughout the United States and Puerto Rico. The distribution centers enable
the Company to be closer to many of its customers for faster product delivery
and to generate incremental over-the-counter sales. The Company's experience
indicates that many of its customers prefer to purchase from local suppliers and
often choose to pick up their orders in person. Approximately 30% of the
Company's orders are picked up by the customer at one of the Company's local
distribution centers.

         Superior Customer Service. As a result of its large in-stock inventory,
the Company is typically able to fulfill approximately 96% of the items included
in each customer order, and, in almost all cases, ships the order within the
same day of receipt of the order. In addition, as a result of its large number
of distribution centers, the Company is able to provide its customers with more
rapid delivery to markets within the continental United States, the Caribbean
and South America. In an effort to maximize sales and increase customer
retention, the Company has structured its telesales staff to create regular
contact between the Company's telesales personnel and each active customer. The
Company's customer retention rate (i.e., customers who place orders in the
following year) has consistently remained in the 80% range for the past four
years.

         Competitive Pricing and Private Label Products. Due to the Company's
size, volume of purchases, substantial vendor base and offshore sourcing
capabilities, the Company is frequently able to obtain purchase terms that the
Company believes are more favorable than those available to its competition.
This enables the Company to offer prices that are generally lower than those
available from its competitors. Many of the Company's private label products
provide the customer with lower-cost, high quality alternatives to name brand
products, as well as providing the Company with higher profit margins. During
fiscal 2000, approximately 30.0% of the Company's net sales were attributable to
sales of private label products.

         Centralized Management Information Systems.  The Company's proprietary
integrated centralized management information systems provide the Company with
real-time information for managing telesales, distribution, customer service,
inventory control



                                        3

<PAGE>


and financial controls. The management information systems also enable the
Company to effectively coordinate its purchasing, marketing, outbound telesales,
order entry, shipping and billing. The current system has enabled the Company to
enhance its levels of customer service and increase the productivity and
profitability of its telesales operations, as well as enabling management to
make well informed business decisions. The system can be easily and
cost-effectively upgraded as the Company grows.

Marketing and Distribution

         The Company markets its products nationwide and internationally to
existing and potential customers through regular catalog and promotional
mailings, supported by a telesales operation. Products are shipped from a
network of 42 distribution centers allowing for shipment to and pick up by
customers generally the same day the order is received. The outbound telesales
operation is utilized to make telephonic sales presentations to existing and
potential customers that have received written promotional materials. The
Company's inbound telesalespersons provide customer assistance and take customer
orders. The Barnett outbound and inbound telesales operations are centralized in
Jacksonville, Florida and the U.S. Lock operations are centralized in Long
Island, New York.

  Catalogs

         The Company's six approximately 1000-page catalogs containing
approximately 21,300 plumbing, electrical, hardware and security hardware
products are mailed to its approximately 71,500 active customers. These catalogs
are supplemented by monthly promotional flyers. The Company's targeted customers
include professional contractors, independent hardware stores, maintenance
managers, LP Gas dealers and locksmiths. The Company has been distributing its
principal catalog since 1958 and believes that both the Barnett(R) and U.S.
Lock(R) names have achieved a very high degree of recognition among the
Company's customers and suppliers.

         The Company makes its initial contact with potential customers
primarily through promotional flyers. The Company obtains the names of
prospective customers through the purchase and rental of mailing lists from
outside marketing information services and other sources. Sophisticated
proprietary information systems are used to analyze the results of individual
catalog and promotional flyer mailings. The information derived from these
mailings, as well as information obtained from the Company's telesales
operations, is used to create and/or supplement individual customer profiles and
to target future mailings. The Company updates its mailing lists frequently to
delete inactive customers.

         The Company believes that due, in part, to the continuing expansion of
its product offerings in conjunction with continuing its expanded promotional
flyer campaigns, it has the opportunity to market its products to attract new
customers. In fiscal 2000, approximately 13,400 new customers contributed
approximately $19.6 million to net sales.

         The Company's in-house art department produces the design and layout
for its catalogs and promotional mailings. The catalogs are indexed and
illustrated, provide simplified pricing and highlight new product offerings.

  Telesales

         During fiscal 2000, approximately 69.5% of the Company's net sales were
generated through the Company's telesales operation. The Company's telesales
operation has been designed to make ordering its products as convenient and
efficient as possible, thereby enabling the Company to provide superior customer
service. The Company offers its customers a nationwide toll-free telephone
number that currently is staffed by approximately 146 telesales, customer
service and technical support personnel who utilize the Company's proprietary,
on-line order processing system. This sophisticated software provides the
telesales staff with detailed customer profiles and information about products,
pricing, promotions and competition. This data enables the Company to segment
its customer base, analyze mailing effectiveness on a weekly basis, closely
track and manage inventory on a real-time basis and quickly react to and
capitalize on market opportunities.




                                        4

<PAGE>


         The Company divides its telesales staff into outbound and inbound
groups. The Company's experience indicates that customer loyalty is bolstered by
the ability of the telesales staff to develop an ongoing personal relationship
with their customers. The Company's highly trained outbound telesales staff
maintains frequent customer contact, makes telesales presentations and
encourages additional purchases. Inbound telesalespersons are trained to quickly
process orders from existing customers, provide technical support, expedite and
process new customer applications as well as handle all customer service. They
endeavor to increase sales by informing customers of price breaks for larger
orders, companion items and replacement items with higher margins. Outbound
telesalespersons are also utilized to make telephonic sales presentations to
both potential and existing customers. Also, for several months prior to the
opening of new distribution centers, the Company utilizes its telesales
operation to generate awareness of the Company, its product offerings and the
upcoming opening of new distribution centers located near the target customers.

         The Company conducts a customized, in-depth six week training course
for new telesales employees. Training includes the use of role playing and
videotape analysis. Upon satisfactory completion of their training, new
telesales personnel are provided with a dedicated, experienced associate who
serves as a "coach" for the next year. In order to better assure high telesales
service levels, telesales supervisors regularly monitor telesales calls.

         The direct marketing channel primarily uses product catalogs and
promotional materials to target small to mid-size customers. Barnett markets its
full line catalogs to its existing customer base and mails flyers and other
promotional material to prospective customers and also as supplemental mailings
to existing customers.

  Export business

         The Company believes that many opportunities for direct marketing to
the Company's existing target markets exist in foreign locations including South
America, the Caribbean and Europe. In October 1997, the Company opened its first
offshore distribution center in Puerto Rico. Although the Company does not
intend to commit material resources to international expansion during the next
few years, the Company has begun to, and intends to continue to, access these
markets through its existing telesales operations and increased mailings of its
promotional flyers. The Company believes that customers in these international
areas are receptive to mail order purchasing and that potential customers would
be attracted to the breadth of the Company's product lines and its competitive
pricing.

  Factory Direct Programs

         During fiscal 1999, the Company significantly enhanced its factory
direct programs. Factory direct programs represent products shipped directly to
the Company's customers from certain suppliers and manufacturers. The Company
now offers approximately 2,000 factory direct items in its various catalogs.

  Distribution Center Network

         The Company has established a network of 42 local distribution centers
strategically located in 34 major metropolitan areas throughout the United
States and Puerto Rico. This network enables the Company to provide rapid and
complete product delivery and provides a strong local presence.

         The Company's distribution centers range in size from approximately
17,000 square feet to 60,000 square feet. Distribution centers are typically
maintained under operating leases in commercial or industrial centers.
Distribution centers primarily consist of warehouse and shipping facilities, but
also include "city sales counters". These city sales counters typically occupy
approximately 900 square feet, where customers can pick up orders or browse
through a limited selection of promotional items. The Company is often able to
generate incremental sales from customers who pick up their orders. During
fiscal 2000 the Company opened its 41st distribution center in Orlando, Florida
in October 1999 and its 42nd distribution center in Phoenix, Arizona in December
1999.




                                        5

<PAGE>


         During fiscal 2000, the Company had commenced a study to refine its
National logistics network and had reached a conclusion to open a National
Distribution Center (the "NDC"). Historically, the Company operated a
decentralized distribution strategy whereby most of its vendors shipped to each
of the existing distribution centers. This NDC, which is located in Nashville,
Tennessee and is 189,000 square feet, will receive all vendor shipments and
re-distribute to the other distribution centers. This strategy is designed to
significantly increase the Company's product capability. Due to the shorter lead
times between the NDC and the network facilities, the network facilities will be
able to reduce their on-hand inventory and re-assess their space requirements
while actually improving fill rates. The NDC opened in July 2000.

Products

         The Company markets an extensive line of approximately 21,300 plumbing,
electrical, hardware and security hardware products, many of which are sold
under its proprietary trade names and trademarks. This extensive line of
products allows the Company to serve as a single source supplier for many of its
customers. Many of these products are higher margin products bearing the
Company's proprietary trade names and trademarks. In addition, proprietary
products are often the customers' higher margin product offerings.

         The Company tracks sales of new products the first year they are
offered and new products that fail to meet specified sales criteria are
discontinued. The Company believes that its customers respond favorably to the
introduction of new product lines in areas that allow the customers to realize
additional cost savings and to utilize the Company's catalogs as a means of
one-stop shopping for many of their needs.

         The Company plans to increase its new product offerings by 1,200 to
1,500 items per year over the next three years, which will deepen the Company's
existing product lines and establish new product categories. The Company's name
and reputation have enabled the Company to successfully market a trusted line of
private label products, and accordingly, a significant portion of new product
additions will be private label products. Private label products offer customers
high quality, lower-cost alternatives to the brand name products the Company
sells. The Company's catalogs and monthly promotional flyers emphasize the
comparative value of the Company's private label products. During fiscal 2000,
approximately 30.0% of the Company's net sales were generated by the sale of the
Company's private label products. The Company believes that the introduction of
new product lines will expand the Company's total potential target market.
Examples of new product lines recently introduced include water heaters, bath
fixtures, rope and chain and paint. The Company's products are generally covered
by a one year warranty, and returns, which require prior authorization from the
Company, have historically been immaterial in amount.

         The following is a discussion of the Company's principal product
groups:

         Plumbing Products. The Company sells branded products of leading
plumbing supply manufacturers including Delta(R), Moen(R) and Price Pfister(R).
The Company's private label plumbing products are also sold under its
Barnett(R), Premier(R) and ProPlus(R) trademarks.


         Electrical Products. The Company sells branded products of leading
electrical supply manufacturers including Phillips(R), Westinghouse(R),
Honeywell(R) and General Electric(R). Certain of the Company's private label
electrical products are sold under its own proprietary trademarks including
Barnett(R), Premier(R), Electracraft(R) and Lumina(TM).

         Hardware Products. The Company sells hardware products of leading
hardware product manufacturers including DAP(R) sealants and caulks,
Rust-oleum(R) paints and Milwaukee(R) power tools. Certain of the Company's
hardware products are also sold under its own proprietary Legend(TM) trademark.

         Security Hardware Products. The Company sells a full line of security
hardware products including locksets, door closers and locksmith tools including
Kwikset(R) and Schlage(R). Certain of the Company's security hardware products
are also sold under its own proprietary U.S. Lock(R), Legend(TM) and Rx(TM)
trademarks.




                                        6

<PAGE>


         HVAC/R Products. The Company began selling a limited number of brand
name HVAC/R products in July 1997 and intends to continue expanding this product
line.


Sourcing

         The products sold by the Company are purchased from approximately 600
domestic and 50 foreign suppliers. Domestically manufactured products are
shipped directly to the Company's 42 distribution centers. Products manufactured
abroad are initially shipped to the Company's 5 regional distribution centers
and subsequently redistributed to each of the remaining local distribution
centers. The Company is not dependent upon any single supplier for any of its
requirements. Due to the volume of the Company's purchases and its utilization
of over 650 vendors, it is able to obtain purchase terms it believes to be more
favorable than those available to most local suppliers of plumbing, electrical
and hardware products. Approximately 73.5% of the Company's purchases for the
year ended June 30, 2000 were from domestic manufacturers and 26.5% were from
foreign manufacturers, primarily located in Asia. During fiscal 2000, the
Company purchased approximately 10.1% of its products through Waxman Industries
entities. Although the Company intends to continue to purchase products through
Waxman Industries entities in the future, the Company is not committed to
purchase any products from Waxman Industries.

Management Information Systems

         The Company has integrated all of its operating units into its
state-of-the-art management information system. This system encompasses all of
the Company's major business functions and was designed to enable the Company to
receive and process orders, manage inventory, verify credit and payment history,
invoice customers, receive payments and manage the Company's proprietary mail
order customer lists. In addition, all of the Company's local distribution
centers are linked to the Company's computer system to provide real-time access
to all necessary information, including inventory availability, order tracking,
and customer creditworthiness. The system can be easily and cost-effectively
upgraded as the Company grows. The Company has adopted procedures to protect the
data in its computer systems and to provide for recovery in the event of
equipment failures. All data systems are backed up to tape daily with backup
tapes stored off-site. End of month tapes, tape archives and production software
kept on-site are stored in a fire-proof safe. Additionally, the Company
maintains a geographically remote "hot site" computer system that is able to
communicate with all of the Company's distribution centers in the event of a
failure of the Company's primary system.

         The Company's customers can place orders directly via mail, facsimile,
telephone or through an electronic data interchange ("EDI") transmission.
Utilizing EDI, the Company's customers can send electronic purchase orders
directly to the Company's order entry systems. The Company makes this ordering
process simple for its customers by providing well-developed computer media
containing the Company's product information including item number, product
description, price, package quantity and UPC codes to be loaded directly into
the customer's purchasing system. The Company automatically edits and processes
EDI orders and sends the majority of EDI orders received directly to shipping.
The few EDI orders that need editing are sent immediately to a sales
representative for review. Through EDI, the Company can provide faster order
turnaround, thereby further fostering customer satisfaction.

         During fiscal 2000, the Company developed a fully functional e-commerce
and supply chain website. This website houses most of the Company's catalogs
on-line and provides vendor links, which the Company believes will strengthen
its competitive position in the marketplace. The website provides customers
instant access to the Company's complete line of products and provides on-line
ordering 24 hours a day, seven days a week.

         Costs associated with bringing the Company's systems into Y2K
compliance were immaterial, approximating $50,000, as the Company did not need
to incorporate material revisions or updates to the current systems to bring
them into Y2K compliance.




                                        7
<PAGE>


 Competition

         The market in which the Company competes is highly fragmented
consisting of many regional and local distributors of plumbing, electrical and
hardware products. The Company believes that competition is primarily based on
price, product quality and selection, as well as service, which includes rapid
order turnaround. The Company believes that its operating strategy positions it
to be an effective competitor in its markets. The Company's major competitors
include local and regional broad line suppliers, specialty suppliers, industrial
suppliers, direct mail distributors and warehouse home centers.

Seasonality

         The Company's sales are generally consistent throughout the year.

Environmental Regulations

         The Company's facilities are subject to certain federal, state and
local environmental laws and regulations. The Company believes that it is in
compliance with all environmental laws and regulations applicable to it.

Employees

         As of June 30, 2000, the Company employed 913 individuals, 248 of whom
were clerical and administrative personnel, 189 of whom were telesales and sales
representatives and 476 of whom were either production or warehouse personnel.
The Company's employees are not unionized. The Company considers its relations
with its employees to be good.


Recent Developments

         On July 10, 2000, the Company entered into an Agreement and Plan of
merger with Wilmar Industries, Inc. ("Wilmar") which provides for Wilmar to
acquire the Company in a cash merger. The Company's stockholders will receive
$13.15 cash for each share of common stock of the Company they own immediately
before the merger. The merger will be submitted for stockholder approval at a
special meeting of the Company's stockholders on September 27, 2000. Subject to
the receipt of stockholder approval and the satisfaction of other conditions to
closing, the Company anticipates that the merger will take place at the end of
September 2000.




                                        8
<PAGE>


ITEM 2.  PROPERTIES

       The Company's headquarters is located at 3333 Lenox Avenue, Jacksonville,
Florida. The building in which the headquarters are located is leased by the
Company through October 31, 2003, and contains approximately 47,000 square feet
of warehouse space and 19,000 square feet of offices. The Company has built a
new 38,000 square foot telesales center in Jacksonville, Florida, which it
occupied in May 1998. This new telesales center has enabled the Company to
continue expanding its telesales staff, and has enabled the Company to either
terminate or consolidate existing leased spaces. As part of the U.S. Lock
acquisition, the Company owns a 59,400 square foot building in Long Island, New
York which houses the U.S. Lock management team and telesales center, as well as
its largest distribution center.

       The Company's National Distribution Center, which opened in July 2000, is
located in Nashville, Tennessee and is approximately 189,000 square feet. The
building is leased by the Company through June 2010 with an additional 5 year
renewal option.

         The Company's 42 distribution centers utilize leased space ranging from
17,000 to 60,000 square feet and are all located in the United States and Puerto
Rico. The leases expire at various dates from December 2000 to June 2010. The
Company believes that its distribution facilities are adequate for its current
needs and does not anticipate that it will have any problem leasing additional
space when needed.

ITEM 3.  LEGAL PROCEEDINGS

       The Company is subject to various legal proceedings and claims that arise
in the ordinary course of business. In the opinion of management, the amount of
any ultimate liability with respect to these actions will not have a material
impact on the financial position, liquidity or results of operations of the
Company.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

       No matters were submitted to a vote of security holders during the fourth
quarter of fiscal 2000.




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<PAGE>


                                     Part II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
         SECURITY HOLDER MATTERS

Price Range of Common Stock

         The Company's common stock is traded on the NASDAQ National Market
under the symbol "BNTT". The following table sets forth the high and low sales
prices for the Common Stock for each quarter during the past two fiscal years,
as reported by NASDAQ.


                                          High              Low
Fiscal 2000
   First Quarter                        $  9.75           $ 7.50
   Second Quarter                         11.50             7.25
   Third Quarter                          13.75            10.81
   Fourth Quarter                         11.63             9.44

Fiscal 1999
   First Quarter                        $ 22.75           $ 8.38
   Second Quarter                         14.88             7.88
   Third Quarter                          17.63             8.44
   Fourth Quarter                         11.13             7.50




Holders of Record

       As of September 21, 2000, there were approximately 284 holders of record
of the Common Stock.

Dividends

       The Company presently retains all of its earnings to finance the
expansion of its business and does not anticipate paying cash dividends on its
common stock in the foreseeable future. Any determination to pay cash dividends
in the future will be at the discretion of the Board of Directors after taking
into account various factors, including the Company's financial condition,
results of operations, current and anticipated cash needs and plans for
expansion. In addition, the Company's current credit facility limits the amount
of cash dividends payable on the common stock in any one year to the Company's
net income for such year.

Sale of Unregistered Securities

         On July 1, 1997, the Company acquired certain of the assets of LeRan
Gas Products, an operating unit of Waxman Industries. The acquisition price was
$3.8 million, of which $3.2 million was paid in cash and the remainder was paid
by the issuance of 24,730 shares of the common stock of the Company. The
issuance of shares to the Company's former parent Corporation, Waxman
Industries, Inc., was exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933 as a transaction not involving a public offering.




                                       10

<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA

The following selected financial information for the last five fiscal years
through 2000 has been derived from the financial statements of the Company for
such years, which have been audited by Arthur Andersen LLP, independent
certified public accountants, whose report is included elsewhere herein. All
such information is qualified by reference to the Financial Statements included
elsewhere herein.


<TABLE>
<CAPTION>
                                                                            Fiscal Years Ended June 30,
                                                                 ( Amounts in Thousands, except per share amounts )

                                                        2000           1999            1998             1997           1996
                                                        ----           ----            ----             ----           ----
<S>                                                  <C>            <C>              <C>             <C>             <C>
Income Statement Data:
Net sales                                            $ 281,471      $ 241,374        $ 199,578       $ 160,068       $ 127,395
Cost of sales                                          189,273        161,183          132,135         105,376          84,748
                                                      --------       --------         --------        --------        --------
 Gross profit                                           92,198         80,191           67,443          54,692          42,647
Selling , general and administrative
 expenses                                               65,056         53,906           44,061          35,068          26,877
Corporate charge                                          --             --              --               --             1,342
                                                      --------       --------         --------        --------        --------
Operating income                                        27,142         26,285           23,382          19,624          14,428
Non-recurring merger costs                                 734           --               --              --              --
Interest expense                                         1,892          1,217              157              59           1,921
                                                      --------       --------         --------        --------        --------
Income before income taxes
   and extraordinary item                               24,516         25,068           23,225          19,565          12,507
Provision for income taxes                               9,844          9,853            8,948           7,530           4,625
                                                      --------       --------         --------        --------        --------
Income before extraordinary item                        14,672         15,215           14,277          12,035           7,882
Extraordinary loss on early
  retirement of debt, net of
  tax benefit (1)                                         --             --              --               --               724
                                                      --------       --------         --------        --------        --------
Net income                                           $  14,672      $  15,215        $  14,277       $  12,035       $   7,158
                                                      ========       ========         ========        ========        ========
Earnings per common share:
  Basic                                              $    0.90      $    0.94        $    0.88       $    0.76       $    0.55
  Diluted                                            $    0.90      $    0.94        $    0.87       $    0.75       $    0.55
Weighted average shares
outstanding:(2)
  Basic                                                 16,242         16,195           16,179          15,785          12,914
  Diluted                                               16,249         16,200           16,341          15,987          12,914
</TABLE>









                                                            11

<PAGE>


<TABLE>
<CAPTION>
                                                                            Fiscal Years Ended June 30,
                                                                 ( Amounts in Thousands, except per share amounts )

                                                        2000           1999            1998             1997           1996
                                                        ----           ----            ----             ----           ----
<S>                                                  <C>            <C>              <C>             <C>             <C>
Balance Sheet Data:
Working Capital                                      $  83,183      $  71,183        $  52,431       $  44,867       $  30,744
Total Assets                                           170,002        149,186           95,784          77,015          58,300
Total long-term debt                                    33,000         33,000                0               0               0
Stockholders' equity                                   106,584         91,571           76,161          60,611          41,324
</TABLE>



(1)      In accordance with certain Securities and Exchange Commission rules,
         the financial statements have been adjusted to reflect push-down
         adjustments from Waxman, comprised of certain bank indebtedness
         ("push-down debt") which was repaid by the Company with the net
         proceeds of the Initial Public Offering. The Company incurred a
         one-time, non-cash extraordinary charge of $724 (net of applicable tax
         benefit of $426) which was a result of the write-off of unamortized
         debt issuance costs incurred in connection with the Company prepaying
         its borrowings under a secured revolving credit facility, which
         indebtedness included push-down bank indebtedness from Waxman. This
         charge was recorded in the quarter ended June 30, 1996.

(2)      The historical shares outstanding for the fiscal year ended 1996, were
         prior to the Initial Public Offering which changed the Company's
         capitalization structure.





                                       12
<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS


Forward-Looking Statements

         Certain statements set forth in Management's Discussion and Analysis of
Financial Condition and Results of Operations constitute certain
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 that are based on the beliefs of the Company and
its management. When used in this document, the words "expect", "believe",
"intend", "may", "should", "anticipate", and similar expressions are intended to
identify forward-looking statements. Such forward-looking statements reflect the
current view of the Company with respect to future events and are subject to
certain risks, uncertainties and assumptions including, but not limited to, the
risk that the Company may not be able to implement its growth strategy in the
intended manner, risks associated with currently unforeseen competitive
pressures and risks affecting the Company's industry such as increased
distribution costs and the effects of general economic conditions. In addition,
the Company's business, operations, and financial condition are subject to the
risks, uncertainties and assumptions which are described in the Company's
reports and statements filed from time to time with the Securities and Exchange
Commission, including this Report. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described herein as anticipated,
believed, estimated, expected or intended.

Overview

         The Company is a direct marketer and distributor of an extensive line
of plumbing, electrical, hardware and security hardware products, to
approximately 71,500 active customers throughout the United States, the
Caribbean and South America. The Company offers approximately 21,300 name brand
and private label products through its industry-recognized Barnett(R) and U.S.
Lock(R) catalogs and telesales operations. The Company markets its products
through six distinct, comprehensive catalogs that target professional
contractors, independent hardware stores, locksmiths and maintenance managers.
The Company's staff of over 146 knowledgeable telesales, customer service and
technical support personnel work together to serve customers by assisting in
product selection and offering technical advice. To provide rapid delivery and a
strong local presence, the Company has established a network of 42 distribution
centers strategically located in 34 major metropolitan areas throughout the
United States and Puerto Rico. Through these local distribution centers,
approximately 70% of the Company's orders are shipped to the customer on the
same day the order is received. The remaining 30% of the orders are picked up by
the customer at one of the Company's local distribution centers. The Company's
strategy of being a low-cost, competitively priced supplier is facilitated by
its volume of purchases and offshore sourcing of a significant portion of its
private label products. Products are purchased from over 650 domestic and
foreign suppliers.

         Commensurate with the Company's Initial Public Offering on April 3,
1996 and its secondary stock offering on April 18, 1997, Waxman USA
Inc.,("Waxman"), currently owns 7.2 million shares or 44.2% of the issued and
outstanding stock of the Company.

         On July 1, 1997, the Company acquired certain of the assets of LeRan
Gas Products, an operating unit of Waxman. The acquisition price was $3.8
million, of which $3.2 million was paid in cash and the remainder was paid by
the issuance to Waxman of 24,730 shares of the common stock of the Company. The
operations related to these assets are not material to the Company's financial
statements.

         Effective January 1, 1999, the Company acquired U.S. Lock, a division
of WOC, Inc., a wholly-owned subsidiary of Waxman, for a cash purchase price of
approximately $33.0 million and the assumption of liabilities estimated at
approximately $2.0 million. The acquisition of U.S. Lock was accounted for as a
purchase. Accordingly, the purchase price was allocated to the net assets
acquired based upon their estimated fair market values. The excess of the
purchase price over the estimated fair value of net assets acquired amounted to
approximately $23.0 million. This has been accounted for as goodwill and is
being amortized over 40 years using the straight line method.

         On July 10, 2000, the Company announced that it had entered into a
definitive merger agreement with Wilmar Industries, Inc., whereby Wilmar would
acquire all of the outstanding common stock of the Company for $13.15 per share
of common stock in cash, or approximately $214 million, plus the assumption of
debt. It is anticipated that the transaction will close in the second quarter of
the Company's fiscal year 2001 and will be accounted for as a purchase. The
Company recorded $734 of non-recurring merger costs in fiscal year 2000 for
investment banking fees, legal fees and other expenses.



                                       13
<PAGE>


                              Results of Operations

The following table shows the percentage relationship to net sales of items
derived from the Statements of Income.

<TABLE>
<CAPTION>
                                                                      Percentage of
                                                                        Net Sales
                                                               Fiscal years ended June 30,

                                                      2000                  1999                 1998
                                                      ----                  ----                 ----

<S>                                                  <C>                   <C>                  <C>
Net sales                                            100.0%                100.0%               100.0%
Cost of sales                                         67.2                  66.8                 66.2
                                                     ------                ------               ------
   Gross Profit                                       32.8                  33.2                 33.8

Selling, general and
  administrative expense                              23.1                  22.3                 22.1
                                                     ------                ------               ------

   Operating income                                    9.7                  10.9                 11.7
Non-recurring merger costs                             0.3
Interest expense                                       0.7                   0.5                  0.1
                                                     ------                ------               ------

Income before income
  taxes                                                8.7                  10.4                 11.6
Provision for income taxes                             3.5                   4.1                  4.4
                                                     ------                ------               ------

Net Income                                             5.2%                  6.3%                 7.2%
                                                     =======               ======               =======
</TABLE>



Fiscal 2000 Versus Fiscal 1999

  Net Sales

    The Company's net sales for fiscal 2000 totaled $281.5 million compared with
$241.4 million in fiscal 1999, an increase of 16.6%. Net sales from the
acquisition of U.S. Lock in the second half of last year accounted for $14.9
million of the revenue increase. Approximately 79.8% of the increase in the
Company's net sales was derived from the Company's telesales operations,
primarily resulting from increased sales and productivity by existing
telesalespersons and the addition of 25 telesalespersons acquired with U.S.
Lock, compared to the prior year. The remainder of the net sales increase was
attributable to the Company's outside sales force, integrated account management
teams, factory direct programs and the Company's export division. As a result of
the Company's promotional flyer campaign, the Company added approximately 13,400
new customers during the fiscal year, and these new customers contributed
approximately $19.6 million to the net sales increase during the year. Also
contributing to the net sales increase for fiscal 2000 was revenue from new
product introductions approximating $15.0 million.

    Last fiscal year, the Company began an integration of its outside sales
force with its telesales force. The integrated account management provides
synergies with improved customer knowledge, as well as superior customer service
and quicker response times. These integrated account management teams produced
revenue increases in fiscal 2000 exceeding 18%. Additionally, the Company's
export division, primarily consisting of a small dedicated international
telesales staff, garnished revenue increases in excess of 25%. Furthermore, the
Company continues to invest in its factory direct programs whereby products are
shipped directly to the customer from certain suppliers and manufacturers. These
programs yielded more than 27% revenue increases in fiscal 2000.

         The Company opened its 41st distribution center in Orlando, Florida in
October 1999 and its 42nd distribution center in Phoenix, Arizona in December
1999. These two new distribution centers averaged a 30.8% sales increase over
the base business transferred to them.

 Gross Profit

    Gross profit increased 15.0% to $92.2 million in fiscal 2000 from $80.2
million in fiscal 1999. Gross profit margins decreased to 32.8% in fiscal 2000
from 33.2% in fiscal 1999




                                       14
<PAGE>


primarily as a result of a higher mix of the aforementioned factory direct
shipments which carry much lower gross profit margins than the Company's
warehouse shipments.

  Selling, General and Administrative Expenses

    Selling, general and administrative ("SG&A") expenses increased by $11.2
million, or 20.7%, to $65.1 million for fiscal 2000 from $53.9 million for
fiscal 1999. The increase was primarily due to the increased sales volume which
required additional staffing and support. Additionally, combining the expenses
of U.S. Lock, along with the full year effect of occupancy and other expenses
related to the opening of three new distribution centers in the prior year, and
the opening of two new distribution centers in fiscal 2000 also played
contributing roles to the overall expense increase. Increased wages and training
costs related to personnel turnover in various distribution centers also
contributed to the increased expense level, as well as the amortization of
goodwill related to the U.S. Lock acquisition. Additionally, the Company
recorded one-time start-up costs of $ 1.0 million which relate to pre-opening
expenses of the Company's National Distribution Center ("NDC") in Nashville,
Tennessee. This NDC, which opened in July 2000, will receive substantially all
of the Company's inventory purchases from vendors and re-distribute them to the
Company's existing distribution centers. SG&A expenses represented 23.1% of net
sales in fiscal 2000 compared to 22.3% of net sales in fiscal 1999.

   Provision for Income Taxes

    The provision for income taxes decreased $9,000 to $9.8 million for fiscal
2000 from $9.9 million for fiscal 1999. The provision for income taxes as a
percentage of income before provision for income taxes represents approximately
40.1% for fiscal 2000 and 39.3% for fiscal 1999.


Fiscal 1999 Versus Fiscal 1998

  Net Sales

    The Company's net sales for fiscal 1999 totaled $241.4 million compared with
$199.6 million in fiscal 1998, an increase of 20.9%. Net sales from the
acquisition of U.S. Lock accounted for $14.2 million of the revenue increase.
Approximately 77.4% of the increase in the Company's net sales was derived from
the Company's telesales operations, primarily resulting from increased sales by
existing telesalespersons and the addition of 20 telesalespersons internally and
25 telesalespersons acquired with U.S. Lock, compared to the prior year. The
remainder of the net sales increase was attributable to the Company's outside
sales force, integrated account management teams, factory direct programs and
the Company's export division. As a result of the Company's promotional flyer
campaign, the Company added approximately 18,000 new customers during the fiscal
year, and these new customers contributed approximately $21.7 million to the net
sales increase during the year. Also contributing to the net sales increase for
fiscal 1999 was revenue from new product introductions approximating $10.8
million.

    As noted above, the Company began an integration of its outside sales force
with its telesales force. The integrated account management provides synergies
with improved customer knowledge, as well as superior customer service and
quicker response times. These integrated account management teams produced
revenue increases in fiscal 1999 exceeding 24%. Additionally, the Company's
export division, primarily consisting of a small dedicated international
telesales staff, garnished revenue increases in excess of 21%. Furthermore, the
Company continues to invest in its factory direct programs whereby products are
shipped directly to the customer from certain suppliers and manufacturers. These
programs yielded more than 67% revenue increases in fiscal 1999.

         The Company opened its 33rd distribution center in Birmingham, Alabama
in September 1998 and its 34th distribution center in Parsippany, New Jersey in
March 1999. U.S. Lock opened its 6th distribution center in Dallas, Texas in
March 1999. These three new distribution centers averaged a 34.4% sales increase
over the base business transferred to them.

 Gross Profit

    Gross profit increased 18.9% to $80.2 million in fiscal 1999 from $67.4
million in fiscal 1998. Gross profit margins decreased to 33.2% in fiscal 1999
from 33.8% in fiscal 1998 primarily as a result of a higher mix of the
aforementioned factory direct shipments which carry much lower gross profit
margins.




                                       15
<PAGE>


  Selling, General and Administrative Expenses

    Selling, general and administrative ("SG&A") expenses increased by $9.8
million, or 22.3%, to $53.9 million for fiscal 1999 from $44.1 million for
fiscal 1998. The increase was primarily due to the increased sales volume which
required additional staffing and support. Additionally, combining the expenses
of U.S. Lock, along with the full year effect of occupancy and other expenses
related to the opening of three new distribution centers in the prior year, and
the opening of three new distribution centers in fiscal 1999 also played
contributing roles to the overall expense increase. Increased wages and training
costs related to personnel turnover in various distribution centers also
contributed to the increased expense level, as well as the amortization of
goodwill related to the U.S. Lock acquisition. SG&A expenses represented 22.3%
of net sales in fiscal 1999 compared to 22.1% of net sales in fiscal 1998.

   Provision for Income Taxes

    The provision for income taxes increased $0.9 million or 10.1% to $9.9
million for fiscal 1999 from $8.9 million for fiscal 1998. The provision for
income taxes as a percentage of income before provision for income taxes
represents approximately 39.3% for fiscal 1999 and 38.5% for fiscal 1998.

Liquidity and Capital Resources

         At June 30, 2000, the Company had working capital of $83.2 million and
a current ratio of 3.7 to 1.

         Net cash provided by operating activities totaled $12.3 million for the
year ended June 30, 2000 compared to $10.5 million for the year ended June 30,
1999.

         Net cash used in investing activities totaled $6.3 million for the year
ended June 30, 2000 compared to $40.0 million for the year ended June 30, 1999.
In fiscal year 2000, these investments related primarily to improved management
information systems, the expansion and/or relocation of several of the Company's
distribution centers to accommodate new product offerings and capital
expenditures related to the Company's National Distribution Center. In fiscal
year 1999, these investments related primarily to the acquisition of U.S. Lock.

         Net cash provided by financing activities was $0.3 million for the year
ended June 30, 2000 compared to $32.5 million for the year ended June 30, 1999.
Net cash provided by financing activities in fiscal 1999 represents a term loan
received in connection with the U.S. Lock acquisition.

         In April 1996, the Company entered into a revolving credit agreement
with First Union National Bank of Florida ("First Union") for an unsecured
three-year credit facility providing borrowings of up to $15.0 million,
including a letter of credit subfacility of $4.0 million. On January 6, 1999, in
connection with the acquisition of U.S. Lock, (See Note 9 to the accompanying
financial statements) the Company entered into an amended and restated credit
agreement, (the "Credit Agreement"), with First Union. The Credit Agreement
provides for an unsecured revolving credit facility and letter of credit
facility providing borrowings of up to $15.0 million expiring December 31, 2001,
and a seven year term loan of $33.0 million, proceeds of which were used to
purchase U.S. Lock. Borrowings under the revolving credit facility bear interest
at LIBOR plus 75 basis points. The Company is required to pay a commitment fee
of 0.1% per annum on the unused commitment. The Company entered into an interest
rate swap to minimize the risk and costs associated with changes in interest
rates. The swap agreement is a contract to exchange the variable rate of
three-month LIBOR + .825% on its term loan for fixed interest payments of 6.29%,
payable quarterly. The interest rate swap has a notional amount of $33.0 million
and a maturity date of December 31, 2005, corresponding with the term loan. The
interest rate swap had a fair value of $1.5 million and $1.0 million at June 30,
2000 and 1999, respectively. The outstanding principal balance of the term loan
is payable in 19 equal and consecutive quarterly payments of 1/20th of the
original outstanding balance of the term loan commencing on April 30, 2001. All
remaining unpaid principal and all accrued and unpaid interest thereon is due
and payable in full on December 31, 2005.

         In July 1999, the Company entered into a credit agreement with Bank of
America, N.A. for a letter of credit facility which shall not exceed $5,000,000.
This letter of credit facility replaces the sub-facility with First Union.

         Both credit agreements contain customary affirmative and negative
covenants, including certain covenants requiring the Company to maintain debt to
net worth, interest coverage and current ratios, as well as a minimum net worth
test. The Company was in compliance with all




                                       16
<PAGE>


covenants at June 30, 2000. At June 30, 2000, there were $0 of borrowings under
the revolving credit agreement and there were $3.5 million of letters of credit
outstanding.

         Generally, cash flow from operations has been sufficient to fund the
Company's growth. The Company believes that funds generated from operations,
together with funds available under the credit facility discussed above, will be
sufficient to fund the Company's current and foreseeable operational needs and
growth strategy. The Company has budgeted capital expenditures in fiscal 2001 of
approximately $10.0 million, which the Company expects to fund out of cash flow
from operations. These capital expenditures are primarily for (i) expansion and
reprofiling of several of the Company's existing distribution centers and (ii)
enhancements to management information systems and capital expenditures related
to the Company's National Distribution Center.






                                       17
<PAGE>


Year 2000 Issue

         The Year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Computer
programs that have date-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in a system failure
or in miscalculations causing disruptions to operations, including, among other
things, a temporary inability to process transactions, to send invoices to
customers, or to engage in similar normal business activities.

         The Company used both internal and external resources to reprogram,
replace, and test the software and hardware for Year 2000 compliance. The
Company did not experience any significant problems for mission critical and
most non-mission critical systems. The expenses associated with the project
included both a reallocation of existing internal resources plus the use of
outside services. Project expenses amounted to approximately $50,000.

         In addition to addressing internal systems, the Company's Year 2000
project team surveyed suppliers of goods and services with whom the Company does
business. No significant problems were encountered as a result of the Year 2000
issue.

Inflation

         The Company does not believe inflation has had a material impact on
earnings during the past several years. Although substantial increases in
product costs, labor, and other operating expenses could adversely affect the
operations of the Company and the home repair and remodeling supply market,
management believes it can recover such increases by increasing prices.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company is exposed to interest rate changes primarily as a result
of its line of credit and long-term debt used to maintain liquidity and fund
capital expenditures and operations. The Company's interest rate risk management
objective is to limit the impact of interest rate changes on earnings and cash
flows and to lower its overall borrowing costs. In seeking to minimize the risks
and/or costs associated with such activities, the Company manages its exposure
to such risk through its regular financing activities and by entering into an
interest rate swap (See Note 2 in Item 14a). The Company does not utilize
financial instruments for trading or other speculative purposes, nor does it
utilize leveraged financial instruments.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      The Financial Statements are listed in Item 14(a) and are included herein.
      The Financial Statement Schedule II is listed in Item 14(b).

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

       None















                                       18
<PAGE>


                                    PART III

ITEM 10.          DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The Company's Board of Directors currently consists of five members and is
divided into three classes. The following information is derived from
information supplied by the directors.

<TABLE>
Directors Whose Term Expires in 2003 (CLASS 1)

<CAPTION>
                                                                                       Has Been A Director of the
Name of Director                                                 Age                          Company Since
----------------                                                 ---                   --------------------------

<S>                                                               <C>                             <C>
Melvin Waxman....................................                 66                              1984
Sheldon G. Adelman...............................                 58                              1996


Directors Whose Term Expires in 2000 (CLASS 2)

                                                                                       Has Been A Director of the
Name of Director                                                 Age                          Company Since
----------------                                                 ---                   ---------------------------

Armond Waxman....................................                 61                              1984
Morry Weiss......................................                 60                              1996


Director Whose Term Expires in 2001 (CLASS 3)

                                                                                       Has Been A Director of the
Name of Director                                                 Age                          Company Since
----------------                                                 ---                   ---------------------------

William R. Pray..................................                 53                              1993
</TABLE>

         Mr. Melvin Waxman was elected Chairman of the Board of the Company in
January 1996. Mr. Waxman has been a director of the Company since its
acquisition by Waxman Industries in 1984. Mr. Waxman was elected Co-Chief
Executive Officer of Waxman Industries in May 1988, Co-Chairman of the Board of
Waxman Industries in June 1995 and Chairman of the Board of Waxman Industries in
April 1996. Mr. Waxman has been the Chief Executive Officer of Waxman Industries
for over 20 years and has been a director of Waxman Industries since 1962. Mr.
Waxman has been either Chairman or Co-Chairman of the Board of Waxman Industries
since August 1976. Mr. Waxman was a director of Ideal Plumbing Group, Inc., a
Canadian subsidiary of Waxman Industries, that was involuntarily liquidated in
1994. Mr. Melvin Waxman is the brother of Armond Waxman.

         Mr. Sheldon G. Adelman is the principal of Adelman Capital, a private
investment firm. From 1974 to 1997, Mr. Adelman was the Chairman of the Board
and Chief Executive Officer of Blue Coral, Inc., a multi-divisional, commercial
and consumer product manufacturer. Mr. Adelman also serves on the Board of
Directors of CCAI, a privately held service company specializing in information
technology consulting and installation (Cleveland, OH). He is active in many
civic organizations and serves on the Board of Directors of University
Hospitals, Cleveland, Ohio.

         Mr. Armond Waxman was elected Vice-Chairman of the Board in December
1995. Mr. Waxman has been a director of the Company since its acquisition by
Waxman Industries in 1984. Mr. Waxman was elected Co-Chief Executive Officer of
Waxman Industries in May 1988 and was Co- Chairman of the Board of Waxman
Industries from June 1995 until April 1996. Mr. Waxman had been the President
and Treasurer of Waxman Industries from August 1976 until June 1995, and was
reappointed to the position of President in April 1996. Mr. Waxman has been a
director of Waxman Industries since 1962 and was the Chief Operating Officer of
Waxman Industries from August 1966 to May 1988. Mr. Waxman was a director of
Ideal Plumbing Group, Inc., a Canadian subsidiary of Waxman Industries, that was
involuntarily liquidated in 1994. Mr. Armond Waxman is the brother of Melvin
Waxman.

         Mr. Morry Weiss is the Chairman of the Board and Chief Executive
Officer of American Greetings Corporation.  Mr. Weiss joined American Greetings
Corporation in 1961.  He was appointed President and Chief Operating Officer in
June 1978, Chief Executive Officer in February 1992 and Chairman of the Board in
February 1992.  Mr. Weiss is a member of the Board




                                       19
<PAGE>


of Directors of National City Corporation, the Advisory Board of Primus Venture
Partners, and the Listed Company Advisory Committee to the New York Stock
Exchange Board. Mr. Weiss is also active in various community affairs.

         Mr. William R. Pray was elected President, Chief Executive Officer and
a director of the Company in February 1993. Mr. Pray was elected President and
Chief Operating Officer of Waxman Industries in June 1995, and resigned these
positions in April 1996 upon consummation of the initial public offering of the
Company. From February 1991 to February 1993, Mr. Pray was Senior Vice
President--President of Waxman Industries' U.S. Operations, after serving as
President of the Mail Order/Telesales Group (which included the Company) since
1989. He joined the Company in 1978 as Regional Sales Manager, became Vice
President of Sales and Marketing in 1984 and was promoted to President in 1987.






                                       20
<PAGE>


        The following sets forth the names, ages, positions and offices with the
Company held by the present executive officers of the Company.

Name                           Age          Position and Office Presently Held
----                           ---          ----------------------------------

William R. Pray                53           President, Chief Executive Officer
                                            and Director

David R. Janosz                54           Vice President--Marketing

Andrea M. Luiga                43           Vice President--Finance, Chief
                                            Financial Officer

Alfred C. Poindexter           48           Vice President--Operations


         Mr. William R. Pray was elected President, Chief Executive Officer and
a Director of the Company in February 1993. Mr. Pray was elected President and
Chief Operating Officer of Waxman Industries in June 1995, and resigned these
positions in April 1996, upon consummation of the Company's initial public
offering, (the "Initial Public Offering"). From February 1991 to February 1993,
Mr. Pray was Senior Vice President--President of Waxman Industries' U.S.
Operations, after serving as President of the Mail Order/Telesales Group (which
included the Company) since 1989. He joined the Company in 1978 as Regional
Sales Manager, became Vice President of Sales and Marketing in 1984 and was
promoted to President in 1987. Mr. Pray is a Director of Waxman Industries.

         Mr. David R. Janosz was appointed Vice President--Marketing of the
Company in October 1998.  He joined the Company in that position at the same
time. Mr Janosz's previous experience includes tenure in executive positions in
the automotive and industrial distribution industries.

         Ms. Andrea M. Luiga was elected Vice President--Finance, Chief
Financial Officer of the Company in February 1993. Ms. Luiga was elected Vice
President and Chief Financial Officer of Waxman Industries in August 1995, and
resigned these positions in April 1996 upon consummation of the Initial Public
Offering. From September 1991 to February 1993, Ms. Luiga was Vice
President--Group Controller of the Mail Order Group of Waxman Industries (which
included the Company) after serving as Group Controller of the Mail Order Group
since October 1989. Ms. Luiga joined the Company in March 1988 as Controller.

         Mr. Alfred C. Poindexter was elected Vice President--Operations of the
Company in February 1993. From September 1988 to February 1993, Mr. Poindexter
served as Vice President-- Operations of the Company after serving as Director
of Operations of the Company since 1987. He joined the Company in 1983 as
Purchasing Manager.


Compliance With Section 16(a) of the Securities Exchange Act of 1934

         Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more than
ten-percent of a registered class of the Company's equity securities, to file
reports of securities ownership and changes in such ownership with the
Securities and Exchange Commission (the "Commission"). Officers, directors and
greater than ten-percent stockholders also are required by rules promulgated by
the Commission to furnish the Company with copies of all Section 16(a) forms
they file.

         Based solely upon a review of the copies of such forms furnished to the
Company, or written representations that no such forms were required, the
Company believes that, during the fiscal year ended June 30, 2000, its officers,
directors and greater than ten-percent beneficial owners complied with all
applicable Section 16(a) filing requirements.




                                       21
<PAGE>


ITEM 11.                       Executive Compensation

         The following table sets forth the cash compensation paid for services
rendered during the three fiscal years ended June 30, 2000 to the Chief
Executive Officer and the three other executive officers of the Company whose
total annualized salary and bonus was at least $100,000 in fiscal 2000.

<TABLE>
                           SUMMARY COMPENSATION TABLE

<CAPTION>
                                                                                                  Long-Term
                                                         Annual Compensation(1)                  Compensation
                                            -------------------------------------------   ----------------------------
                                                                                           Restricted      Securities
                                                                         Other Annual        Stock         Underlying    All Other
      Name and                                               Bonus       Compensation       Award(s)        Options/    Compensation
Principal Position               Year         Salary ($)     ($)(2)        ($)(3)            ($)(4)          SARs(#)       ($)(5)
------------------               ----         ----------     ------      ------------      ----------      ----------   ------------

<S>                              <C>           <C>           <C>            <C>              <C>             <C>           <C>
William R. Pray                  2000          363,465           --            --               --               --        59,140
President and Chief              1999          328,468       55,200            --               --               --        59,140
Executive Officer                1998          300,040       51,750         3,190            8,900           50,000        59,140

Andrea M. Luiga                  2000          128,252           --            --               --               --            --
Vice President--                 1999          121,846       17,550            --               --               --            --
Finance and Chief                1998          114,885       15,900         3,190            8,900           15,000            --
Financial Officer

Alfred C. Poindexter             2000          121,393           --            --               --               --            --
Vice President--                 1999          117,076       16,800            --               --               --            --
Operations                       1998          110,461       15,300         3,190            8,900           15,000            --

David R. Janosz (6)              2000          114,000           --            --               --               --            --
Vice President--                 1999           65,868        9,548            --               --               --            --
Marketing                        1998               --           --            --               --               --            --
</TABLE>

---------------------------------


(1)   Certain executive officers received compensation in fiscal 1998, 1999 and
      2000 in the form of perquisites, the amount of which does not exceed
      reporting thresholds.

(2)   All bonuses were paid under the Company's Profit Incentive Plan.

(3)   Other annual compensation represents amounts reimbursed for payment of
      taxes on restricted stock awards.

(4)   Restricted stock awards of 400 shares of the Company's Common Stock were
      made to each of the named executives in fiscal 1998 under the Company's
      Omnibus Incentive Plan. The value of the restricted stock awards has been
      calculated based upon $22.25, per share, the closing market price of
      the Common Stock on the date of grant, as reported by the Nasdaq
      National Market. Awards became fully transferable on the first
      anniversary date of grant. The executives were entitled to dividends
      and voting rights on unvested shares. On June 30, 2000, each share
      acquired through restricted stock awards had a value of $10.25, based
      on the closing price of the Common Stock as reported by the Nasdaq
      National Market.

(5)   All other compensation represents premiums on split-doll life insurance
      policies.

(6)   David Janosz's employment with the Company commenced on October 19, 1998











                                       22
<PAGE>


Employment Agreements

         William R. Pray, President and Chief Executive Officer of the Company,
entered into an employment agreement (the "Agreement") with the Company which
became effective as of July 1, 1990, was amended as of January 1, 1996 and
terminates on January 1, 2006. The Agreement provides for an annual base salary
of $260,000 which will be increased by eight percent (8%) each year until the
base salary reaches $300,000 per year, after which time the base salary
increases each year by changes in the applicable Consumer Price Index (the
"CPI"), or such greater amount as may be determined by the Board, in its
discretion. Mr. Pray's annual base salary was increased effective January 2000
to $385,000. Mr. Pray is eligible to receive discretionary bonuses as determined
by the Board. In addition to certain miscellaneous benefits and perquisites, the
Company maintains a $2,000,000 split dollar life insurance policy for Mr. Pray.
The Company and Mr. Pray also have entered into a money purchase deferred
compensation agreement pursuant to which the Company established an account into
which it deposits approximately $59,000 annually. The balance in the account on
termination of employment will be paid to Mr. Pray or his beneficiaries.

         If Mr. Pray's employment is terminated without Cause (as defined in the
Agreement) or in the event he terminates his employment for Good Reason (as
defined in the Agreement), he will receive a lump sum amount equal to the
present value of the product of (I) the sum of (x) the base salary (as such base
salary would have been adjusted for the remainder of the term) and (y) the
average of the bonus compensation paid to Mr. Pray with respect to the three
years preceding the termination of the Agreement and (ii) the greater of (a) the
remaining number of years (or portions thereof) in the term of the Agreement and
(b) two; provided, however, that if any portion of such compensation would
constitute an "excess parachute payment" under Section 280G of the Internal
Revenue Code of 1986, as amended, the amount of such compensation will be
reduced to the highest amount that would not constitute an excess parachute
payment. The Agreement also contains provisions which restrict Mr. Pray from
competing with the Company during the term of the Agreement and for two years
following termination.

         The Company has entered into Executive Employment and Change of Control
Agreements with Ms. Luiga, Mr. Poindexter and Mr. Janosz. These agreements
generally provide that, if the executive's employment is terminated by the
Company without cause within three years following a Change of Control (as
defined in the agreements) of the Company, the Company will pay Ms. Luiga, Mr.
Poindexter or Mr. Janosz, as the case may be, a lump sum amount equal to three
times, two times and one time, respectively, his or her annual base salary then
in effect plus the prior year's bonus received by the executive and the marginal
cost to the Company of annual fringe benefits received by the executive.

         Each of the Company's four executive officers entered into stay pay
agreements with the Company effective as of January 1, 2000, which provide for
cash bonuses when the Wilmar merger occurs. The Company entered into these
agreements as inducement for these executives to continue in the Company's
employment while it explored a possible sale of the Company. The agreements
establish a bonus pool, the total amount of which increases as the price at
which the Company is sold increases. The total amount payable under these
agreements at the closing of the Wilmar merger, after the amendments to the
agreements for Mr. Pray and Ms. Luiga discussed below, is approximately $3.6
million. The officers must remain employed by the Company through the date of
the merger, and also have agreed to remain employed for six months after the
merger at the Company's request. The Company's executive officers will receive
the following stay bonuses at the time of the merger: Mr. Pray, approximately
$1.1 million; Ms. Luiga, approximately $418,000; Mr. Poindexter, approximately
$368,000; and Mr. Janosz, approximately $135,000.

         The stay bonus agreements for Mr. Pray and Ms. Luiga provide for the
officer to receive a gross-up payment if the bonus constitutes an excess
parachute payment under the Internal Revenue Code, so that the executive will
receive the same after-tax amount that he or she would have received had there
been no excess parachute payment. Both Mr. Pray and Ms. Luiga have agreed with
Wilmar to reduce their stay bonuses to the extent that the bonuses would
constitute excess parachute payments under the Internal Revenue Code.




                                       23
<PAGE>


Stock Option and SAR Exercises

         The following table sets forth information with respect to (i) the
number of options exercised by each of the executive officers named in the
Summary Compensation Table in fiscal 2000, (ii) the numbers of unexercised
options held by the named executive officers who held options as of June 30,
2000 and (iii) the value of unexercised in-the-money options as of June 30,
2000.
<TABLE>
                                Aggregated Option/SAR Exercises in Last Fiscal Year and
                                           Fiscal Year-End Option/SAR Values


<CAPTION>
                                                                            Number of                     Value of Unexercised
                              Shares                                   Unexercised Options                In-the-Money Options
                           Acquired on           Value                 At Fiscal Year End(#)              At Fiscal Year End ($)
Name                       Exercise(#)        Reaized ($)             Exercisable/Unexercisable        Exercisable/Unexercisable(1)
----                       -----------        -----------             -------------------------        -----------------------------

<S>                             <C>                <C>                     <C>                                  <C>
William R. Pray                 --                 --                      195,000 / 25,000                     $0 / $0
Andrea M. Luiga                 --                 --                       57,500 / 7,500                      $0 / $0
David R. Janosz                 --                 --                        3,750 / 11,250                     $0 / $0
Alfred C. Poindexter            --                 --                       32,500 / 7,500                      $0 / $0
</TABLE>


--------------

(1)  Calculated on the basis of the closing share price ($10.25) of the Common
     Stock as of June 30, 2000, as reported by the Nasdaq National Market, less
     the exercise price.

Director Remuneration

         Directors who are employees of the Company receive no compensation, as
such, for service as members of the Board. Directors who are not employees of
the Company receive quarterly compensation of $4,000, plus $1,000 for each
meeting of the Board or any committee of the Board attended by them (other than
with respect to any meetings of a committee on a day on which the Board also
meets). All Directors are reimbursed for expenses incurred in connection with
attendance at meetings.

         In addition to the foregoing compensation, the Company's 1996 Stock
Option Plan for Non-Employee Directors provides that each non-employee director
may elect to receive, in lieu of their annual director cash compensation, an
option exercisable to purchase 5,000 shares of Common Stock, at the fair market
value thereof on the date of grant. Mr. Weiss elected to receive such an option
in lieu of the annual cash compensation to which he would have been entitled for
calendar 2000.




                                       24
<PAGE>


ITEM 12.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
               AND MANAGEMENT

         The following table sets forth, as of September 10, 2000, the number of
shares of the Company's Common Stock beneficially owned by each director and
executive officer, by the directors and executive officers of the Company as a
group and by each holder known to the Company of at least 5% of the Company's
outstanding common stock. Unless otherwise indicated in the footnotes, each of
the stockholders has sole voting and investment power over the shares
beneficially owned. As required by rules of the Securities and Exchange
Commission, the table includes all stock options held by the directors or named
executive officers because all options will become exercisable immediately
before the Wilmar merger, regardless of their original vesting schedule.
However, all of the options included in the table will be canceled in the merger
without any payment to the holder because they have exercise prices greater than
the $13.15 per share merger price, with the exception of 5,000 options held by
Morry Weiss, which have an exercise price of $9.44 per share.


<TABLE>
<CAPTION>
                                                       Amount and Nature
                                                         of Beneficial                Percent of
  Name of Beneficial Owner                                 Ownership                     Stock
  ------------------------                             ------------------             -----------

<S>                                                        <C>                           <C>
Waxman Industries, Inc.(1)                                 7,025,807                     43.2%
Melvin Waxman(2)(3)                                        7,149,807                     43.7%
Armond Waxman(2)(3)                                        7,150,507                     43.7%
Artisan Partners Limited Partnership(4)                    1,259,400                      7.7%
Sheldon Adelman(3)                                            35,000                      *
Morry Weiss(3)                                                60,000                      *
William R. Pray(5)(6)                                        224,162                      1.4%
Andrea M. Luiga(5)                                            67,199                      *
Alfred C. Poindexter(5)(6)                                    41,655                      *
David R. Janosz(5)                                            15,000                      *
Directors and executive officers
      as a group (8 individuals)(2)(5)(6)                  7,717,523                     45.7%
----------------------------------------------
</TABLE>

* Less than 1%.
(1)  The shares beneficially owned by Waxman Industries, Inc. are owned through
     its wholly-owned subsidiary, Waxman USA Inc. The address of Waxman
     Industries, Inc. and Waxman USA Inc. is 24460 Aurora Road, Bedford Heights,
     Ohio  44146.

(2)  Includes 7,186,530 shares of common stock owned by Waxman USA Inc. Each
     of Messrs. Melvin and Armond Waxman may be deemed to be the beneficial
     owners of such shares by virtue of their respective positions as
     co-chief executive officers and chairman of the board and president,
     respectively, of Waxman USA Inc. Messrs. Armond and Melvin Waxman have
     disclaimed beneficial ownership of the shares owned by Waxman USA Inc.

(3)  Includes for each of Messrs. Melvin Waxman, Armond Waxman, Adelman and
     Weiss an aggregate of 100,000, 100,000, 25,000 and 45,000 shares of
     common stock, respectively, which may be acquired upon the exercise of
     stock options issued under Barnett's 1996 Non-Employee Director Stock
     Option Plan. These options have exercise prices greater than the $13.15
     per share price with the exception of 5,000 options held by Morry
     Weiss, which have an exercise price of $9.44 per share.

(4)  The information about Artisan Partners Limited Partnership was obtained
     from a Schedule 13G filed on February 14, 2000 with the Securities and
     Exchange Commission and from a Schedule 13F filed with the Securities
     and Exchange Commission reporting ownership as of March 31, 2000. The
     address of Artisan Partners Limited Partnership is 1000 North Water
     Street, #1770, Milwaukee, Wisconsin 53202. Artisan Partners Limited
     Partnership, an investment advisor, has shared voting and dispositive
     power over the shares shown.

(5)  Includes for each of Mr. Pray, Ms. Luiga, Mr. Poindexter and Mr. Janosz
     220,000, 65,000, 40,000 and 15,000 shares of common stock, respectively,
     which may be acquired upon the exercise of employee stock options.  These
     options have exercise prices greater than the $13.15 per share merger
     price.

(6)  Includes for Mr. Pray and Mr. Poindexter 1,665 and 556 shares of common
     stock, respectively, which they have to right to acquire under
     Barnett's employee stock



                                       25
<PAGE>


     purchase plan on September 30, 2000 and at the time of the Wilmar
     merger at a 15% discount from the lower of their then trading price or
     the trading price at the beginning of the purchase option period.



                                       26
<PAGE>


ITEM 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         The Company engages in business transactions with Waxman Industries and
its subsidiaries. Waxman Industries is a principal shareholder of the Company.
Messrs. Melvin Waxman and Armond Waxman, directors of the Company, are
directors, executive officers and shareholders of Waxman Industries. Products
purchased for resale by the Company from Waxman Industries and its subsidiaries
totaled approximately $19.1 million in fiscal 2000, and sales to these entities
totaled approximately $18,000 in fiscal 2000. The Company also entered into a
five year rental agreement with Waxman Industries in fiscal 1998 for the leasing
of a warehouse facility in the normal course of business. The Company prepaid
all rent totaling $500,000. This warehouse facility was purchased as part of the
U.S. Lock acquisition from an indirect wholly-owned subsidiary of Waxman
Industries and any unamortized prepaid rent was reduced from the purchase price
of the acquisition.

         During fiscal 1999, the Company entered into a 10-year lease for a
warehouse owned by a partnership in which Messrs. Melvin Waxman and Armond
Waxman and members of their families own a controlling interest. Total rent paid
during fiscal 2000 was $151,560. In addition, the Company entered into 10-year
leases in fiscal 2000 for three additional warehouses owned by partnerships in
which Messrs. Melvin Waxman and Armond Waxman and members of their families own
a controlling interest. These additional leases provide for total annual rent of
$642,400.

         On September 1,2000, the Company purchased 160,723 shares of its common
stock from Waxman USA Inc., a wholly-owned subsidiary of Waxman Industries,
pursuant to an agreement entered into in connection with the Wilmar merger. To
facilitate the merger, the Company agreed to purchase $2 million in shares to
enable Waxman USA to make an interest payment to its note holders. The number of
shares purchased was determined based on the average closing price of the common
stock during the ten trading days before the date of purchase.














                                       27
<PAGE>


                                     PART IV

ITEM 14.      EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K

(a)  Financial Statements

     The following financial statements and schedules of the Company are
     included as Part II, Item 8 of this Form 10-K:


     (1)  Consolidated Financial Statements                                 Page
          ---------------------------------                                 ----

        Report of Independent Certified Public                               F-1
        Accountants

        Consolidated Balance Sheets - June 30,                        F-2 to F-3
        2000 and June 30, 1999

        Consolidated Statements of Income for the                            F-4
        years ended June 30, 2000, 1999 and 1998

        Consolidated Statements of Stockholders'                             F-5
        Equity for the years ended June 30, 2000,
        1999 and 1998

        Consolidated Statements of Cash Flows for                            F-6
        the years ended June 30, 2000, 1999 and
        1998

        Notes to Consolidated Financial Statements                   F-7 to F-14

     (2)  Supplementary Financial Information                               F-15
          -----------------------------------

(b)      Financial Statement Schedule II, Valuation and Qualifying Accounts and
         Reserves for each of the three years ended June 30, 2000.

(C)  Exhibits:

Exhibit Number                              Exhibits
--------------                              --------

     2.2                   Agreement and Plan of Merger dated as of July 10,
                           2000 by and among Barnett Inc., Wilmar Industries,
                           Inc. And BW Acquisition, Inc. (Incorporated by
                           reference to Appendix 1 of Barnett Inc.'s definitive
                           proxy statement filed with the Securities and
                           Exchange Commission on August 28, 2000).
    3.2(2)                 Amended and Restated Certificate of Incorporation of
                           Barnett Inc.
    3.4(3)                 Amended and Restated By-Laws of Barnett Inc.
   10.1(1)                 Tax sharing agreement dated May 20, 1994 among
                           Barnett Inc., Waxman USA Inc., Waxman Industries,
                           Inc., each member of the Waxman Group (as defined
                           therein) and each member of the Waxman USA Group (as
                           defined therein).
   10.3(4)                 Intercorporate Agreement dated March 28, 1996 among
                           Barnett Inc., Waxman Industries Inc., Waxman Consumer
                           Products Group Inc., WOC Inc. and TWI, International,
                           Inc.
   10.4(4)                 Registration Rights Agreement dated March 28, 1996 by
                           and between Barnett Inc. and Waxman Industries, Inc.
   10.5(1)                 Trademark License Agreement dated May 20, 1994 by and
                           between Barnett Inc. and Waxman Consumer Products
                           Group Inc.
  *10.7(3)                 Amended and Restated Employment Agreement dated
                           March 8, 1996 between Barnett Inc. and William R.
                           Pray.
  *10.8(2)                 Omnibus Incentive Plan of Barnett Inc.
  *10.9(2)                 Stock Purchase Plan of Barnett Inc.
   10.10(7)                Amended Revolving Credit Agreement dated January 6,
                           1999 between Barnett Inc. and First Union National
                           Bank of Florida.




                                       28

<PAGE>



  *10.11(5)                1996 Stock Option Plan for Non-Employee Directors of
                           Barnett Inc.
   10.12(4)                Standstill Agreement dated March 28, 1996, between
                           Waxman Industries, Inc., and Barnett Inc.
  *10.13(6)                Barnett Inc. Profit Sharing and 401(K) Retirement
                           Plan.
  23.1                     Consent of Arthur Andersen LLP
  27.1                     Financial Data Schedule



(1)      Incorporated by reference to the exhibit of the same number contained
         in the Company's Registration Statement on Form S-1 (the "Registration
         Statement"), Registration No. 333-829, filed with Securities and
         Exchange Commission (the "SEC") on February 1, 1996.

(2)      Incorporated by reference to the exhibit of the same number contained
         in Amendment No. 1 to the Company's Registration Statement,
         Registration No. 333-829, filed with SEC on March 5, 1996.

(3)      Incorporated by reference to the exhibit of the same number contained
         in Amendment No. 3 to the Company's Registration Statement,
         Registration No. 333-829, filed with the SEC on March 25, 1996.

(4)      Incorporated by reference to the exhibit of the same number contained
         in the Company's Annual Report on Form 10-K for the year ended June 30,
         1996.

(5)      Incorporated by reference to the exhibit of the same number contained
         in the Company's Registration Statement on Form S-1, Registration No.
         333-22453, filed with the SEC on February 27, 1997.

(6)      Incorporated by reference to Exhibit 4.1 contained in the Company's
         Registration Statement on Form S-8, Registration No. 333-30485, filed
         with the SEC on June 30, 1997.

(7)      Incorporated by reference to the exhibit of the same number contained
         in the Company's Form 10-K405 for year ending June 30, 1999, filed with
         the SEC on September 22, 1999.

*        Management contract or compensatory plan or arrangement.

(d)      Reports on Form 8-K

         None




                                       29
<PAGE>




                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                       BARNETT INC.


                                       By  /s/  WILLIAM R. PRAY
                                       ----------------------------
                                              William R. Pray
Dated:  September 22, 2000             President and Chief Executive Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.


<TABLE>
<CAPTION>
                 Name                                    Title                                           Date
                 ----                                    -----                                           ----

<S>                                    <C>                                                        <C>
 /s/    WILLIAM  R.  PRAY              President, Chief Executive Officer and Director            September 22, 2000
 -------------------------------              (Principal Executive Officer)
        William R. Pray

/s/    ANDREA M.  LUIGA                Vice President - Finance and Chief Financial               September 22, 2000
--------------------------------            Officer (Principal Financial and
       Andrea M. Luiga                              Accounting Officer)

/s/    MELVIN WAXMAN                   Chairman of the Board and Director                         September 22, 2000
--------------------------------
       Melvin Waxman

/s/    ARMOND WAXMAN                   Vice-Chairman of the Board and Director                    September 22, 2000
--------------------------------
       Armond Waxman

/s/    SHELDON ADELMAN                 Director                                                   September 22, 2000
--------------------------------
       Sheldon Adelman


/s/    MORRY WEISS                     Director                                                   September 22, 2000
 -------------------------------
       Morry Weiss
</TABLE>


















                                       30
<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



To Barnett Inc. and Subsidiaries:

         We have audited the accompanying consolidated balance sheets of Barnett
Inc. (a Delaware corporation) and Subsidiaries as of June 30, 2000 and 1999, and
the related consolidated statements of income, stockholders' equity and cash
flows for each of the three years in the period ended June 30, 2000. These
financial statements and the schedule referred to below are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements and schedule based on our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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 audits provide a reasonable basis
for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Barnett Inc. and
Subsidiaries as of June 30, 2000 and 1999, and the results of their operations
and their cash flows for each of the three years in the period ended June 30,
2000, in conformity with accounting principles generally accepted in the United
States.

         Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in Item 14(a),
Financial Statements and Supplementary Data, is presented for the purpose of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.

ARTHUR ANDERSEN LLP

Jacksonville, Florida
August 18, 2000




                                       F-1

<PAGE>



                          BARNETT INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                             June 30, 2000 and 1999
                      (In Thousands, Except Per Share Data)


                                     ASSETS



                                                          June 30,
                                                          --------
                                                   2000               1999
                                                   ----               ----


Current Assets:
   Cash                                        $   9,703          $   3,421
   Accounts receivable, net                       37,729             35,914
   Inventories                                    61,220             52,733
   Prepaid expenses and other                      4,949              3,730
                                                --------           --------
         Total current assets                    113,601             95,798
                                                --------           --------
Property and Equipment:
   Machinery and equipment                        23,401             19,352
   Furniture and fixtures                          5,473              4,662
   Leasehold improvements                          9,729              8,265
   Building and improvements                       7,282              7,281
                                                --------           --------
                                                  45,885             39,560
Less accumulated depreciation
   and amortization                              (20,939)           (15,978)
                                                --------           --------
                                                  24,946             23,582
                                                --------           --------
Cost of businesses in excess of net
   assets acquired, net                           26,236             27,353
Other assets                                       5,219              2,453
                                                --------           --------
                                               $ 170,002          $ 149,186
                                                ========           ========










       The accompanying notes to consolidated financial statements are an
              integral part of these consolidated balance sheets.



                                       F-2
<PAGE>



                          BARNETT INC. AND SUBSIDIARIES


                           CONSOLIDATED BALANCE SHEETS


                             June 30, 2000 and 1999

                      (In Thousands, Except Per Share Data)


                      LIABILITIES AND STOCKHOLDERS' EQUITY



                                                                  June 30,
                                                                  --------
                                                             2000         1999
                                                             ----         ----


Current Liabilities:
   Accounts payable                                       $ 25,410    $  20,061
   Accrued liabilities                                       4,656        4,061
   Accrued income taxes                                         --          151
   Accrued interest                                            352          342
                                                                --           --
         Total current liabilities                          30,418       24,615
                                                           -------     --------

Commitments and Contingencies (Notes 2,4,5,6,8
and 10)

Long - term debt                                            33,000       33,000
                                                           -------     --------

Stockholders' Equity:
   Serial preferred stock, $ 0.10 par value,
     10,000 shares authorized, 0 shares
      issued and outstanding at June 30, 2000
      and 1999                                                  --           --
   Common stock, $ 0.01 par value,
     40,000 shares authorized, 16,264 and
     16,218 issued and outstanding at
     June 30, 2000 and 1999, respectively                      163           162
   Paid-in capital                                          48,277        47,937
   Retained earnings                                        58,144        43,472
                                                           -------      --------
                                                           106,584        91,571
                                                           --------     --------
                                                          $ 170,002    $ 149,186
                                                           ========     ========

















       The accompanying notes to consolidated financial statements are an
              integral part of these consolidated balance sheets.








                                       F-3
<PAGE>



                          BARNETT INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

                For the Years Ended June 30, 2000, 1999 and 1998

                      (In Thousands, Except Per Share Data)



<TABLE>
<CAPTION>
                                                         2000                 1999                1998
                                                         ----                 ----                ----

<S>                                                  <C>                  <C>                 <C>
Net sales                                            $  281,471           $  241,374          $  199,578
Cost of sales                                           189,273              161,183             132,135
                                                      ---------            ---------           ---------
   Gross profit                                          92,198               80,191              67,443
Selling, general and administrative
  expenses                                               65,056               53,906              44,061
                                                      ---------            ---------           ---------
Operating income                                         27,142               26,285              23,382
Non-recurring merger costs                                  734                   --                  --
Interest expense, net                                     1,892                1,217                 157
                                                      ---------            ---------           ---------
   Income before provision for
     income taxes                                        24,516               25,068              23,225
Provision for income taxes                                9,844                9,853               8,948
                                                      ---------            ---------           ---------
Net income                                           $   14,672           $   15,215          $   14,277
                                                      =========            =========           =========

Earnings per common share:
Basic                                                $     0.90           $     0.94          $     0.88
Diluted                                              $     0.90           $     0.94          $     0.87

Weighted average shares outstanding:
Basic                                                    16,242               16,195              16,179
Diluted                                                  16,249               16,200              16,341
</TABLE>




       The accompanying notes to consolidated financial statements are an
            integral part of these consolidated financial statements.





                                       F-4
<PAGE>


<TABLE>
                          BARNETT INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                For the Years Ended June 30, 2000, 1999 and 1998
                                 (In Thousands)


<CAPTION>
                                                                                                                    Total
                                                     Serial                                                        Stock-
                                                   Preferred         Common         Paid-in       Retained        holders'
                                                     Stock           Stock          Capital       Earnings         Equity
                                                   ---------         ------         --------      --------        --------

<S>                                                   <C>           <C>            <C>           <C>             <C>
Balance June 30, 1997                                 --              160            46,471         13,980          60,611
Net income                                                                                          14,277          14,277
Common stock issued for:
   Acquisition of LeRan Gas Products                                                    600                            600
   Exercise of options                                                  1               415                            416
   Employee stock plans                                                                 195                            195
Tax benefits related to
   stock option plans                                                                    62                             62
                                                    -------          ------         -------       --------        --------
Balance June 30, 1998                                 --              161            47,743         28,257          76,161
Net income                                                                                          15,215          15,215
Common stock issued for:
   Exercise of options                                                  1                79                             80
   Employee stock plans                                                                  49                             49
Tax benefits related to
   stock option plans                                                                    66                              66
                                                    --------         -------        -------       ---------       ---------
Balance June 30, 1999                                 --              162            47,937          43,472          91,571
Net income                                                                                           14,672          14,672
Common stock issued for:
   Employee stock plans                                                 1               337                             338
Tax benefits related to
   stock option plans                                                                     3                               3
                                                    --------         -------        -------       ---------       ---------
Balance June 30, 2000                                 --            $ 163          $ 48,277      $   58,144      $  106,584
                                                    ========         =======        =======       =========       =========
</TABLE>




       The accompanying notes to consolidated financial statements are an
            integral part of these consolidated financial statements.





                                       F-5
<PAGE>



<TABLE>
                          BARNETT INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                For the Years Ended June 30, 2000, 1999 and 1998
                                 (In Thousands)



<CAPTION>
                                                                               2000                1999               1998
                                                                               -----               ----               ----

<S>                                                                          <C>                <C>               <C>
Cash Provided By
Operations:
   Net income                                                                $ 14,672           $  15,215         $  14,277
   Adjustments to reconcile net income
    to net cash provided by operations:
       Depreciation and amortization                                            5,735               4,933             3,813
       Deferred taxes                                                            (590)               (141)             (365)
   Changes in assets and liabilities (net of businesses acquired):
       Accounts receivable, net                                                (1,815)             (4,160)           (6,186)
       Inventories                                                             (8,487)             (5,944)           (4,840)
       Prepaid expenses and other                                                (629)               (791)             (753)
       Other assets                                                            (2,423)             (1,213)             (295)
       Accounts payable                                                         5,349               2,088             2,258
       Accrued liabilities                                                        454                 516              (292)
                                                                              -------            --------          --------
        Net cash provided by operations                                        12,266              10,503             7,617
                                                                              -------            --------          --------
Investments:
    Capital expenditures, net                                                  (6,325)             (7,013)           (9,783)
    Acquisition of LeRan Gas Products                                              --                  --            (3,200)
    Acquisition of U.S. Lock                                                       --             (33,000)               --
                                                                              -------            --------          --------
         Net cash used for investments                                         (6,325)            (40,013)          (12,983)
                                                                              -------            --------          --------
Financing:
    Net proceeds from issuance of common stock                                    341                 195               673
    Borrowings under credit agreement                                             705              48,727            39,414
    Payments under credit agreement                                              (705)            (49,441)          (38,700)
    Borrowings in connection with acquisition
     of U.S. Lock                                                                  --              33,000               --
                                                                              -------            --------          --------
        Net cash provided by financing                                            341              32,481             1,387
                                                                              -------            --------          --------
Net increase (decrease) in cash                                                 6,282               2,971            (3,979)
Cash, beginning of period                                                       3,421                 450             4,429
                                                                              -------            --------          --------
Cash, end of period                                                          $  9,703           $   3,421         $     450
                                                                              =======            ========          ========
</TABLE>



       The accompanying notes to consolidated financial statements are an
            integral part of these consolidated financial statements.





                                       F-6
<PAGE>



                          BARNETT INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                For The Years Ended June 30, 2000, 1999 and 1998
                      (In Thousands, except per share data)


1.       Summary of Significant Accounting Policies and Description of Business
         ----------------------------------------------------------------------

         A.  Basis of Presentation

         The accompanying consolidated financial statements include the accounts
         of Barnett Inc.(a Delaware corporation) and its wholly owned
         subsidiaries (collectively, the "Company"). All intercompany accounts
         and transactions have been eliminated.

         B.  Business

         The Company operates in a single business segment -- the distribution
         of plumbing, electrical, hardware and security hardware products,
         utilizing mail order catalogs and a telesales program. The Company's
         various products are economically similar and do not require separate
         segment reporting.

         C.  Accounts Receivable

         The Company's trade receivables are exposed to credit risk. The
         majority of the market served by the Company is comprised of numerous
         individual accounts, none of which is individually significant. The
         Company monitors the creditworthiness of its customers on an ongoing
         basis and provides a reserve for estimated bad debt losses. The Company
         had allowances for doubtful accounts of $1,983 and $1,980 for June 30,
         2000 and 1999, respectively. Bad debt expense totaled $979 in fiscal
         2000, $872 in fiscal 1999, and $616 in fiscal 1998.

         D.  Inventories

         At June 30, 2000 and 1999, inventories are stated at the lower of
         first-in, first-out (FIFO) cost or market. The Company regularly
         evaluates its inventory carrying value, with appropriate consideration
         given to any excess and/or slow-moving inventories.

         E.  Property and Equipment

         Property and equipment are stated at cost. For financial reporting
         purposes, machinery and equipment and furniture and fixtures are
         depreciated on a straight-line basis over their estimated useful lives
         of 5 to 7 years. Leasehold improvements are amortized over the life of
         the improvement or remaining period of the lease, whichever is shorter.
         Building and improvements are depreciated on a straight-line basis over
         their estimated useful life of 39 years. Expenditures for maintenance
         and repairs are charged against income as incurred. Betterments which
         increase the value or materially extend the life of the assets are
         capitalized and amortized over the period which the life is extended.
         For income tax purposes, accelerated methods are used. Depreciation and
         amortization expense totaled $4,961 in fiscal 2000, $4,144 in fiscal
         1999 and $3,183 in fiscal 1998.

         F.  Cost of Businesses in Excess of Net Assets Acquired

         Cost of businesses in excess of net assets acquired is being amortized
         over 40 years, using the straight-line method. Management has evaluated
         its accounting for goodwill, considering such factors as historical
         profitability and future undiscounted operating cash flows, and
         believes that the asset is realizable and the amortization period is
         appropriate. Goodwill amortization expense totaled $774 in fiscal 2000,
         $470 in fiscal 1999 and $173 in fiscal 1998. The accumulated
         amortization of goodwill at June 30, 2000 and 1999 was $2,957 and
         $2,183, respectively. The Company periodically assesses all long-lived
         assets, including goodwill, to determine if there is impairment. Based
         on these evaluations, there were no adjustments in the carrying value
         of the long-lived assets for fiscal 2000 and 1999.

         G.  Deferred Advertising

         Costs of producing and distributing sales catalogs and promotional
         flyers are capitalized and charged to expense in the periods in which
         the related sales occur. Total advertising expense capitalized was $407
         and $752 in fiscal years 2000 and 1999, respectively. Total advertising
         expenses were $2,296, $2,922 and $2,313 in fiscal years 2000, 1999 and
         1998, respectively.




                                       F-7
<PAGE>


         H.  Deferred Start-Up Costs

         Prior to July 1, 1999, the costs of establishing local distribution
         centers were capitalized and charged to expense over a 12 month period.
         Total capitalized start-up costs were $0 and $207 in fiscal years 2000
         and 1999, respectively. Amortization expense totaled $0, $319, and $456
         in fiscal years 2000, 1999 and 1998, respectively. Statement of
         Position ("SOP") No. 98- 5, "Reporting on the Costs of Start-Up
         Activities", which is effective for fiscal years beginning after
         December 15, 1998, requires all start-up and organizational costs to be
         expensed as incurred. The Company adopted this statement on July 1,
         1999.

         I.  Income Taxes

         The Company uses the asset and liability method in accounting for
         income taxes. Deferred income taxes result from the net tax effect of
         temporary differences between the carrying amount of assets and
         liabilities for financial reporting purposes and the amounts used for
         income tax purposes.

         J.  Revenue Recognition

         The Company records sales as orders are shipped to or picked up by the
         customer.

         K.  Earnings Per Share

         Basic earnings per share is calculated based on weighted average number
         of shares of common stock outstanding. Diluted earnings per share is
         calculated based on the weighted average number of shares of common
         stock outstanding and common stock equivalents, consisting of
         outstanding stock options. Common stock equivalents are determined
         using the treasury method for diluted shares outstanding. The
         difference between diluted and basic shares outstanding are common
         stock equivalents from stock options outstanding in the years ended
         June 30, 2000, 1999, and 1998.

         L.  Financial Statement Estimates

         The preparation of financial statements in conformity with accounting
         principles generally accepted in the United States requires management
         to make estimates and assumptions that affect the reported amounts of
         assets and liabilities at the date of the financial statements and the
         reported amounts of revenues and expenses during the reporting periods.
         Actual results could differ from those estimates.

         M.  Fair Value of Financial Instruments

         The carrying amounts of the Company's financial instruments, including
         cash, trade receivables, and accounts payable, approximate their fair
         values due to the short-term nature of these assets and liabilities.
         The Company believes that the fair value of its long-term debt
         approximates its carrying value.

         N.  Stock-Based Compensation

         The Company accounts for its stock-based compensation plan using the
         intrinsic value approach of Accounting Principles Board ("APB")
         Statement No. 25 "Accounting for Stock Issued to Employees". The
         Company has adopted the disclosure only provisions of Statement of
         Financial Accounting Standards ("SFAS") No. 123, "Accounting for
         Stock-Based Compensation". In accordance with SFAS No. 123, for
         footnote disclosure purposes only, the Company computes its earnings
         and earnings per share on a pro forma basis as if the fair value method
         had been applied.

         O.  Statements of Cash Flows

         The Company's non-cash investing and financing activities were as
         follows:

<TABLE>
<CAPTION>
                                                                           2000            1999           1998
                                                                           ----            ----           ----
<S>                                                                         <C>           <C>            <C>
         Business Acquisitions:
            Fair value of identifiable asset acquired                       $ -           $12,015        $3,500
            Liabilities assumed                                               -             2,023           996
            Issuance of common stock                                          -               -             600
         Tax benefits related to stock option plan                            3                66            62
</TABLE>


                                       F-8
<PAGE>



         P.  Recent Accounting Pronouncements

         In June 1998, the Financial Accounting Standards Board ("FASB") issued
         SFAS No. 133, "Accounting for Derivative Instruments and Hedging
         Activities". This statement establishes accounting and reporting
         standards for derivative instruments (including certain derivative
         instruments imbedded in other contracts). SFAS No. 133, as amended, is
         effective for fiscal years beginning after June 15, 2000. The adoption
         of this standard is not expected to have a material impact on reported
         results of the Company's operations.

         In December 1999, the Securities and Exchange Commission issued Staff
         Accounting Bulletin ("SAB") No. 101,"Revenue Recognition in Financial
         Statements", which summarizes the staff's view in applying existing
         Generally Accepted Accounting Principles ("GAAP") to selected revenue
         recognition issues. SAB 101 is effective for the fourth quarter of
         fiscal years beginning after December 15, 1999. The adoption of this
         bulletin is not expected to have a material impact on the reported
         results of the Company's operations.

         Q. Reclassifications

         Certain fiscal year 1999 amounts have been reclassified to conform to
         the current year's presentation. These reclassifications had no effect
         on reported earnings.

2.       Debt
         ----

         In April 1996, the Company entered into a revolving credit agreement
         with First Union National Bank of Florida ("First Union") for an
         unsecured three-year credit facility providing borrowings of up to
         $15.0 million, including a letter of credit subfacility of $4.0
         million. On January 6, 1999, in connection with the acquisition of U.S.
         Lock, (See Note 9) the Company entered into an amended and restated
         credit agreement, (the "Credit Agreement"), with First Union. The
         Credit Agreement provides for an unsecured revolving credit facility
         and letter of credit facility providing borrowings of up to $15.0
         million expiring December 31, 2001, and a seven year term loan of $33.0
         million, proceeds of which were used to purchase U.S. Lock. Borrowings
         under the revolving credit facility bear interest at LIBOR plus 75
         basis points. The Company is required to pay a commitment fee of 0.1%
         per annum on the unused commitment. The Company entered into an
         interest rate swap to minimize the risk and costs associated with
         changes in interest rates. The swap agreement is a contract to exchange
         the variable rate of three-month LIBOR + .825% on its term loan for
         fixed interest rate payments of 6.29%, payable quarterly. The interest
         swap has a notional amount of $33.0 million and a maturity date of
         December 31, 2005, corresponding with the term loan. The interest rate
         swap had a fair value of $1.5 million and $1.0 million at June 30, 2000
         and 1999, respectively. The outstanding principal balance of the term
         loan is payable in 19 equal and consecutive quarterly payments of
         1/20th of the original outstanding balance of the term loan commencing
         on April 30, 2001. All remaining unpaid principal and all accrued and
         unpaid interest thereon is due and payable in full on December 31,
         2005.

         In July 1999, the Company entered into a credit agreement with Bank of
         America, N.A. for a letter of credit facility which shall not exceed
         $5,000,000. This letter of credit facility replaces the sub-facility
         with First Union.

         Both credit agreements contain customary affirmative and negative
         covenants, including certain covenants requiring the Company to
         maintain debt to net worth, interest coverage and current ratios, as
         well as a minimum net worth test. At June 30, 2000, there were $0 of
         borrowings under the revolving credit agreement and there were $3.5
         million of letters of credit outstanding.

         The Company made interest payments of $2.1 million in fiscal 2000, $891
         in fiscal 1999 and $164 in fiscal 1998.

3.       Income Taxes
         ------------

         The Company accounts for income taxes in accordance with the provisions
         of SFAS No. 109, "Accounting for Income Taxes." SFAS No. 109 utilizes
         an asset and liability approach and deferred taxes are determined based
         on the estimated future tax effects of differences between the
         financial and tax bases of assets and liabilities given the provisions
         of the enacted tax laws. The provisions for income taxes are detailed
         as follows:



                                       F-9
<PAGE>



                                      Fiscal Year Ended June 30,


                                 2000                1999              1998
                                 ----                ----              ----
     Current:
     U.S. Federal             $  9,051            $  8,690          $  8,095
     State                       1,383               1,304             1,218
                               -------             -------           -------
                                10,434               9,994             9,313
     Deferred:                    (590)               (141)             (365)
                               -------             -------           -------
                              $  9,844            $  9,853          $  8,948
                               =======             =======           =======

     Deferred income taxes reflect the impact of temporary differences
     between the amounts of assets and liabilities for financial reporting
     purposes and such amounts as measured by tax laws. The deferred tax
     assets and liabilities are as follows and are included in prepaid
     expenses and other in the accompanying consolidated balance sheet:


                                                       June 30,
                                                 2000             1999
                                                 ----             ----

     Inventories                                $1,135           $  970
     Accounts receivable                           561               476
     Accrued benefits                              382               242
     Other                                         306               292
                                                 -----            ------
     Deferred tax assets                         2,384             1,980
                                                 -----            ------
     Property                                     (780)             (733)
     Deferred costs                               (157)             (390)
                                                 -----            ------
     Deferred tax liabilities                     (937)           (1,123)
                                                 -----            ------
     Net deferred tax assets                    $1,447           $   857
                                                 =====            ======


     The following table reconciles the U.S. statutory rate applied to
     pretax income to the Company's provision for income taxes:


                                      Fiscal Year Ended June 30,

                                             2000         1999         1998
                                             ----         ----         ----
     U.S. Statutory rate applied
       to pretax income                    $ 8,581      $ 8,776      $ 8,129
     State taxes, net                          829          848          792
     Goodwill amortization                     298          181           49
     Other                                     136           48          (22)
                                            ------       ------       ------
     Provision for income taxes            $ 9,844      $ 9,853      $ 8,948
                                            ======       ======       ======

         All deferred tax assets are considered to be realizable due to assumed
         future taxable income; thus, no valuation allowance has been recorded
         against the deferred tax assets.

         The Company made federal income tax payments of $8,700, $8,972 and
         $7,876 in fiscal 2000, 1999 and 1998, respectively, and state income
         tax payments of $1,874, $2,025 and $1,496 in fiscal 2000, 1999 and
         1998, respectively.

4.       Lease Commitments
         -----------------

         The Company leases its distribution centers and office facilities as
         well as certain equipment under operating lease agreements, which
         expire at various dates through 2010 with, in some cases, options to
         extend the terms of the leases.



                                      F-10
<PAGE>


         Future minimum payments, by year and in the aggregate, consist of the
         following at June 30, 2000:

               2001                                   $  5,111
               2002                                      4,710
               2003                                      3,852
               2004                                      3,192
               2005                                      1,933
               Thereafter                                7,052
                                                       -------
               Total future minimum lease
                    payments                          $ 25,850
                                                       =======


         Total rent expense was $5,281 in fiscal 2000, $4,104 in fiscal 1999 and
         $3,458 in fiscal 1998.

5.       Benefit Plans
         -------------

         During fiscal 1997, the Company established a 401(k) retirement plan
         for employees. Employees are able to contribute up to 15% of pretax
         compensation and control the investment options for their entire
         account. Employees vest in Company contributions ratably over 5 years
         of service.

         Company contributions to the 401(k) plan are discretionary and may be
         changed each year as determined by the Board of Directors. In fiscal
         2000 and 1999, the Company contributed $294 and $251, respectively, in
         matching contributions to the Company's 401(k) plan. The Board of
         Directors approved a 50% match of up to 4% of employee contributions
         for fiscal 2000.

         The Company offers no other post-retirement or post-employment benefits
         to its employees.

6.       Employee Stock Plans
         --------------------

         The Company has established an Omnibus Incentive Plan (the "Omnibus
         Plan") and an Employee Stock Purchase Plan ("ESPP") under which an
         aggregate of 1,500 shares of common stock may be subject to awards.
         Under the Omnibus Plan, awards may be granted for no consideration and
         consist of stock options and other stock based awards. The Omnibus Plan
         was designed to provide an incentive to the officers and other key
         employees of the Company by making available to them an opportunity to
         acquire a proprietary interest in the Company.

         In fiscal 2000, 1999 and 1998, the Company granted options to employees
         which vest over four years and are exercisable for a ten year period.
         The following table sets forth stock options granted, exercised,
         canceled, expired and outstanding for each of the fiscal years ended
         2000, 1999 and 1998:





                                      F-11
<PAGE>



<TABLE>
<CAPTION>
                                              2000                          1999                            1998
                                              ----                          ----                            ----
                                                    Weighted                        Weighted                       Weighted
                                                    Average                         Average                         Average
                                     Shares         Exercise         Shares         Exercise        Shares         Exercise
                                     (000's)         Price           (000's)         Price          (000's)          Price
                                     -------        ---------        -------        ---------       -------        --------
<S>                                  <C>             <C>            <C>              <C>             <C>            <C>
Outstanding at
  beginning of year                  1,035.2         $17.39           937.4          $18.02          780.0          $16.91
Granted                                 69.0          $9.62           152.5          $13.71          215.0          $21.80
Exercised                                0.0          $0.00            (5.7)         $14.00          (26.2)         $14.00
Canceled / Expired                     (32.0)        $14.83           (49.0)         $18.17          (31.4)         $19.63
                                     -------                        -------                         ------
Outstanding at end of                1,072.2         $16.97         1,035.2          $17.39          937.4          $18.02
  year                               =======                        =======                         ======
Exercisable at end of                  743.3         $17.04           497.6          $16.86          276.7          $15.97
year
Weighted average fair
  value of options
  granted during the
  year                                 $4.76                          $7.18                          $9.51
</TABLE>

         As of June 30, 2000, 748 shares of common stock are available for
         issuance under the plan. The information relating to the different
         ranges of exercise prices of stock options as of June 30, 2000 are as
         follows:


<TABLE>
<CAPTION>
                                        Options Outstanding                                     Options Exercisable
                                        -------------------                                     -------------------

                                                     Weighted
                                Number of            Average             Weighted            Number of
                                 Options            Remaining            Average              Options
 Actual Range of               Outstanding         Contractual           Exercise           Exercisable         Weighted Average
 Exercise Prices               at 6/30/00              Life               Price             at 6/30/00           Exercise Price
 ---------------               ----------              ----               -----             ----------           --------------

<S>                             <C>                    <C>                <C>                  <C>                   <C>
$ 7.50 to $11.00                   91.5                9.2                $9.46                  6                   $8.91
$12.13 to $15.38                  513.7                6.3                $14.15               434.5                 $14.04
$18.25 to $27.25                  467.0                6.6                $21.53               302.8                 $21.49
                                -------                                                        -----
$ 7.50 to $27.25                1,072.2                6.7                $16.96               743.3                 $17.04
                                =======                                                        =====
</TABLE>

         The Company has chosen to continue to account for its options under the
         provisions of APB Statement No. 25 "Accounting for Stock Issued to
         Employees" and thus has adopted the disclosure-only provisions of SFAS
         No. 123, "Accounting for Stock-Based Compensation." Accordingly, no
         compensation cost has been recognized for the stock option plans, as
         the exercise price of options granted were equal to the fair value at
         the date of grant. Pro forma net income and earnings per common share
         for the fiscal years ended 2000, 1999, and 1998, assuming the Company
         had accounted for the plans as defined in SFAS No. 123, are as follows:


                                      2000           1999           1998
                                      ----           ----           ----

Net Income-as reported               $14,672        $15,215        $14,277
Net Income-pro forma                 $12,697        $13,297        $12,422
Basic Earnings per share-
as reported                           $0.90          $0.94          $0.88
Basic Earnings per share-
pro forma                             $0.78          $0.82          $0.77
Diluted Earnings per
share-as reported                     $0.90          $0.94          $0.87
Diluted Earnings per
share-pro forma                       $0.78          $0.82          $0.76





                                      F-12

<PAGE>


         The assumptions regarding the stock options issued to employees in
         fiscal 2000, fiscal 1999 and fiscal 1998 are that the options vest
         equally over four years. The fair value of each option grant is
         estimated on the date of grant using the Black-Scholes option-pricing
         model with the following assumptions. In fiscal 2000: dividend yield of
         0.0%; expected volatility of 47.0%; risk free interest rate of 6.21%;
         turnover rate of 10% for employees and 0% for executives; and expected
         life of options of 5 years. In fiscal 1999: dividend yield of 0.0%;
         expected volatility of 55.0%; risk free interest rate of 4.63%;
         turnover rate of 10% for employees and 0% for executives; and expected
         life of options of 5 years. In fiscal 1998: dividend yield of 0.0%;
         expected volatility of 38.4%; risk free interest rate of 6.05%;
         turnover rate of 10% for employees and 0% for executives; and expected
         life of options of 5 years.

         The ESPP enables employees of the Company to subscribe for shares of
         common stock on annual offering dates at a purchase price which is 85%
         of the fair market value of the shares on the first day of the annual
         period. Employee contributions to the ESPP were $338, $49, and $195 for
         fiscal 2000, 1999, and 1998, respectively. Pursuant to the ESPP, 46, 6,
         and 11 shares were issued to employees during fiscal 2000, 1999, and
         1998, respectively.

7.       Related Party Transactions
         --------------------------

         The Company engages in business transactions with Waxman Industries,
         the Company's former parent, and its subsidiaries. Waxman owned 44.2%
         and 44.3% of the Company's common stock as of June 30, 2000 and 1999,
         respectively. Products purchased for resale from Waxman Industries and
         its subsidiaries totaled $19,070 in fiscal 2000, $18,176 in fiscal 1999
         and $15,307 in fiscal 1998. Sales to these entities totaled $18 in
         fiscal 2000, $79 in fiscal 1999 and $517 in fiscal 1998. The Company
         also entered into a five year rental agreement with Waxman Industries
         in fiscal 1998 for the leasing of a warehouse facility in the normal
         course of business. The Company prepaid all rent totaling $500. This
         warehouse facility was purchased as part of the U.S. Lock acquisition
         (See Note 9) and any unamortized prepaid rent was reduced from the
         purchase price of the acquisition. See Note 9 for the acquisition of
         LeRan Gas Products and U.S. Lock.

         The Company and Waxman Industries formerly provided to, and received
         from each other certain selling, general and administrative
         services,("S,G&A") expenses, and reimbursed each other for
         out-of-pocket disbursements related to those services. The Company
         charged Waxman and was reimbursed for $0, $293 and $431 for S,G&A
         expenses in each of fiscal 2000, 1999 and 1998. The Company was charged
         by and reimbursed Waxman $0, $65 and $0 for S,G&A expenses during
         fiscal 2000, 1999 and 1998, respectively.

         During fiscal years 2000 and 1999, the Company entered into various
         leases for warehouses owned by a partnership in which Messrs. Melvin
         Waxman and Armond Waxman and members of their families own a
         controlling interest. Total rent paid under such leases during fiscal
         2000 and 1999 was $606 and $126, respectively.

8.       Commitments and Contingencies
         -----------------------------

         The Company is subject to various legal proceedings and claims that
         arise in the ordinary course of business. In the opinion of management,
         the amount of any ultimate liability with respect to these actions will
         not materially affect the Company's financial position, liquidity or
         results of operations.

9.       Acquisitions
         ------------

         On July 1, 1997, the Company acquired substantially all of the assets
         of LeRan Gas Products, an operating unit of Waxman Industries,
         accounted for using the purchase method of accounting. The acquisition
         price was $3.8 million, of which $3.2 million was paid in cash and the
         remainder was paid by the issuance to Waxman of 25 shares of the common
         stock of the Company. The operations related to these assets, which are
         not material to the Company's financial statements, have been included
         in the results of the Company since the date of acquisition.






                                      F-13

<PAGE>



         On January 8, 1999, Barnett Inc. acquired the U.S. Lock ("U.S. Lock")
         division of WOC, Inc., an indirect wholly-owned subsidiary of Waxman
         Industries, Inc. for a cash purchase price of approximately $33.0
         million and the assumption of liabilities of approximately $2.0
         million. The effective date of the U.S. Lock acquisition was January 1,
         1999.

         The acquisition of U.S. Lock was accounted for as a purchase.
         Accordingly, the purchase price was allocated to the net identifiable
         assets acquired based upon their estimated fair market values. The
         excess of the purchase price over the estimated fair value of net
         assets acquired amounted to approximately $23.0 million. This has been
         accounted for as goodwill and is being amortized over 40 years using
         the straight line method.

         The following unaudited pro forma information presents a summary of
         consolidated results of operations of Barnett Inc. and U.S. Lock as if
         the acquisition had occurred at the beginning of fiscal year 1998, with
         pro forma adjustments to give effect to amortization of goodwill,
         interest expense on acquisition debt and certain other adjustments,
         together with related income tax effects (dollars in thousands, except
         per share data).


                                        Fiscal Year               Fiscal Year
                                        ------------              -----------
                                       Ended 6-30-99              Ended 6-30-98
                                       -------------              -------------

Net sales                                 $254,736                   $222,339
Net income                                 $15,281                    $14,092
Diluted earnings per share                   $0.94                      $0.86



10.      Subsequent Event
         ----------------

         On July 10, 2000, the Company announced that it had entered into a
         definitive merger agreement with Wilmar Industries, Inc., whereby
         Wilmar would acquire all of the outstanding common stock of the Company
         for $ 13.15 per share of common stock in cash, or approximately $214
         million, plus the assumption of debt. It is anticipated that the
         transaction will close in the second quarter of the Company's fiscal
         year 2001 and will be accounted for as a purchase. The Company recorded
         $734 of non-recurring merger costs in fiscal year 2000 for investment
         banking fees, legal fees and other expenses.




                                      F-14

<PAGE>



                 SUPPLEMENTARY FINANCIAL INFORMATION (Unaudited)

Quarterly Results of Operations:

         The following is a summary of the unaudited quarterly results of
operations for the fiscal years ended June 30, 2000 and 1999 (in thousands,
except per share amounts)


<TABLE>
<CAPTION>
                                                                                                  Diluted
                                                                                                  Earnings
                                  Net                     Gross                    Net              Per
                                 Sales                    Profit                  Income           Share
                                 -----                    ------                  ------          --------
<S>                             <C>                       <C>                     <C>              <C>
2000

Fourth                          $69,651                   $22,649                 $2,621           $0.16
Third                            73,348                    24,463                  3,921            0.24
Second                           71,072                    23,352                  4,512            0.28
First                            67,400                    21,734                  3,618            0.22

1999

Fourth                          $66,984                   $22,131                 $3,882           $0.24
Third                            63,879                    21,606                  3,827            0.24
Second                           58,120                    19,278                  4,065            0.25
First                            52,391                    17,176                  3,441            0.21
</TABLE>





















                                      F-15
<PAGE>



<TABLE>
                          BARNETT INC. AND SUBSIDIARIES

                  VALUATION AND QUALIFYING ACCOUNT AND RESERVES
                                   SCHEDULE II
                                 (In Thousands)


<CAPTION>
                                                                                                        Additions
                                                                  Additions                             Charged to         Balance
                                             Balance at           Charged to                               Other          at End of
                                            Beginning of          Costs and           Deductions         Accounts           Period
                                               Period              Expenses              (A)                (B)

<S>                                           <C>                     <C>                <C>                 <C>            <C>
Allowance for Doubtful Accounts:
  Fiscal Year Ended June 30, 2000             $1,980                  979                (976)                0             $1,983
  Fiscal Year Ended June 30, 1999             $1,231                  872                (766)               643            $1,980
  Fiscal Year Ended June 30, 1998               $864                  616                (668)               419            $1,231
</TABLE>



(A)      Uncollectible accounts written off, net of recoveries

(B)      Allowance for doubtful accounts resulting from the acquisitions of U.S.
         Lock in fiscal 1999 and LeRan Gas Products in fiscal 1998.




                                      F-16