<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-K/A

                                (AMENDMENT NO. 1)

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

                     FOR THE FISCAL YEAR ENDED JUNE 30, 2002

                                       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 0-5888

                             WAXMAN INDUSTRIES, INC.

             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S>                                                             <C>
                 DELAWARE                                       34-0899894
                 --------                                       ----------
        (STATE OF INCORPORATION)                (I.R.S. EMPLOYER IDENTIFICATION NUMBER)

             24460 AURORA ROAD,
           BEDFORD HEIGHTS, OHIO                                  44146
           ---------------------                                 -----
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                        (ZIP CODE)
</TABLE>

                                 (440) 439-1830

               (REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE)

           SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

                                      NONE

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                                      NONE

         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 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
Over-The-Counter Bulletin Board on August 21, 2002: $4,828,720

         Number of shares of Common Stock outstanding as of August 21, 2002:

                 Common Stock                        1,003,990
                 Class B Common Stock                  214,189


<PAGE>


                                EXPLANATORY NOTE

         This Form 10-K/A (Amendment No. 1) amends the Registrant's Annual
Report on Form 10-K for the fiscal year ended June 30, 2002, which was
originally filed on August 28, 2002, in order to: (i) include disclosure in
"Item 1. Business" regarding the Registrant's comprehensive financial
restructuring plan that was completed in fiscal year 2001; (ii) include a
description of the customary covenants relating to the Registrant's senior
credit facility in "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources;" (iii)
expand existing disclosure regarding foreign exchange rate risk appearing in
"Item 7A. Quantitative and Qualitative Disclosures About Market Risk;" (iv)
include the fiscal 2002 audit reports of TN Soong & Co. and Chien Chyuan & Co.,
relating to the audited financial statements of two wholly-owned foreign
subsidiaries of the Registrant, TWI, International Taiwan, Inc. and CWI
International China, Ltd., respectively; (v) include disclosure relating to the
audit report previously issued by Arthur Andersen, LLP on August 28, 2000; and
(vi) include descriptions of the Registrant's accounting policies relating to
revenue recognition, shipping and handling fees and split-dollar life insurance
policies under "Note 1. Summary of Significant Accounting Policies" to the
Registrant's Consolidated Financial Statements.

         For the convenience of the reader, this Amendment No. 1 amends and
restates in its entirety the entire Form 10-K, amending only the aforementioned
disclosures. This Amendment No. 1 has not been updated to reflect any events
that occurred after the day of the original filing of the Form 10-K.

                       DOCUMENTS INCORPORATED BY REFERENCE

         Registrant intends to file with the Securities and Exchange Commission
a definitive Proxy Statement pursuant to Regulation 14A of the Securities
Exchange Act of 1934 within 120 days of the close of its fiscal year ended June
30, 2002, portions of which document shall be deemed to be incorporated by
reference in Part I and Part III of this Annual Report on Form 10-K from the
date such document is filed.

         The Company consists of Waxman Industries, Inc. and subsidiaries in
which Waxman Industries, Inc. directly or indirectly has a majority voting
interest. Until its sale on September 29, 2000, the Company owned 44.2% of the
common stock of Barnett Inc. (the "Barnett Common Stock"), a direct marketer and
distributor of plumbing, electrical, hardware, and security hardware products,
and accounted for Barnett Inc. ("Barnett") under the equity method of
accounting.

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. 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,
risks associated with currently unforeseen competitive pressures and risks
affecting the Company's industry, such as decreased consumer spending, customer
concentration issues 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 those risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described herein.

                                     PART I

ITEM 1.   BUSINESS

        GENERAL

        The Company believes it is one of the leading suppliers of specialty
plumbing, floor and surface protection and other hardware products to the repair
and remodeling market in the United States. The Company also distributes its
products to non-U.S. countries through its operations based in Asia, primarily
to wholesale distributors, industrial and O.E.M. customers. The Company
distributes its products to approximately 770 customers, including a wide
variety of large national and regional retailers, independent retail customers
and wholesalers. The Company's consolidated net sales were $70.4 million in
fiscal 2002.

        The Company conducts its business primarily through its wholly-owned
subsidiaries, Waxman Consumer Products Group Inc. ("Consumer Products"), WAMI
Sales, Inc. ("WAMI Sales") and TWI, International, Inc. Consumer Products, the




                                       2
<PAGE>

Company's largest operation, is a supplier of specialty plumbing, floor and
surface protection and other hardware products to a wide variety of large
retailers. WAMI Sales distributes galvanized, black, chrome and brass pipe
nipples and fittings to industrial and wholesale distributors. TWI,
International, Inc. includes TWI International Taiwan Inc. and its sales
operation, TWI Industrial, Inc. (collectively, "TWI"), located primarily in
Taiwan, and CWI International China, Ltd. ("CWI"), located in Mainland China.
TWI and CWI manufacture, package, source and assemble product purchased by
Consumer Products and non-affiliated businesses. Approximately 44% of Consumer
Products' purchases are from TWI or CWI. Until March 31, 2001, the Company also
supplied plumbing and hardware products to hardware stores and smaller
independent retailers through Medal of Pennsylvania, Inc. ("Medal", formerly
known as WOC Inc. ("WOC")), when substantially all of the assets and certain
liabilities of this business were sold (see Note 5).

         Until its sale on September 29, 2000, the Company owned 44.2% of
Barnett, a direct marketer and distributor of an extensive line of plumbing,
electrical, hardware and security hardware products. The Company recorded equity
earnings from this investment of $1.4 million for the first fiscal quarter ended
September 30, 2000. The Company did not report equity earnings thereafter, due
to the sale of its ownership interest in Barnett. See the "Business --
Comprehensive Financial Restructuring Plan" section, the "Management's
Discussion and Analysis -- Significant Developments -- Prior Year Strategic
and Restructuring Developments" section and Notes 2 and 3 of the Notes to
Consolidated Financial Statements in this Annual Report on Form 10-K for
information regarding the sale of the Company's interest in Barnett.

COMPREHENSIVE FINANCIAL RESTRUCTURING PLAN

         In fiscal 2001, the Company completed its comprehensive financial
restructuring plan (See Note 3 of the Notes to Consolidated Financial Statements
in this Form 10-K), disposing of 7,186,530 shares of Barnett Common Stock and
using the $94.5 million in proceeds as follows:

         -  paid or reserved for payment approximately $1.35 million for state
            and federal taxes associated with the sale of the Barnett shares.

         -  reduced its borrowings under its working capital credit facility by
            approximately $10 million.

         -  retired all of its approximately $35.9 million principal amount of
            11 1/8% Senior Notes due 2001 (the "Senior Notes") of Waxman USA
            Inc., a direct wholly-owned subsidiary of the Company, plus accrued
            interest.

         -  paid approximately $6.0 million in semi-annual interest due on June
            1, 2000 to the holders of the Company's 12 3/4% Senior Secured
            Deferred Coupon Notes due 2004 (the "Deferred Coupon Notes").

         -  funded a dedicated account with the remaining gross proceeds of
            approximately $39.0 million, which was used for the full
            satisfaction of the Deferred Coupon Notes, including accrued
            interest, upon confirmation of the Joint Plan (as defined below).

         The sale of the Barnett Common Stock and payments outlined above were
made subsequent to the Company and an ad hoc committee representing a
controlling portion of the Deferred Coupon Notes and Senior Notes developing a
jointly sponsored, prepackaged plan of reorganization in advance of its filing
with the United States Bankruptcy Court (the "Joint Plan"). The Joint Plan
received the approval of the holders of approximately 97% of the Deferred Coupon
Notes. Under the Joint Plan, the holders of the Deferred Coupon Notes were the
only impaired class of creditors; none of the Company's operating subsidiaries
or operating divisions were included in the filing and they paid their trade
creditors, employees and other liabilities under normal conditions. On October
2, 2000, the Company filed a petition for reorganization under Chapter 11 of the
U.S. Bankruptcy Code in the United States Court for the District of Delaware. On
November 14, 2000, the Company's Joint Plan was approved by the Court and on
March 14, 2001, the Court closed the Chapter 11 case, and the Company emerged
from bankruptcy.

CONSUMER PRODUCTS

         Consumer Products actively markets and distributes approximately 3,000
products to a wide variety of retailers, primarily do-it-yourself ("D-I-Y")
warehouse home centers, home improvement centers and mass merchandisers.
Consumer Products' customers include large national retailers such as Wal-Mart,
Kmart, Lowe's and Sears, as well as several regional D-I-Y retailers such as
Meijers, Fred Meyers and Menards. Consumer Products works closely with its
customers to develop comprehensive marketing and merchandising programs designed
to improve their profitability, efficiently manage shelf space, reduce inventory
levels and maximize floor stock turnover. Consumer Products also offers certain
of its customers the option of private label programs and direct import
programs. Consumer Products' net sales for fiscal 2002 were $39.8 million,
excluding direct import sales.



                                       3
<PAGE>

         In recent years, the rapid growth of large mass merchandisers and D-I-Y
retailers has contributed to a significant consolidation of the United States
retail industry and the formation of large, dominant, product specific and
multi-category retailers. These retailers demand suppliers who can offer a broad
range of quality products and can provide strong marketing and merchandising
support. Due to the consolidation in the D-I-Y retail industry, a substantial
portion of Consumer Products' net sales are generated by a small number of
customers. Sales to Consumer Products' larger customers for fiscal 2002, 2001
and 2000, respectively, were as follows; Wal-Mart accounted for 29.0%, 25.0% and
13.6%; Lowes accounted for 16.1%, 8.4% and 5.8%; and Kmart accounted for 13.6%,
11.3% and 16.7%. The retail industry consolidation has resulted in the cessation
of business for a number of weaker organizations over the past several years,
including some companies served by Consumer Products. In January 2002, Kmart
filed for Chapter 11 bankruptcy protection. The Company had adequate reserves to
account for any loss on its accounts receivable at the time of Kmart's Chapter
11 filing. The Company will continue to provide Kmart with approximately $2.2
million in floor and surface protection products in fiscal 2003. The Company is
working to expand its sales to Kmart to include some products in plumbing
repair, a program that ended in June 2002. Although the Company expects a
decrease in monthly revenue initially, we believe that increases in sales with
other customers will ultimately offset any loss of Kmart revenue.

         The Company is evaluating the reduction in the Kmart revenue base and
ways to reduce its cost structure to be more in line with a potentially smaller
revenue base. The Company also expects that programs with other retailers will
ultimately offset much of the loss of this business. However, in the short-term
it may not be able to absorb all of the expenses due to the curtailment of
Kmart's purchases of the plumbing repair products from Consumer Products. In the
event Consumer Products were to further lose any of its larger retail accounts
as a customer or one of its larger accounts were to significantly curtail its
purchases from Consumer Products, there would be material short-term adverse
effects until the Company could further modify Consumer Products' cost structure
to be more in line with its anticipated revenue base. Consumer Products would
likely incur significant charges if a materially adverse change in its customer
relationships were to occur.

         In fiscal 1999, Consumer Products moved its distribution center from
Bedford Heights, Ohio to a more modern and efficient center in Groveport, Ohio,
a suburb of Columbus. In the fourth quarter of fiscal 2000, Consumer Products
closed its warehouse in Grand Prairie, Texas, and now operates from one national
distribution center in Groveport. Consumer Products also closed its packaging
facility in Tijuana, Mexico. The items previously packaged in Mexico are now
packaged at the Company's overseas operations and, to a lesser extent, by
domestic packagers. The closure of these facilities resulted in a charge of $0.6
million, but Consumer Products has benefited from significant cost savings as a
result of this consolidation.

         In the past several years, certain retailers have begun to develop
direct import programs to improve their profitability. Those retailers generally
select certain product categories and import full containers of such products to
their domestic distribution centers. Consumer Products has responded to this
trend by working with the Company's foreign sourcing operations to provide the
products, while Consumer Products provides certain value added services, such as
account management, selling and marketing support and customer service. Due to
the sharing of responsibilities in servicing the domestic retail accounts,
profits are shared by Consumer Products and the foreign operation. The direct
shipment arrangement generally results in lower gross profit margins for the
Company, but also results in lower selling, general and administrative costs.

         Consumer Products' marketing strategy includes offering mass
merchandisers and D-I-Y retailers a comprehensive merchandising program, which
includes design, layout and setup of selling areas. Sales and service personnel
assist the retailer in determining the proper product mix in addition to
designing category layouts to effectively display products and optimally utilize
available floor and shelf space. Consumer Products supplies point-of-purchase
displays for both bulk and packaged products, including color-coded product
category signs and color-coordinated bin labels to help identify products and
backup tags to identify products that require reordering. Consumer Products also
offers certain of its customers the option of private label programs for their
plumbing and floor care products. In-house design, assembly and packaging
capabilities enable Consumer Products to react quickly and effectively to
service its customers' changing needs. Consumer Products' products are packaged
and designed for ease of use, with "how to" instructions to simplify
installation, even for the uninitiated D-I-Y consumer. In addition, Consumer
Products has sophisticated EDI capabilities, enabling customers to reduce
inventory levels and increase return on investment.

PRODUCTS

         The following is a discussion of Consumer Products' principal product
groups:

         Plumbing Products. Consumer Products' plumbing repair products include
toilet repair, sink and faucet repair, water supply repair, drain repair, shower
and bath repair, hose and pipe repair, and connection repair. Consumer Products
also offers proprietary lines of faucets under the trade name AquaLife(R) and a
line of shower and bath accessories under the proprietary trade name Spray
Sensations(R). Consumer Products' product line also includes a full line of
valves and fittings, rubber products and



                                       4
<PAGE>

tubular products such as traps and elbows. Many of Consumer Products' plumbing
products are sold under the proprietary trade names Plumbcraft(R) and
PlumbKing(R). In addition, Consumer Products offers certain of its customers the
option of private label programs.

         Floor and Surface Protective Hardware Products. Consumer Products'
floor and surface protective hardware products include casters, doorstops, and
other floor, furniture, felt and rubber surface protective and wall protective
items. Consumer Products markets a complete line of floor and surface protective
hardware products under the proprietary trade name SoftTouch(TM) and also under
private labels.

         New Product and Packaging Introductions. In recent years, as the
consolidation in the United States retail industry has accelerated, decreasing
the number of potential customers in the Company's traditional market, the
Company has placed an emphasis on new product development, product line
extensions and the redesign of existing products and packaging concepts to allow
it to diversify its product offerings to its existing customers and to enable it
to penetrate new customer categories. Consumer Products has several new product
and new packaging initiatives planned.

         In the shower category, Consumer Products has repackaged and re-named
its shower product line with eye catching graphics targeted to the female
consumer. In addition, new shower products with the features and functions
desired most by consumers have been added. Consumer Products has also developed
a new line of luxury shower products targeted for placement in home stores and
with mass merchandisers. This line has unique product features with designer
packaging that will command premium yet affordable pricing.

         EZ Mount(R), a unique self adhering, non marking, reusable product that
sticks on any surface, will be launched in the fall of 2002. This exciting new
product line with dozens of decorating, mounting and communications uses, has
specifically been targeted for office supply stores, mass retailers, home stores
and specialty toy stores.

         EZ Caster(R), is a unique self stick caster that requires no tools for
installation and has a locking mechanism that is designed to fit a number of
surfaces and will not scratch hardwood or vinyl floors. EZ Caster is targeted
for placement in office supply retailers, mass retailers, big box stores and
home stores.

OTHER DOMESTIC OPERATIONS

         WAMI Sales

         WAMI Sales was started by the Company in July 1997 to distribute pipe
nipples that were manufactured in Tijuana, Mexico by Western American
Manufacturing Inc. ("WAMI"), an operation that was sold effective March 31,
2000. WAMI Sales distributes pipe nipples, fittings and other products to
industrial supply and wholesale operations throughout the United States and, to
a lesser extent, Canada. It distributes approximately 2,680 products to
approximately 650 customers through its own sales force and through outside
sales representative organizations. WAMI Sales has developed relationships with
foreign suppliers, including producers from Asia and with the acquirer of WAMI,
to supply the products it distributes. WAMI Sales' net sales amounted to $3.3
million in fiscal 2002.

         Medal

         Prior to its sale effective March 31, 2001, Medal was a supplier of
hardware and plumbing products to approximately 600 independent hardware stores
and small independent retailers within a 250 mile radius of its facility in
Sharon, Pennsylvania. Medal was formerly a division of WOC Inc., which also
included U.S. Lock, a full line supplier of security hardware products, until
its sale on January 1, 1999. In fiscal 2001, WOC was renamed Medal of
Pennsylvania, Inc. to reflect its only remaining operation. Medal's net sales
amounted to $3.4 million for the nine-month period it operated in fiscal 2001.

FOREIGN OPERATIONS

         The Company conducts its foreign operations through TWI, International,
Inc. including TWI in Taiwan and CWI in Mainland China. TWI and CWI manufacture,
package, source and assemble product purchased by Consumer Products and
non-affiliated businesses. These businesses were initially intended to support
Consumer Products and other affiliated companies, but they have also developed
their own base of non-affiliated companies. TWI and Consumer Products have also
responded to the increasing interest by certain retailers in direct import
programs, with the added benefit of domestic account management. For the years
ended June 30, 2002, 2001 and 2000, products purchased from the foreign
operations accounted for approximately 15.9%, 15.1% and 16.8%, respectively, of
the total product purchases made by the Company. For fiscal 2002, the combined
foreign



                                       5
<PAGE>

operations had net sales of $35.3 million, of which $7.9 million were
intercompany transactions, which are eliminated in consolidation. Approximately
$13.1 million of the Company's non-retail sales are to Barnett, a former
affiliated company. However, the Company has made significant progress in recent
years in its effort to develop the non-retail customer base served by its
foreign operations.

         The Company believes that these facilities give it competitive
advantages in terms of cost and flexibility in sourcing. Both labor and physical
plant costs are significantly below those in the United States. Substantially
all of the other products purchased by the Company are manufactured by third
parties. The Company estimates that it purchases products and materials from
approximately 215 suppliers and is not dependent on any single unaffiliated
supplier for a material portion of its requirements.

         Effective March 31, 2000, the Company sold nearly all of the assets and
certain liabilities of WAMI, a company that manufactured galvanized, black,
brass and chrome pipe nipples in Tijuana, Mexico. In June 2000, the Company
closed one of its facilities in China that manufactured faucet components,
resulting in a restructuring charge of $1.2 million to write down assets to
their fair value and provide for two months of costs to close the facility. The
Company will continue to distribute faucets that have been assembled by the
Company, with components being manufactured by outside suppliers.

PRINCIPAL PRODUCT GROUPS

         The following table sets forth the approximate percentage of net sales
attributable to the Company's principal product groups.

                                 2002             2001             2000
                                 ----             ----             ----

        Plumbing                  72%              77%              79%
        Hardware                  28%              23%              21%
                                 ---              ---              ---
        Total net sales          100%             100%             100%
                                 ===              ===              ===

IMPORT RESTRICTIONS AND CUSTOMS ISSUES

         Under current United States government regulations, some products
manufactured offshore are subject to import restrictions. The Company currently
imports goods from China and Taiwan. When the Company chooses to directly import
goods purchased outside of the United States, the Company may be subject to
import quota restrictions, depending on the country of origin of assembly. If
the Company cannot obtain the necessary quota, the Company will not be able to
import the goods into the United States. These restrictions may limit the amount
of goods from a particular country that may be imported into the United States
or increase the cost of goods being imported into this country. In fiscal 2002,
the United States imposed a 15% tariff on many imported products made of steel,
including products imported by WAMI Sales. This tariff has increased the cost
structure of this business. Export visas for the goods purchased offshore by the
Company are readily available. As indicated above, many of the Company's
imported goods are of Chinese origin, which was granted most favored nation
status in the spring of 2000. There is no guarantee this will continue to be the
case in the future.

EQUITY INVESTMENT - BARNETT AFFILIATE

         Until September 29, 2000, the Company held an equity interest in
Barnett, a direct marketer and distributor of an extensive line of plumbing,
electrical, hardware and security hardware products to professional contractors,
independent hardware stores, maintenance managers, liquid propane gas dealers
and locksmiths throughout the United States. The Company owned 100% of Barnett
prior to an initial public offering in April 1996. A secondary offering in April
1997 reduced the Company's ownership interest to approximately 44.4% of the
Barnett Common Stock. In July 2000, the Company announced that it had reached an
agreement to monetize its Barnett Common Stock for $13.15 per share as part of
the purchase of all of Barnett's outstanding shares by Wilmar Industries, Inc.
(the "Barnett Merger"). In September 2000, the remaining 7,186,530 shares of
Barnett Common Stock were used to raise $94.5 million in proceeds as part of the
Company's comprehensive financial restructuring plan. The Company's equity
investment in Barnett amounted to $44.3 million immediately prior to the sale,
including equity earnings recognized by the Company in the quarter ended
September 30, 2000 of $1.4 million. The Company reported a net gain on the sale
of Barnett of $47.5 million, after the write-off of $2.7 million in transaction
related costs and other costs associated with the comprehensive financial
restructuring of the Company. In addition, the Company recognized $7.8 million
in deferred gain on the sale of U.S. Lock in fiscal 2001, which was being
recognized as Barnett amortized the goodwill associated with its purchase of
U.S. Lock.

COMPETITION

         The Company faces significant competition within each of its product
lines, although it has no competitor offering the



                                       6
<PAGE>

range of products in all of the product lines that the Company offers. The
Company believes that its buying power, extensive inventory, use of technology,
emphasis on customer service and merchandising programs have contributed to its
ability to compete successfully in its various markets. The Company faces
significant competition from smaller companies which specialize in particular
types of products and larger companies which manufacture their own products and
have greater financial resources than the Company. The Company believes that
competition in sales to retailers is primarily based on price, product quality
and selection, as well as customer service, which includes speed of responses
for packaging, delivery and merchandising for retailers.

EMPLOYEES

         As of June 30, 2002, the Company employed 405 persons, 117 of whom were
clerical and administrative personnel, 64 of whom were sales and service
representatives and 224 of whom were either production or warehouse personnel.
None of the Company's employees are represented by collective bargaining units.
The Company considers its relations with its employees to be satisfactory.

TRADEMARKS

         Several of the trademarks and trade names used by the Company are
considered to have significant value in its business. See "Business -- Consumer
Products - Products"

ENVIRONMENTAL REGULATIONS

         The Company is subject to certain federal, state and local
environmental laws and regulations. The Company believes that it is in material
compliance with such laws and regulations applicable to it. To the extent any
subsidiaries of the Company are not in compliance with such laws and
regulations, the Company, as well as such subsidiaries, may be liable for such
non-compliance.

         The Company or one of its indirect subsidiaries have been threatened
with litigation by two separate California public interest groups alleging
unlawful discharge of chemicals under California's Safe Drinking Water and Toxic
Enforcement Act of 1986. The Company is researching the merits of the
allegations and intends to contest and vigorously defend itself. Any potential
liability related to this threatened litigation cannot be assessed at this time
as the Company is in the very preliminary stages of its investigation.

SEASONALITY

         The Company's sales are generally consistent throughout its fiscal
year, although the third fiscal quarter is generally weaker in sales than the
other quarters.



                                       7
<PAGE>

ITEM 2. DESCRIPTION OF PROPERTIES

         The following table sets forth, as of the most current date, certain
information with respect to the Company's principal physical properties:

<TABLE>
<CAPTION>
                                                                                                        LEASE
                           APPROXIMATE                                                               EXPIRATION
    LOCATION               SQUARE FEET                      PURPOSE                                     DATE
    --------               -----------                      -------                                  ----------
<S>                        <C>                         <C>                                           <C>
24460 Aurora Road             21,000                Corporate Office                                     Owned
  Bedford Hts., OH

24455 Aurora Road             46,000                Consumer Products Corporate                        6/30/07
  Bedford Hts., OH (1)                              Office and Distribution Center

5920 Green Pointe Dr.        142,000                Consumer Products                                  11/1/08
  Groveport, OH                                     Office and Distribution Center

24001 Aurora Road             28,000                Consumer Products                                   9/1/02
  Bedford Hts., OH                                  Warehouse

No. 10, 7th Road              55,000                TWI                                                  Owned
  Industrial Park                                   Office, Packaging
  Taichung, Taiwan                                  and Distribution Center
  Republic of China

Dan Keng Village              57,000                CWI                                                  Owned
  Fu Ming County                                    Office, Packaging, Manufacturing
  Shenzhen, P.R. China                              and Distribution Center

9430 Cabot Drive              13,000                WAMI Sales                                         1/31/03
  San Diego, California                             Office and Distribution Center

4647 Leston Avenue            12,000                WAMI Sales                                         6/30/04
  Dallas, Texas                                     Office and Distribution Center
</TABLE>


(1)      Aurora Investment Co., a partnership owned by Melvin Waxman, Chairman
         of the Board and Co-Chief Executive Officer of the Company, and Armond
         Waxman, President and Co-Chief Executive Officer of the Company,
         together with certain other members of their families, is the owner and
         lessor of this property. In fiscal 2002, Consumer Products leased 9,000
         square feet of office space and 20,000 square feet of warehouse space
         from Aurora Investment. The remaining 97,000 square feet of warehouse
         space in this facility had been subleased to Handl-it, Inc. (see below
         for information regarding affiliated ownership) until the lease expired
         on June 30, 2002. Rent expense under this lease was $326,716 in fiscal
         2002, 2001 and 2000. Effective July 1, 2002, Consumer Products extended
         the lease with Aurora Investment for the 9,000 square feet of office
         space and 20,000 square feet of warehouse space for five years. In
         addition, Consumer Products began subleasing 17,000 square feet of
         warehouse space from Handl-it at the same location to consolidate the
         warehouse location at 24001 Aurora Road in Bedford Heights that was
         previously scheduled to expire in September 2002.

         Handl-it Inc., a corporation owned by John S. Peters, a director of and
consultant to the Company, together with another member of his family, and
Melvin Waxman and Armond Waxman, subleased warehouse space from Consumer
Products through June 30, 2002. The sublease by Handl-it allowed Consumer
Products to move to a more efficient national distribution center in Groveport,
Ohio. The Company charged Handl-it, Inc. $191,079, $290,496 and $290,970 in
fiscal 2002, 2001 and 2000, respectively, for subleasing the warehouse in
Bedford Hts., Ohio. However, Handl-it owes the Company for $133,638 of unpaid
rent in fiscal 2002, for which it has signed a note (see Note 10, Related Party
Transactions of the Notes to the Consolidated Financial Statements in this
Annual Report on Form 10-K). In fiscal 2001 and 2000, Handl-it provided Consumer
Products with certain outside transportation services, for which Consumer
Products paid Handl-it Inc. approximately $27,000 and $40,000, respectively.
From July 1, 1999 through April 2001, WAMI Sales utilized Handl-it to provide
all warehousing, labor and shipping functions in Cleveland, Ohio for a fee equal
to a percentage of monthly sales plus other direct costs from this operation.
The charge amounted to $67,000 and $74,000 in fiscal 2001 and 2000,
respectively. Consumer Products also utilizes an outside



                                       8
<PAGE>

packaging operation in certain instances where the packaging cannot be performed
by the Company's operations in Asia. This outside packager, which was acquired
by Handl-it, received $377,599, $234,368 and $110,577 for these services in
fiscal 2002, 2001 and 2000, respectively. Consumer Products had been using
Con-Pak Inc. for several years before its acquisition by Handl-it in 1999.

         The Company believes that its facilities are suitable for its
operations and provide the Company with adequate productive capacity and that
the related party leases and rental arrangements are on terms comparable to
those that would be available from unaffiliated third parties.

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
materially affect the financial position or operations of the Company.

         As further described in Note 14 of the Notes to the Consolidated
Financial Statements in this Annual Report on Form 10-K, the Company or one of
its indirect subsidiaries have been threatened with litigation by two separate
California public interest groups. The Company is researching the merits of the
allegations and intends to contest and vigorously defend itself. Any potential
liability related to this threatened litigation cannot be assessed at this time
as the Company is in the very preliminary stages of its investigation.

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

         There were no matters submitted to a vote of security holders during
the fourth quarter of the fiscal year covered by this report.

ITEM 4A.  EXECUTIVE OFFICERS OF THE REGISTRANT

         The following is a list of the executive officers of the Company and a
brief description of their business experience. Each executive officer will hold
office until his successor is chosen and qualified.

         Mr. Melvin Waxman, age 68, has been the Chairman of the Board and since
August 1976, other than from June 1995 until April 1996, when he was Co-Chairman
of the Board. Mr. Waxman was the Chief Executive Officer from 1962 until May
1988, when he became the Co-Chief Executive Officer of the Company. Mr. Waxman
has been a director of the Company since 1962. Melvin Waxman and Armond Waxman
are brothers.

         Mr. Armond Waxman, age 63, is the Co-Chief Executive Officer, President
and Treasurer of the Company. Mr. Waxman became the Co-Chief Executive Officer
in May 1988, and has been the President and Treasurer of the Company since
August 1976, other than from August 1976 to May 1988, when he was the Chief
Operating Officer of the Company. Mr. Waxman has been a director of the Company
since 1962. Armond Waxman and Melvin Waxman are brothers.

         Mr. Laurence Waxman, age 45, has been Senior Vice President of the
Company since November 1993 and is also President of Consumer Products, a
position he has held since 1988. Mr. Waxman joined the Company in 1981. Mr.
Waxman has been a director of the Company since July 1996. Mr. Laurence Waxman
is the son of Melvin Waxman.

         Mr. Mark Wester, age 47, is a Senior Vice President and Chief Financial
Officer of the Company and a certified public accountant. Mr. Wester joined the
Company in October 1996 as Corporate Controller and in January 1997 became the
Vice President-Finance. In April 1997, Mr. Wester became the Chief Financial
Officer of the Company, and in May 2002, he became a Senior Vice President and
Chief Financial Officer. Mr. Wester provided consulting services to the Company
from May 1996 through September 1996. From March 1992 to April 1996, Mr. Wester
was a limited partner with a privately owned telecommunications company, Capital
Communications Cooperative and the Chief Financial Officer of Progressive
Communications Technologies. From 1978 to 1992, Mr. Wester was employed by The
Fairchild Corporation (formerly, Banner Industries, Inc.), where he held several
positions during his tenure, including Vice President and Corporate Controller.


                                       9
<PAGE>




                                     PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS


PRICE RANGE OF COMMON STOCK

         The Company's Common Stock is quoted on the Over-The-Counter Bulletin
Board ("OTCBB"). On February 20, 2001, the Company effected a 1 for 10 reverse
stock split (the "Reverse Stock Split") for the Company's Common Stock, which
trades under the symbol "WAXM.BB" and Class B Common Stock. From March 22, 1999
until the Reverse Stock Split, the Company's Common Stock traded under the
symbol "WAXX". The Company's Class B Common Stock does not trade in the public
market due to restricted transferability. However, the Class B Common Stock may
be converted into Common Stock on a share-for-share basis at any time.

         The following table sets forth the high and low closing quotations as
reported by the OTCBB for fiscal 2002 and 2001 (adjusted for the Reverse Stock
Split).

<TABLE>
<CAPTION>
                                                                         2002                              2001
                                                                        ------                            ------

                                                                  HIGH           LOW               HIGH            LOW
                                                                 -------       -------            ------         ------

<S>                                                               <C>            <C>               <C>            <C>
       First Quarter                                              $2.35          $1.55             $3.44          $1.25
       Second Quarter                                              3.46           1.70              3.50           1.25
       Third Quarter                                               5.00           3.25              3.13           1.50
       Fourth Quarter                                              6.25           4.40              2.05           1.50
</TABLE>


HOLDERS OF RECORD

         As of August 21, 2002, there were 578 holders of record of the
Company's Common Stock and 97 holders of record of the Company's Class B Common
Stock.

DIVIDENDS

         The Company declared no dividends in fiscal 2002 or 2001. Restrictions
contained in the Company's debt instruments currently prohibit the declaration
and payment of cash dividends.


                                       10
<PAGE>

ITEM 6.   SELECTED FINANCIAL DATA

INCOME STATEMENT DATA:

<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                 2002        2001 (8)       2000 (9)       1999 (10)        1998
                                                              ---------     ----------      ---------      ---------      ---------
<S>                                                           <C>            <C>            <C>            <C>            <C>
Net sales (1)                                                 $  70,425      $  71,370      $  80,710      $  96,616      $ 105,662
Cost of sales (2)                                                47,253         49,890         59,259         69,264         69,429
                                                              ---------      ---------      ---------      ---------      ---------
Gross profit                                                     23,172         21,480         21,451         27,352         36,233
Selling, general and administrative expenses                     21,535         21,763         27,094         31,635         30,290
Restructuring and impairment charges (3)                           --              350          9,720          2,015             24
                                                              ---------      ---------      ---------      ---------      ---------
       Operating income (loss)                                    1,637           (633)       (15,363)        (6,298)         5,919
Gain on sale of Barnett stock, net (4)                             --           47,473           --             --             --
Loss on the sale of Medal, net (5)                                 --           (1,105)          --             --             --
Loss on sale of WAMI, net (3) (5)                                  --             --           (2,024)          --             --
Gain on sale of U.S. Lock, net (5)                                 --             --             --           10,298           --
Equity earnings of Barnett                                         --            1,370          6,511          6,744          6,341
Amortization of deferred U.S. Lock gain (6)                        --            7,815            202           --             --
Interest expense, net                                               723          5,414         18,201         17,192         16,031
                                                              ---------      ---------      ---------      ---------      ---------
Income  (loss) from  operations  before  income taxes and
extraordinary items                                                 914         49,506        (28,875)        (6,448)        (3,771)
(Benefit) provision for income taxes                               (671)         1,680            (27)         1,029            537
                                                              ---------      ---------      ---------      ---------      ---------
Income (loss) from operations before extraordinary items          1,585         47,826        (28,848)        (7,477)        (4,308)
Extraordinary items (7)                                            --           52,222           --             --               92
                                                              ---------      ---------      ---------      ---------      ---------
Net income (loss)                                             $   1,585      $ 100,048      $ (28,848)     $  (7,477)     $  (4,500)
                                                              =========      =========      =========      =========      =========
Average number of shares outstanding                              1,215          1,212          1,207          1,206          1,203
                                                              =========      =========      =========      =========      =========
Basic earnings (loss) per share:
  From operations before extraordinary items                  $    1.30      $   39.46      $  (23.91)     $   (6.20)     $   (3.58)
  Extraordinary items                                              --            43.09           --             --             (.16)
                                                              ---------      ---------      ---------      ---------      ---------
  Net income (loss) per share                                 $    1.30      $   82.55      $  (23.91)     $   (6.20)     $   (3.74)
                                                              =========      =========      =========      =========      =========
Diluted earnings (loss) per share:
   From operations before extraordinary items                 $    1.30      $   39.46      $  (23.91)     $   (6.20)     $   (3.58)
  Extraordinary items                                                --          43.09           --             --             (.16)
                                                              ---------      ---------      ---------      ---------      ---------
  Net income (loss) per share                                 $    1.30      $   82.55      $  (23.91)     $   (6.20)     $   (3.74)
                                                              =========      =========      =========      =========      =========


Cash dividends per share:
  Common stock                                                $    --        $    --        $    --        $    --        $    --
  Class B common stock                                        $    --        $    --        $    --        $    --        $    --

BALANCE SHEET DATA:
Working capital                                               $   8,767      $   7,209      $  (5,725)     $  21,945      $  15,776
Total assets                                                     40,296         40,832         94,218        100,210        105,743
Total long-term debt                                                950            532        128,453        128,480        118,314
Stockholders' equity (deficit)                                   20,786         19,032        (80,543)       (52,086)       (44,744)
</TABLE>

(1)      Prior to fiscal 2002, the Company charged off business procurement
         charges for inventory repurchases as a contra sale, while reporting
         other business procurement costs, such as slotting fees and the cost of
         reorganizing a customer's store aisles and displays in order to
         accommodate the Company's products, as a separate operating expense
         category. Beginning in fiscal 2002, the Company adopted a new Financial
         Accounting Standards Board standard, EITF Issue No. 00-25, and began to
         report all of these charges as a reduction in net sales. As a result,
         net sales for fiscal 2001, 2000 and 1999 were reduced by $2.15 million,
         $0.65 million and $2.5 million, respectively, for charges not
         previously reported as a contra sale, but there was no impact on
         operating income. There were no procurement costs in fiscal 1998 that
         had not previously been reported as a reduction in net sales.



                                       11
<PAGE>

(2)      In the fiscal 2000 fourth quarter, Consumer Products incurred higher
         cost of sales for the write off of $1.7 million in packaging material
         and other inventory associated with the closure of (i) a distribution
         facility in Grand Prairie, Texas, which was consolidated into Consumer
         Products' national distribution center near Columbus, Ohio and (ii) a
         packaging operation in Tijuana, Mexico that transferred operations to
         the Company's operations in Taiwan and China. The Company also reported
         a reduction in sales of $0.4 million and additional charges to cost of
         sales of $0.5 million for the realizability of receivables and
         inventory in the fiscal 2000 fourth quarter for the closure of its
         Premier Faucet Company.

(3)      In the fiscal 2001 first quarter, the Company recorded a $0.35 million
         charge associated with additional restructuring costs for warehouses
         closed by Consumer Products in prior years. In the fiscal 2000 second
         quarter, the Company recorded a $1.3 million restructuring charge
         related to the consolidation of its packaged plumbing products under
         the Plumbcraft(R) brand name. In the fiscal 2000 fourth quarter, the
         Company recorded a $0.6 million restructuring charge related to (i) the
         closure of its Grand Prairie, Texas distribution center, which was
         consolidated into Consumer Products' distribution center near Columbus,
         Ohio, and (ii) the closure of a packaging operation in Tijuana, Mexico
         that was transferred to the Company's operations in Taiwan and China.
         In the fourth quarter of fiscal 2000, the Company also recorded an
         asset impairment charge of $6.7 million related to the write-off of
         goodwill as required by SFAS No. 121 "Accounting for the Impairment of
         Long-Lived Assets and Assets to Be Disposed Of", for two product lines
         that were acquired by Consumer Products in December 1986 and May 1988.
         Also included in restructuring costs is a $1.2 million charge from the
         closure of Premier Faucet Corporation in June 2000. In fiscal 1999, the
         Company recorded a $2.1 million restructuring charge associated with
         the move of one of Consumer Products' warehouses. In fiscal 1998, the
         Company recorded an estimated restructuring charge of $24,000 for
         warehouse closure costs and other expenses associated with the sale of
         LeRan Gas Products.

(4)      In September 2000, the Company sold its remaining 7,186,530 shares of
         Barnett common stock as part of its comprehensive debt restructuring,
         recognizing a net gain of $47.5 million.

(5)      The sale of significantly all of the assets and certain liabilities of
         these operations are detailed in Note 5 to the Consolidated Financial
         Statements, including the $1.1 million loss on the March 31, 2001 sale
         of Medal, the $2.0 million loss on the March 31, 2000 sale of Western
         American Manufacturing, Inc. and the $10.3 million gain on the January
         1, 1999 sale of U.S. Lock.

(6)      The Company deferred $8.1 million of the gain on the sale of U.S. Lock
         in fiscal 1999 due to its continued ownership interest in Barnett. The
         gain was being amortized as Barnett wrote-off the goodwill associated
         with the U.S. Lock purchase. In fiscal 2001, the Company recognized the
         remaining $7.8 million in deferred gain on the U.S. Lock sale due to
         the disposal of its remaining interest in Barnett. See Notes 2 and 5 to
         the Consolidated Financial Statements.

(7)      Fiscal 2001 amounts reflect the extraordinary gain on the defeasance of
         debt at a discount, net of the write-off of deferred financing costs
         (see Note 6 to the Consolidated Financial Statements). Fiscal 1998
         extraordinary charges represents the write-off of deferred financing
         costs resulting from the repayment and refinancing of debt, as further
         described in Notes 2 and 7 to the Consolidated Financial Statements.

(8)      The results of Medal were consolidated by the Company until its sale,
         which was effective March 31, 2001. As a result of the sale, fiscal
         2001 includes results for Medal for nine months, while the previous
         fiscal years include results for twelve months. See Note 5 to the
         Consolidated Financial Statements for further discussion of the sale of
         Medal. Fiscal 2001 also includes equity earnings for Barnett through
         September 2000, when the remaining Barnett stock was sold. Prior
         periods presented include equity earnings from Barnett for the full
         fiscal year.

(9)      The results of WAMI were consolidated by the Company until its sale,
         which was effective March 31, 2000. As a result of the sale, fiscal
         2000 only includes nine months of WAMI's results while the previous
         fiscal years include results for twelve months. See Note 5 to the
         Consolidated Financial Statements for further discussion of the sale of
         WAMI.

(10)     The results of U.S. Lock were consolidated by the Company until its
         sale, which was effective January 1, 1999. As a result of the sale,
         fiscal 1999 includes only six months of U.S. Lock's results while the
         previous fiscal years include results for twelve months.



                                       12
<PAGE>


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

GENERAL

         The Company operates in two business segments -- the distribution of
specialty plumbing and hardware products to retailers and the distribution of
plumbing and other products to non-retail businesses. Distribution of plumbing
and hardware products to retailers is primarily conducted through domestic
operations, but is also conducted through direct import programs from the
foreign sourcing, manufacturing and packaging operations. In fiscal 2002,
approximately 22.3% of the Company's foreign operations' sales were to the
Company's domestic wholly-owned operations, respectively, which are eliminated
in consolidation.

SIGNIFICANT DEVELOPMENTS

Current Year Developments

         The Company has been a supplier to Kmart for approximately 15 years.
For fiscal 2002, Kmart accounted for $6.3 million, or approximately 8.9 percent
and 13.6 percent of the Company's and Consumer Products' net sales,
respectively. On January 22, 2002, Kmart filed for Chapter 11 bankruptcy
protection. The Company had adequate reserves to account for the loss of its
outstanding account receivable that were not covered by credit insurance at the
time of Kmart's Chapter 11 filing.

         In connection with the Chapter 11 filing, Kmart reviewed its vendor
relationships, including the financial commitments required of suppliers. The
Company also assessed the issues associated with maintaining certain of its
supply arrangements with Kmart, including the cost of retaining and supporting
these programs and the cash flow implications of such programs, the risk/reward
profile of each of such programs and the potential opportunities with other
customers. The Company will continue to provide Kmart with approximately $2.2
million in floor and surface protection products in fiscal 2003. The Company is
working to expand its sales to Kmart to include some products in plumbing
repair, a program that ended in June 2002. Although the Company expects a
decrease in monthly revenue initially, we believe that increases in sales with
other customers will ultimately offset any loss of Kmart revenue. However, there
can be no assurances as to whether the Company will continue to supply Kmart
with all of the existing product lines, the level, if any, of future purchases
or the terms and conditions applicable to any future supply relationship.

         The Company is evaluating the possible reduction or loss of the
remaining Kmart revenue base and ways to reduce its cost structure to be more in
line with a potentially smaller revenue base. The Company believes that
increases in sales with other customers will ultimately offset any potential
loss of Kmart revenue, however, in the short term it may not be able to absorb
all of the expenses due to this revenue loss.

Prior Year Strategic and Restructuring Developments

         In fiscal 2001, the Company completed its comprehensive financial
restructuring plan (See Note 3 of the Notes to Consolidated Financial Statements
in this Form 10-K), disposing of 7,186,530 shares of Barnett Common Stock and
using the $94.5 million in proceeds as follows:

         -  paid or reserved for payment approximately $1.35 million for state
            and federal taxes associated with the sale of the Barnett shares.

         -  reduced its borrowings under its working capital credit facility by
            approximately $10 million.

         -  retired all of its approximately $35.9 million principal amount of
            Senior Notes plus accrued interest.

         -  paid approximately $6.0 million in semi-annual interest due on June
            1, 2000 to the holders of its Deferred Coupon Notes.

         -  funded a dedicated account with the remaining gross proceeds of
            approximately $39.0 million, which was used for the full
            satisfaction of the Deferred Coupon Notes, including accrued
            interest, upon confirmation of the Joint Plan (as defined below).

         The sale of the Barnett Common Stock and payments outlined above were
made subsequent to the Company and an ad hoc committee representing a
controlling portion of the Deferred Coupon Notes and Senior Notes developing a
jointly sponsored, prepackaged plan of reorganization in advance of its filing
with the United States Bankruptcy Court (the "Joint Plan"). The Joint Plan
received the approval of the holders of approximately 97% of the Deferred Coupon
Notes. Under the Joint Plan, the holders of the Deferred Coupon Notes were the
only impaired class of creditors; none of the Company's operating subsidiaries
or operating divisions were included in the filing and they paid their trade
creditors, employees and other liabilities under normal conditions. On October
2, 2000, the Company filed a petition for reorganization under Chapter 11 of the
U.S. Bankruptcy Code in the United States Court for the District of Delaware. On
November 14, 2000, the Company's Joint Plan was approved by the Court and on
March 14, 2001, the Court closed the Chapter 11 case, and the Company emerged
from bankruptcy.



                                       13
<PAGE>

         A historic overview of other strategic and restructuring developments
includes:

         Effective March 31, 2001, the Company sold nearly all of the assets and
certain liabilities of Medal, which sold a wide range of products to small
independent hardware stores and other independent retailers in a 250-mile radius
of Sharon, Pennsylvania. Over the past several years, Medal's customer base and
operating results had deteriorated due to competitive pressures.

         In September 2000, the Company sold its remaining 7,186,530 shares of
Barnett Common Stock for $94.5 million, resulting in a net pre-tax gain of $47.5
million. Barnett was a wholly-owned subsidiary until April 1996, when the
Company completed an initial public offering of Barnett (see Note 2 for
additional information related to Barnett stock transactions). The sale of the
Barnett Common Stock enabled the Company to complete its comprehensive financial
restructuring.

         In June 2000, the Company closed its Premier Faucet Corporation
facility in China that manufactured faucets and faucet components, resulting in
a restructuring charge of $1.2 million to write down assets to their fair value
and provide for costs to close the facility. The closure of this operation also
resulted in an additional loss in gross profit of $0.9 million due to the
reduction in sales of $0.4 million and additional charges to cost of sales of
$0.5 million for the realizability of receivables and inventory. The Company
will continue to distribute faucets that have been assembled by the Company,
with components manufactured by outside suppliers.

         In the fourth quarter of fiscal 2000, Consumer Products consolidated
certain operations to improve its efficiencies, including the closure of
Consumer Product's Grand Prairie distribution center and packaging operations in
Tijuana, Mexico. Distribution operations for Consumer Products will be conducted
from a national distribution center near Columbus, Ohio, while the packaging
operations will be conducted at the Company's operations in China and Taiwan.

         Effective March 31, 2000, the Company sold nearly all of the assets and
certain liabilities of Western American Manufacturing Inc., a company that
manufactured galvanized, black, brass, and chrome pipe nipples in Tijuana,
Mexico, for $1.8 million in cash.

         The Company continues to evaluate its operations, including various
options to further streamline its operations, reduce expenses and improve
margins, while distributing high quality products at a fair value to retailers.
The Company intends to examine means to further develop an international
customer base to further utilize the capabilities of the Asian sourcing,
manufacturing and packaging operations.

RESULTS OF OPERATIONS

         The following table sets forth certain items reflected in the Company's
consolidated statements of operations as a percentage of net sales:

<TABLE>
<CAPTION>
                                                                                     Fiscal Year Ended June 30,
                                                                                     --------------------------
                                                                                  2002          2001          2000
                                                                                  ----          ----          ----
<S>                                                                               <C>           <C>          <C>
Net sales                                                                         100.0%        100.0%        100.0%
Cost of sales                                                                      67.1%         69.9%         73.4%
Gross profit                                                                       32.9%         30.1%         26.6%
Selling, general and administrative expenses                                       30.6%         30.5%         33.6%
Restructuring and impairment charges                                                  --          0.5%         12.0%

Operating income (loss)                                                             2.3%        (0.9%)       (19.0%)

Gain on sale of Barnett, net                                                          --         66.5%            --
Loss on sale of Medal, net                                                            --        (1.5%)            --
Loss on sale of WAMI, net                                                             --            --        (2.5%)
Equity earnings of Barnett                                                            --          1.9%          8.1%
Amortization of deferred U.S. Lock gain                                               --         10.9%          0.3%
Interest expense, net                                                               1.0%          7.5%         22.6%
Income (loss) before income taxes and
 extraordinary items                                                                1.3%         69.4%       (35.7%)

(Benefit) provision for income taxes                                              (1.0%)          2.4%          0.0%
Income (loss) before extraordinary items                                            2.3%         67.0%       (35.7%)
Extraordinary items                                                                   --         73.2%            --

Net income (loss)                                                                   2.3%        140.2%       (35.7%)
</TABLE>


                                       14
<PAGE>

YEAR ENDED JUNE 30, 2002 VS. JUNE 30, 2001

NET SALES

         Net sales for the continuing operations for fiscal 2002 totaled $70.4
million, an increase of $2.4 million as compared to $68.0 million for the same
continuing operations in fiscal 2001. Fiscal 2001 net sales, including Medal, an
operation sold on March 31, 2001, would have been $71.4 million. Net sales for
continuing operations were stronger earlier this fiscal year due to the
expansion of product offerings at certain retailers, an increase in the number
of retail stores served of other retailers and other promotion programs, and
stronger sales by the foreign operations.

         The Company adopted a new financial accounting standard in the fiscal
2002 first quarter ended September 30, 2001, resulting in $2.4 million in
slotting fees and other business procurement charges being recorded as a
contra-sale for fiscal 2002. Net sales for the comparable period in fiscal 2001
have been restated, resulting in $3.1 million being recorded as a contra sale,
including $0.9 million of additional business procurement costs originally
reported in operating expenses.

         Net sales to retailers amounted to $52.6 million and $54.8 million for
fiscal 2002 and 2001, respectively. The fiscal 2001 net sales to retailers
included $3.4 million of sales from Medal, which was sold in fiscal 2001.
Excluding Medal's net sales, sales to retailers improved in fiscal 2002 due to
strong sales to certain other retailers, primarily WalMart and Lowes, which
offset lower sales to Kmart. Non-retail sales amounted to $25.6 million and
$24.2 million for fiscal 2002 and 2001, respectively.

GROSS PROFIT

         Gross profit in fiscal 2002 was $23.2 million, with a gross profit
margin of 32.9%, as compared to the prior year gross profit of $20.7 million and
a gross profit margin of 30.4% for businesses continuing in fiscal 2002.
Including Medal through March 31, 2001, the date it was sold, gross profit for
fiscal 2001 would have been $21.5 million and gross profit margin would have
been 30.1%. The increase in the gross profit and gross profit margin is
primarily attributable to the improved sales to retailers from our domestic
operations, which typically have higher profit margins than sales from our
foreign operations. In addition, the mix of products sold domestically
contributed to the improvement. While domestic retail sales have higher gross
margins than direct import sales and other industrial sales from our foreign
operations, they also have higher SG&A expenses due to the level of additional
support and services provided to customers. The gross profit margin for fiscal
2002 also improved due to the exclusion of sales for Medal, which historically
reported lower profit margins.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

         Selling, general and administrative ("SG&A") expenses for continuing
businesses amounted to $21.5 million and $20.6 million for fiscal 2002 and 2001,
respectively. SG&A expenses as a percentage of net sales decreased to 30.5% for
fiscal 2002 from 30.4% for fiscal 2001. SG&A expenses for fiscal 2001, including
Medal, were $21.8 million for fiscal 2001, or 30.5% of sales. Included in fiscal
2002 SG&A expenses is $0.2 million in fees paid to Congress Financial
Corporation when the Company terminated the bank facility prior to its
expiration and replaced it with a new bank facility from PNC Bank. Also
affecting fiscal 2002 SG&A expenses are foreign exchange losses from the
Company's foreign operations of $0.2 million as compared to a gain of $0.4
million in fiscal 2001 due to the weakness in the US Dollar. The $0.6 million
change in SG&A expenses from the foreign exchange loss accounts for a
significant portion of the increase in expense between years.

RESTRUCTURING CHARGES

         There were no restructuring charges in fiscal 2002. In fiscal 2001,
Consumer Products recorded $350,000 in restructuring charges for costs
associated with its closed warehouse facilities. Based on current estimates, the
Company believes it has provided for all remaining costs to be incurred in
connection with the closing of these facilities.

EQUITY EARNINGS OF BARNETT

         The Company recorded equity earnings from its ownership interest in
Barnett of $1.4 million for the quarter ended September 30, 2000. As detailed in
Notes 2 and 3 of the Consolidated Financial Statements in this Form 10K, the
Company sold its equity investment in Barnett on September 29, 2000 as part of
its comprehensive financial restructuring.

GAIN ON SALE OF EQUITY INVESTMENT, AMORTIZATION OF DEFERRED GAIN ON SALE OF
U.S. LOCK AND LOSS ON SALE OF AN OPERATION

         In fiscal 2001, the Company sold its 7,186,530 shares of Barnett Common
Stock for $13.15 per share in connection with the Barnett Merger, receiving
gross proceeds from the sale of $94.5 million. The Company's equity investment
in Barnett amounted to $44.3



                                       15
<PAGE>

million immediately prior to the sale. The Company reported a net gain on the
sale of Barnett of $47.5 million, after the write-off of $2.7 million in
transaction related costs associated with the Barnett sale and other costs
associated with the comprehensive financial restructuring of the Company.

         Effective January 1, 1999, the Company sold U.S. Lock to Barnett for
$33.0 million in cash, before certain adjustments and expenses. The sale of U.S.
Lock resulted in a net pretax gain of $18.3 million, with approximately $10.2
million being recognized in the fiscal 1999 third quarter. The remaining
deferred gain was carried on the Company's consolidated balance sheet and was
amortized as Barnett amortized the goodwill associated with the U.S. Lock
acquisition. As a result of the sale of its remaining interest in Barnett, the
Company recognized the remaining $7.8 million of unamortized deferred gain in
the quarter ended September 30, 2000.

         Effective March 31, 2001, the Company sold substantially all of the
assets and certain liabilities of Medal to Medal USA Inc. for approximately $0.8
million in cash and the assumption of certain liabilities. The sale of Medal
resulted in a net pretax loss of $1.1 million in the quarter ended March 31,
2001.

INTEREST EXPENSE

         In fiscal 2002, net interest expense totaled $0.7 million, as compared
to $5.4 million in fiscal 2001. Average borrowings for fiscal 2002 amounted to
$9.4 million, with a weighted average interest rate of 6.2%, as compared to
fiscal 2001 average borrowings of $44.9 million at a weighted average interest
rate of 11.9%. The Company benefited from the reduction in the prime lending
rate over the past 18 months, as well as the reduction in the working capital
borrowings, which have resulted lower interest expense for fiscal 2002. In
addition, the Company completed its comprehensive financial restructuring in
fiscal 2001 and eliminated the Company's Senior Notes and Deferred Coupon Notes,
thereby significantly reducing the Company's average borrowings for fiscal 2002.

PROVISION FOR INCOME TAXES

         In fiscal 2002, the Company's recorded a net tax benefit of $0.7
million, which includes a tax benefit of approximately $0.8 million, partially
offset by a provision for various state and foreign taxes. The tax benefit was
the result of a change in tax law in March 2002, allowing the Company to utilize
its net operating loss carryforward to fully offset its alternative minimum
taxable income for fiscal 2001. The difference between the effective and
statutory tax rates in fiscal 2002 is primarily due to the aforementioned change
in the tax law and a lower tax rate on foreign earnings compared to the domestic
statutory tax rate.

         The provision for income taxes amounted to $1.7 million for fiscal
2001. The Company's tax provision for fiscal 2001 provided for federal taxes
based on the alternative minimum tax method and for state and various foreign
taxes. The Company utilized its net operating loss carryforwards to offset its
federal tax due based on the regular method of computing tax liability and taxes
on the debt defeasance income were not provided due to favorable tax treatment
allowed in a bankruptcy.

EXTRAORDINARY CHARGE

         The Company did not have any extraordinary items in fiscal 2002. In
fiscal 2001, the Company reported net extraordinary income of $52.2 million from
the retirement of the Company's Deferred Coupon Notes, net of the write-off of
$1.9 million of deferred loan costs associated with the Deferred Coupon Notes
and costs incurred as part of the restructuring process of $2.4 million. In the
quarter ended September 30, 2000, the Company recorded an extraordinary loss of
$57,000, net of a tax benefit of $38,000, to write-off deferred loan costs
associated with the retirement of the Senior Notes.

NET INCOME

         The Company reported net income of $1.6 million, or $1.30 per basic and
diluted share, in fiscal 2002. In fiscal 2001, the Company reported significant
transaction related gains and reported net income of $100.0 million, or $82.55
per basic and diluted share. The fiscal 2001 results include the $47.5 million
net gain on the sale of the Barnett Common Stock, the $52.2 million
extraordinary gain, or $43.09 per share, from the defeasance of debt at a
discount, the recognition of $7.8 million of deferred gain from the sale of U.S.
Lock and the loss of $1.1 million on the sale of Medal.

YEAR ENDED JUNE 30, 2001 VS. JUNE 30, 2000

NET SALES

         Net sales for fiscal 2001 totaled $71.4 million, as compared to $80.7
million for fiscal 2000. Included in the prior year were $8.3 million in net
sales for WAMI, which was sold effective March 31, 2000, and Premier Faucet,
which was closed in June 2000, and Medal, which was sold effective March 31,
2001. Excluding the results of disposed or closed businesses, net sales for
fiscal 2001



                                       16
<PAGE>

amounted to $68.0 million as compared to $72.4 million in fiscal 2000. The
results were lower due to weak sales to retailers in the first half of fiscal
2001.

         Net sales for the continuing businesses in fiscal 2001, while 6.1%
lower than fiscal 2000, improved in the second half of fiscal 2001. The
reduction for the fiscal year was due to weaker than anticipated sales to
retailers for the first six months of fiscal 2001, including sales made through
the direct import program from our Asian operations. In part, this reduction was
due to the closure of certain retailers served by the Company. The largest
retailer closing that affected the Company was the loss of Associated
Distributors, Inc., which closed all but 11 of its stores in August 2000. The
Company believes that Associated Distributors, which accounted for nearly $2.2
million of Consumer Products' net sales in fiscal 2000, has changed its strategy
for its remaining stores and has discontinued the distribution of plumbing
products.

         Retail sales amounted to $54.8 million and $60.3 million for fiscal
2001 and 2000, respectively. The reduction was primarily the result of the
exclusion of sales for WAMI and Premier Faucet in the fiscal 2001 results, the
inclusion of Medal for only nine months in fiscal 2001 and lower sales to
Barnett.

         In fiscal 2002, the Company adopted the Financial Accounting Standards
Board ("FASB") EITF Issue No. 00-25 relating to the accounting for up-front
"slotting fees" charged by retailers for the right to shelf space and has
reclassified financial statements for prior periods. Prior to the adoption of
the new pronouncement, the Company expensed charges of this nature as a separate
expense category, while the new pronouncement recommended the classification as
a contra-sale. Accordingly, fiscal 2001 and 2000 net revenues were restated to
reflect a business procurement charge of $2.15 million and $0.65 million,
respectively, which were previously included in a separate expense category.

         Effective March 31, 2001, the Company sold substantially all of the
assets, net of certain liabilities, of Medal. Medal's results of operations have
been included in the operating results of the Company through March 31, 2001,
including $3.4 million and $4.7 million in net sales for fiscal 2001 and fiscal
2000, respectively.

         Effective March 31, 2000, the Company sold substantially all of the
assets, net of certain liabilities, of WAMI, excluding trade receivables, trade
payables and certain other liabilities, which were retained by the Company. The
net sales of $2.9 million and an operating loss of $0.4 million for WAMI have
been consolidated in the results of operations through March 31, 2000.

GROSS PROFIT

         The gross profit margin for fiscal 2001 improved to 30.1% from 26.6%
for fiscal 2000. The improvement was due to a favorable mix of product sold and
the sale and closure of WAMI and Premier Faucet, respectively, which had lower
gross profit levels. The gross profit for fiscal 2001 and fiscal 2000 were
approximately the same at $21.5 million.

         Gross profit for fiscal 2000 was impacted by a $1.7 million fourth
quarter charge in cost of sales at Consumer Products to write-off packaging
material and other inventory associated with the move of its packaging facility
to Asia, and the consolidation of its Grand Prairie, Texas facility into its
National Distribution Center in Groveport, Ohio. In addition, the June 2000
closure of Premier Faucet Corporation resulted in a reduction in gross profit of
$0.9 million due to the reduction in sales of $0.4 million and additional
charges to cost of sales of $0.5 million for the realizability of receivables
and inventory.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

         SG&A expenses decreased to $21.8 million for fiscal 2001 from $27.1
million for fiscal 2000. Approximately $1.4 million of the prior year SG&A
expenses were attributed to WAMI and Premier Faucet. SG&A expenses for
continuing operations amounted to $20.6 million in fiscal 2001 as compared to
$24.3 million in the prior fiscal year. The majority of the improvement in the
expenses was due to the consolidation of Consumer Product's distribution
operations into one national center, the relocation of its packaging operations
to the Company's facilities overseas and cost improvements at the Company's
foreign operations. In addition, the percentage of SG&A expenses to net sales
improved to 30.5% in fiscal 2001 from 33.6% in the prior fiscal year.

RESTRUCTURING AND IMPAIRMENT CHARGES

         In fiscal 2001, Consumer Products recorded $0.35 million in
restructuring charges in the quarter ended September 30, 2000 for costs
associated with its closed warehouse facilities. Based on current estimates, the
Company believes it has provided for all remaining costs to be incurred in
connection with the closing of these facilities.

         In fiscal 2000, Consumer Products recorded $9.7 million in
non-recurring charges, including $1.3 million for the consolidation of its
packaged plumbing products under the Plumbcraft(R) brand name, $0.6 million for
the completion of its plan to create a National Distribution Center and
consolidate its Grand Prairie, Texas warehouse into the Groveport, Ohio facility
and the



                                       17
<PAGE>

move of the packaging operations from Tijuana, Mexico to the Company's
operations in China, which should reduce certain packaging costs. In the fourth
quarter of fiscal 2000, Consumer Products also recorded an asset impairment
charge of $6.7 million related to the write-off of goodwill as required by SFAS
No. 121 "Accounting for the Impairment of Long-Lived Assets and Assets to Be
Disposed Of", for two product lines that were acquired by Consumer Products in
December 1986 and May 1988. In addition, in June 2000 the Company closed its
Premier Faucet Corporation facility in China that manufactured faucets and
faucet components, resulting in a restructuring charge of $1.2 million to write
down assets to their fair value and provide for costs to close the facility. The
closure of this operation also resulted in an additional loss in gross profit of
$0.9 million due to the reduction in sales of $0.4 million and additional
charges to cost of sales of $0.5 million for the realizability of receivables
and inventory. The Company continues to distribute faucets that have been
assembled by the Company, with components manufactured by outside suppliers.

OPERATING LOSSES:

         For fiscal 2001, the Company reported a loss of $0.6 million, as
compared to the loss of $15.4 million for fiscal 2000. The fiscal 2001 loss
included $2.15 million of business procurement charges and $0.35 million of
restructuring charges, while the large loss in fiscal 2000 included $0.65
million of business procurement charges, $9.75 million of restructuring and
impairment charges and higher cost of sales and SG&A expenses for the
realizability of accounts receivable and inventory from the closure of the
Company's Premier Faucet business in fiscal 2000.

EQUITY EARNINGS OF BARNETT

         As a result of the sale of the Company's interest in Barnett in
September 2000, the Company only reported equity earnings for the fiscal 2001
first quarter, which amounted to $1.4 million. The Company recorded equity
earnings from its ownership interest in Barnett of $6.5 million for fiscal 2000.

GAIN ON SALE OF EQUITY INVESTMENT AND AMORTIZATION OF DEFERRED GAIN ON SALE OF
U.S. LOCK

         On July 10, 2000, the Company announced that it has reached an
agreement to monetize its 7,186,530 shares of Barnett Common Stock for $13.15
per share in connection with the Barnett Merger. On September 1, 2000, as part
of the agreement on the Barnett Merger, the Company sold to Barnett 160,723
shares the Barnett Common Stock to fund the interest payment on its Senior
Notes. The Barnett Merger was approved by Barnett's shareholders on September
27, 2000, and the Company's remaining shares of Barnett Common Stock were sold
on September 29, 2000. The gross proceeds from the sale of the 7,186,530 shares
of Barnett Common Stock amounted to $94.5 million. The Company's equity
investment in Barnett amounted to $44.3 million immediately prior to the sale.
The Company reported a net gain on the sale of Barnett of $47.5 million, after
the write-off of $2.7 million in transaction related costs associated with the
Barnett Sale and other costs associated with the comprehensive financial
restructuring of the Company.

         Effective January 1, 1999, the Company sold U.S. Lock to Barnett for
$33.0 million in cash, before certain adjustments and expenses. The sale of U.S.
Lock resulted in a net pretax gain of $18.3 million, with approximately $10.2
million being recognized in the fiscal 1999 third quarter. The remaining $8.1
million was originally reported as a deferred gain in the Company's consolidated
balance sheet due to the Company's continued ownership of 44.2% of Barnett, the
acquirer of U.S. Lock. Until the sale of its remaining interest in Barnett, the
Company recognized the deferred gain as the goodwill generated by the purchase
of U.S. Lock was amortized by Barnett, resulting in an amortization of the
deferred gain of $0.2 million in fiscal 2000. As a result of the sale of its
remaining interest in Barnett, the Company recognized the remaining $7.8 million
of unamortized deferred gain in the quarter ended September 30, 2000.

LOSS ON SALE OF OPERATION, NET

         In April 2001, the Company sold substantially all of the assets and
certain liabilities of Medal to Medal USA Inc. for approximately $0.80 million
in cash and the assumption of certain liabilities (the "Medal Sale"). The Medal
Sale was effective March 31, 2001, resulting in a net pretax loss of $1.1
million in the quarter ended March 31, 2001. This operation, which served the
small, independent hardware stores within a 250 mile radius of Sharon,
Pennsylvania, had been losing a significant share of its customer base over the
past several years to the larger do-it-yourself retailers that established
operations throughout the area served by Medal.

         Effective March 31, 2000, the Company sold substantially all of the
assets and certain liabilities of WAMI to Niples Del Norte, S.A. de C.V. for
approximately $1.8 million in cash, resulting in a net pretax loss of $2.0
million, including a write-off of approximately $1.0 million of goodwill.

INTEREST EXPENSE

         Net interest expense for fiscal 2001 totaled $5.4 million, as compared
to $18.2 million in fiscal 2000. The significant decrease in interest was due to
the use of proceeds from the September 2000 sale of the Barnett Common Stock to
retire the Senior Notes in



                                       18
<PAGE>

September 2000, reduce working capital debt and to retire the Deferred Coupon
Notes in November 2000. In addition, the reduction in the prime rate was also a
factor in reducing interest expense. Average borrowings for fiscal 2001 amounted
to $44.9 million, with a weighted average interest rate of 11.9%, as compared to
$140.8 million in fiscal 2000, with a weighted average interest rate of 12.3%.
Included in net interest expense for fiscal 2001 was interest income of $0.3
million earned on the proceeds from the sale of Barnett until they were used to
satisfy the Deferred Coupon Notes.

PROVISION FOR INCOME TAXES

         The provision for income taxes amounted to $1.7 million for fiscal
2001. The Company utilized a portion of its net operating loss carryforwards to
offset its federal tax due based on the regular method of computing tax
liability. The Company's tax provision for fiscal 2001 provides for federal
taxes based on the alternative minimum tax method and for state and various
foreign taxes.

         In fiscal 2000, the Company recognized a state tax benefit due to a
refund from a prior year payment, which offset various state and foreign taxes
and resulted in a net tax benefit of $27,000.

EXTRAORDINARY ITEM

         In fiscal 2001, the Company reported net extraordinary income of $52.2
million from the retirement of the Company's Deferred Coupon Notes, after the
write-off of $1.9 million of deferred loan costs associated with the Deferred
Coupon Notes and costs incurred as part of the restructuring process of $2.4
million. In addition, in the quarter ended September 30, 2000, the Company
recorded an extraordinary loss of $57,000, net of a tax benefit of $38,000, to
write-off deferred loan costs associated with the retirement of the Senior
Notes.

NET INCOME (LOSS)

         The Company's net income for fiscal 2001 amounted to $100.0 million, or
$82.55 per basic and diluted share, as compared to the net loss of $28.8
million, or $23.91 per basic and diluted share, in fiscal 2000. The fiscal 2001
results include the $47.5 million net gain on the sale of the Barnett Common
Stock, the $52.2 million extraordinary gain, or $43.09 per share, from the
defeasance of debt at a discount, the recognition of $7.8 million of deferred
gain from the sale of U.S. Lock and the loss on the sale of Medal.

         The Company's fiscal 2000 net loss amounted to $28.8 million, or $23.91
per basic and diluted share. The fiscal 2000 results were affected by $10.4
million of restructuring, impairment and procurement charges, $1.7 million in
costs for the consolidation of the KF(R) packaged plumbing line and $2.0 million
from the loss on the sale of WAMI.

LIQUIDITY AND CAPITAL RESOURCES

         In February 2002, the Company refinanced the Loan and Security
Agreement with Congress Financial Corporation, which was scheduled to expire on
June 18, 2002 and replaced it with a working capital and term loan facility from
PNC Bank, NA. The PNC Revolving Credit, Term Loan and Security Agreement ("PNC
Bank Facility") is between Waxman Industries, Inc., Consumer Products, WAMI
Sales and Waxman USA, as borrowers (the "Borrowers"). The PNC Bank Facility
provides, among other things, for revolving credit advances of up to $15.0
million. The Term Loan facility provided an initial loan on the Company's
corporate office building of $1,155,000, to be amortized over 7 years. As of
June 30, 2002, the Company had $7.3 million in borrowings under the revolving
credit line of the facility and had approximately $2.4 million available under
such facility.

         The PNC Bank Facility provides for revolving credit advances of (a) up
to 85.0% of the amount of eligible accounts receivable and (b) up to the lesser
of (i) $7.5 million or (ii) 60% of the amount of eligible raw and finished goods
inventory. Revolving credit advances bear interest at a rate equal to the higher
of (a) the PNC Bank, NA base prime rate plus 0.5% or (b) Federal Funds Rate plus
1.0%. The Term Loan advance bears interest at a rate equal to the higher of (a)
the PNC Bank, NA base prime rate plus 1.0% or (b) Federal Funds Rate plus 1.5%.
The PNC Bank Facility includes a letter of credit subfacility of $1.0 million,
with none outstanding at June 30, 2002. Borrowings under the PNC Revolving
Credit Loan are secured by the accounts receivable, inventories, certain general
intangibles, and unencumbered fixed assets of Waxman Industries, Inc., Consumer
Products, WAMI Sales, and a pledge of 65% of the stock of various foreign
subsidiaries. The PNC Bank Facility requires the Borrowers to maintain cash
collateral accounts into which all available funds are deposited and applied to
service the facility on a daily basis. The PNC Bank Facility prevents dividends
and distributions by the Borrowers except in certain limited instances
including, so long as there is no default or event of default and the Borrowers
are in compliance with certain financial covenants, and contains customary
negative, affirmative and financial covenants and conditions. The financial
covenants require the Company to maintain a certain fixed charge coverage ratio
and tangible net worth and not exceed a certain amount of capital expenditures
in any given period. The ratios and dollar amounts of such financial covenants
vary during the term of the PNC Bank Facility and are contained in the agreement
governing the PNC Bank Facility, which appears as Exhibit 10.1 to the Current
Report on Form 8-K filed by the Company on February 27, 2002 and is incorporated
herein by reference as Exhibit 4.10 to this Form 10-K. The customary negative
covenants



                                       19
<PAGE>

contained in the PNC Bank Facility include restrictions, subject to important
enumerated exceptions, on the Company's ability to effect a merger,
consolidation, acquisition or sale of its assets, create liens, enter into
guarantees, acquire interests in other entities, make loans to other entities,
incur indebtedness, and engage in transactions with affiliates. The Company was
in compliance with all loan covenants at June 30, 2002. The PNC Bank Facility
also contains a material adverse condition clause, which allows PNC Bank, NA to
terminate the Agreement under certain circumstances.

         In fiscal 2001, the Company completed its comprehensive financial
restructuring plan (see Note 3 of the Notes to Consolidated Financial Statements
in this Form 10K and Management's Discussion and Analysis - Significant
Developments - Prior Year Strategic and Restructuring Developments section in
this Form 10-K for a discussion of the Company's sale of its interest in Barnett
as part of a comprehensive financial reorganization), disposing of 7,186,530
shares of Barnett Common Stock and using the $94.5 million in proceeds as
follows:

         -  paid or reserved for payment approximately $1.35 million for state
            and federal taxes associated with the sale of the Barnett shares.

         -  reduced its borrowings under its working capital credit facility by
            approximately $10 million.

         -  retired all of its approximately $35.9 million principal amount of
            Senior Notes, plus accrued interest.

         -  paid approximately $6.0 million in semi-annual interest due on June
            1, 2000 to the holders of its Deferred Coupon Notes.

         -  funded a dedicated account with the remaining gross proceeds of
            approximately $39.0 million, which was used for the full
            satisfaction of the Deferred Coupon Notes, including accrued
            interest, upon confirmation of the Joint Plan.

         As part of its comprehensive financial restructuring plan, on October
2, 2000, the Company filed its Chapter 11 Joint Plan of Reorganization with the
courts. On October 4, 2000, the First Day Orders were approved and, based on the
overwhelming support of the holders of 97% of the Deferred Coupon Notes, the
date of November 14, 2000 was set for the confirmation hearing to effectuate
terms of the Joint Plan. The approval of the Joint Plan, along with the
retirement of the Senior Notes and reduction of its bank working capital debt,
improved the Company's financial condition significantly, as well as reduced its
interest expense by approximately $17 million per year.

         The Company relies primarily on Consumer Products for cash flow.
Consumer Products' customers include D-I-Y warehouse home centers, home
improvement centers, mass merchandisers and hardware stores. Consumer Products
may be adversely affected by prolonged economic downturns or significant
declines in consumer spending. There can be no assurance that any such prolonged
economic downturn or significant decline in consumer spending will not have a
material adverse impact on Consumer Products' business and its ability to
generate cash flow. Furthermore, Consumer Products has a high proportion of its
sales with a concentrated number of customers. Sales to Consumer Products'
larger customers for fiscal 2002, 2001 and 2000, respectively, were as follows;
Wal-Mart accounted for 29.0%, 25.0% and 13.6%; Lowes accounted for 16.1%, 8.4%
and 5.8%; and Kmart accounted for 13.6%, 11.3% and 16.7%.

         The Company has been a supplier to Kmart for approximately 15 years.
For fiscal 2002, Kmart accounted for $6.3 million, or approximately 8.9 percent
and 13.6 percent of the Company's and Consumer Product's net sales,
respectively. On January 22, 2002, Kmart filed for Chapter 11 bankruptcy
protection. The Company had adequate reserves to account for the loss of its
outstanding accounts receivable that were not covered by credit insurance at the
time of Kmart's Chapter 11 filing.

         In connection with the Chapter 11 filing, Kmart reviewed its vendor
relationships, including the financial commitments required of suppliers. The
Company also assessed the issues associated with maintaining certain of its
supply arrangements with Kmart, including the costs of retaining and supporting
these programs and the cash flow implications of such programs, the risk/reward
profile of each of such programs and the potential opportunities with other
customers. As a result of these reviews, the Company will retain its floor and
surface protection program with Kmart. However, the continuation of the plumbing
repair program, which generated $4.6 million in sales in fiscal 2002 has been
discontinued until such time that the Company and Kmart can agree to the level,
terms and conditions of any future plumbing supply relationship. The Company
believes its relationship with Kmart is good, however, there can be no
assurances as to the level, if any, of future purchases or the terms and
conditions applicable to any future supply relationship.

         The Company is evaluating the possible reduction or loss of the
remaining Kmart revenue base and ways to reduce its cost structure to be more in
line with a potentially smaller revenue base. The Company believes that
increases in sales with other customers will ultimately offset any potential
loss of Kmart revenue, however, in the short-term it may not be able to absorb
all of the expenses due to this additional revenue loss. In the event Consumer
Products were to lose one of its large retail accounts as a customer or one of
its largest accounts were to significantly curtail its purchases from Consumer
Products, there would be material adverse effects until the Company could
further modify Consumer Products' cost structure to be more in line with its
anticipated revenue base. Consumer Products would likely incur significant
charges if additional material adverse changes in its customer relationships
were to occur.



                                       20
<PAGE>

         The Company paid $0.2 million and $1.2 million in income taxes in
fiscal 2002 and 2001, respectively. At June 30, 2002, the Company had $17.4
million of available domestic net operating loss carryforwards for income tax
purposes, which will expire in 2010 through 2022.

         The Company has total future lease commitments for various facilities
and other leases totaling $4.4 million, of which approximately $0.9 million
relates to fiscal 2003. The Company does not have any other commitments to make
substantial capital expenditures. The fiscal 2003 capital expenditure plan
includes expenditures to improve the efficiencies of the Company's operations,
to continue developing our operations with technology and to provide for certain
expansion plans for the Company's foreign operations.

         At June 30, 2002, the Company had working capital of $8.8 million and a
current ratio of 1.5 to 1.

DISCUSSION OF CASH FLOWS

         Net cash provided by operations was $4.6 million for fiscal 2002,
principally due to the decrease in inventories and the income generated during
the period, which was offset by the decrease in accounts payable and accrued
liabilities. Cash flow used for investments, which primarily represented capital
expenditures, totaled $1.8 million. Cash flow used in financing activities
totaled approximately $2.1 million, comprised primarily of reductions in the
Company's working capital bank facility.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

                  The U.S. dollar is the functional currency for a significant
portion of the Company's U.S. operations. Intra-company transactions between
Waxman Industries, Inc. and its Asian operations, TWI and CWI, are effected in
U.S. dollars. The functional currency of the Company's foreign operations is
their local currency. Specifically, the functional currencies relating to TWI
and CWI are the New Taiwan dollar (N.T. Dollar) and the Chinese Renminbi,
respectively. As a result, the Company is exposed to currency translation risks,
which primarily result from fluctuations of the foreign currencies in which the
Company's foreign subsidiaries deal as compared to the U.S. dollar over time,
which is a non-cash and non profit or loss item. The foreign currency
transaction risks arise from certain receivables and payables being denominated
in a currency other than the functional currency. The majority of TWI's
transaction risk relates to it selling goods in U.S. dollars and the exchange
rate changing in the 30 day to 60 day period that it takes to settle the
receivable. TWI purchases very little goods that are not in NT Dollars. CWI has
nearly no transaction risk because the Chinese Renminbi is fixed relative to the
U.S. dollar. The Company does not enter into foreign currency exchange rate risk
sensitive instruments, and the Company does not hedge the above-referenced
transactions.

Gains and losses that result from foreign currency transactions are included in
the Company's consolidated statements of operations on a current basis and
affect the Company's reported net income (loss). Gains or losses created by the
translation of the foreign company balance sheets are reported as cumulative
foreign currency translation adjustments, and are included as a separate
component of stockholders' equity in the Company's consolidated balance sheets
and are also reported in comprehensive income in the Company's consolidated
statements of operations.

ITEM 8.    CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                           (Begins on Following Page)


                                       21
<PAGE>






                               MANAGEMENT'S REPORT

The management of Waxman Industries, Inc. has the responsibility for preparing
the accompanying financial statements and for their integrity and objectivity.
The statements were prepared in accordance with generally accepted accounting
principles. The financial statements include amounts that are based on
management's best estimates and judgments. Management also prepared the other
information in the annual report and is responsible for its accuracy and
consistency with the financial statements.

The Corporation's financial statements have been audited by Meaden & Moore Ltd.,
independent auditors. Management has made available to Meaden & Moore all of the
Corporation's financial records and related data, as well as the minutes of
shareholders' and directors' meetings. Furthermore, management believes that all
representations made to Meaden & Moore Ltd. during its audit were valid and
appropriate.

The Corporation maintains a system of internal accounting controls designed to
provide reasonable assurance that the books and records properly reflect the
transactions of the Company, and that assets are safeguarded against
unauthorized acquisition, use or disposition. The design, monitoring and
revision of internal accounting controls involve, among other things,
management's judgments with respect to the relative cost and the expected
benefits of specific control measures. The Company management reviews and
evaluates internal accounting and operating controls. The Company's management
and the Audit Committee of the Board of Directors also coordinates with Meaden &
Moore Ltd. on the audit of the Company's financial statements. Meaden & Moore
Ltd. also discusses the internal control procedures with management and
communicates with the Audit Committee of their understanding and adequacy of
internal control procedures.

The Audit Committee of the Board of Directors, which is composed of directors
who are not employees of the Company and a majority of directors who are
independent, meets with management periodically and the independent auditors to
ensure that each is carrying out its responsibilities. The Audit Committee
consists of Irving Friedman (chairman) and Mark Reichenbaum. As part of the new
corporate governance provisions established by the Sarbanes-Oxley Act of 2002,
the Audit Committee will (i) hire and oversee the work of the auditors, (ii)
establish procedures for the handling of anonymous submissions from employees
regarding questionable accounting practices, (iii) provide at least one member
who is a "financial expert", (iv) not accept consulting, advisory or other
compensatory fees from the company and (v) receive reports from the auditors
regarding the company's critical accounting policies and material communications
between the auditors and company management. The independent auditors have full
and free access to the Audit Committee.

Melvin Waxman, Co-Chief Executive Officer and Chairman of the Board

Armond Waxman, Co-Chief Executive Officer and President

Mark Wester, Senior Vice President and Chief Financial Officer

Irving Friedman, Director and Chairman of the Audit Committee



                                       22
<PAGE>


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors of Waxman Industries, Inc.:

We have audited the accompanying consolidated balance sheet of Waxman
Industries, Inc. (a Delaware corporation) and Subsidiaries (the Company) as of
June 30, 2002 and 2001, and the related consolidated statement of operations,
stockholders' equity and cash flows for the years ended June 30, 2002 and 2001.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. We did not audit the financial
statements of TWI, International Taiwan, Inc. and CWI International China, Ltd.
two wholly owned subsidiaries for 2002, which statements reflect total assets of
$15,042,000 as of June 30, 2002, and total revenues of $35,236,000, for the year
then ended. Those statements were audited by other auditors whose report has
been furnished to us, and our opinion, insofar as it relates to the amounts
included for TWI, International Taiwan and CWI International China, Ltd., is
based solely on the report of the other auditors.

We conducted our audit 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, based on our audits and the reports of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Waxman Industries, Inc. and
Subsidiaries as of June 30, 2002 and 2001, and the results of their operations
and their cash flows for the years then ended, in conformity with accounting
principles generally accepted in the United States.

Meaden & Moore, Ltd.
Cleveland, Ohio,
August 9, 2002.



                                       23
<PAGE>


                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
TWI International Taiwan Inc.


We have audited the accompanying balance sheet of TWI International Taiwan Inc.
as of June 30, 2002 and the related statements of income, changes in
stockholders' equity and cash flows for the year then ended. These financial
statements (not presented separately herein) are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
financial statements based. on our audit.

We conducted our audit in accordance with Regulations for Audit of Financial
Statements by Certified Public Accountants and auditing standards generally
accepted in the Republic of China and 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 audit provides a reasonable basis for our
opinion.

Accounting principles generally accepted in the Republic of China require that
investments in shares of stock wherein the Corporation exercises significant
influence on their operating and financial policy decisions be accounted for
using the equity method. As more fully explained in Note 6 to the financial
statements (not presented separately herein), the investment in CWI
International, Inc. - Shenzen, a wholly owned subsidiary, has been accounted for
using the cost method with the result that the carrying value of the investments
was understated by NT$80,714,270 as of June 30, 2002, and income before income
tax for the year then ended was understated by NT$84,114,033.

In our opinion, except for the effects of accounting for the investment in CWI
International, Inc. - Shenzen using the cost method as discussed in the
preceding paragraph, the financial statements (not presented separately herein)
refer to above present fairly, in all material respects, the financial position
of TWI International Taiwan Inc. as of June 30, 2002 and the result of its
operations and its cash flows for the year then ended in conformity with
accounting principles generally accepted in the Republic of China.

/s/ T N Soong & Co
T N Soong & Co
An Associate Member Firm of Deloitte Touche Tohmatsu
  Effective April 22, 2002
(Formerly a Member Firm of Andersen Worldwide, SC) Taipei, Taiwan
The Republic of China
July 23, 2002

                                       24
<PAGE>


                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
CWI International China Inc.

We have audited the accompanying balance sheets of CWI International China Inc.
- ShenZhen as of June 30, 2002 and 2001, and the related statements of income
and unappropriated earnings and cash flow for the years then ended. These
statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing standards,
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statements presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CWI International China Inc.
-ShenZhen as of June 30, 2002 and 2001, and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.

Our examination also comprehended the translations of the RMB dollar financial
statements into U. S. dollars on the basis stated in Note 2 to the financial
statements solely for the convenience of readers, and in our opinion, such
translations have been made in conformity with such basis.

/s/ Chien Chyuan & Co.
Chien Chyuan & Co.,
Certified Public Accountants
August 5, 2002


                                       25
<PAGE>



THE FOLLOWING AUDITOR'S REPORT DATED AUGUST 28, 2000 BY ARTHUR ANDERSEN, LLP IS
A COPY OF SAID REPORT PREVIOUSLY ISSUED ON AUGUST 28, 2000, AND THE REPORT HAS
NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP.

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors of Waxman Industries, Inc.:

We have audited the accompanying consolidated balance sheet of Waxman
Industries, Inc. (a Delaware corporation) and Subsidiaries (the Company) as of
June 30, 2000, and the related consolidated statements of operations,
stockholders' equity and cash flow for the year ended June 30, 2000. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.

We conducted our audit 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 audit provides 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 Waxman Industries, Inc. and
Subsidiaries as of June 30, 2000, and the results of their operations and their
cash flow for the year ended June 30, 2000, in conformity with accounting
principles generally accepted in the United States.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company has suffered
recurring losses from operations, has not paid its interest payment on its
Deferred Coupon Notes, has a net stockholders' deficit and plans to file a
pre-negotiated consensual joint plan of reorganization under Chapter 11 of the
U.S. Bankruptcy Code. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are described in Note 14 to the consolidated financial
statements. The consolidated financial statements do not include any adjustments
that might result should the Company be unable to continue as a going concern.

                                                             Arthur Andersen LLP

Cleveland, Ohio,
August 28, 2000.


                                       26
<PAGE>





                    WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             JUNE 30, 2002 AND 2001
                                 (IN THOUSANDS)

                                     ASSETS

<TABLE>
<CAPTION>
                                                                       2002            2001
                                                                       ----            ----

<S>                                                                  <C>                <C>
CURRENT ASSETS:

  Cash and cash equivalents                                          $  1,420           $    740
  Trade receivables, net                                               11,529             12,592
  Other receivables                                                     1,979              1,400
  Inventories                                                          10,497             11,895
  Prepaid expenses                                                      1,902              1,850
                                                                     --------           --------
      Total current assets                                             27,327             28,477
                                                                     --------           --------

PROPERTY AND EQUIPMENT:

  Land                                                                    554                551
  Buildings                                                             4,662              4,318
  Equipment                                                            11,427             10,415
                                                                     --------           --------
                                                                       16,643             15,284
Less accumulated depreciation and
amortization                                                           (8,302)            (6,996)
                                                                     --------           --------

Property and equipment, net                                             8,341              8,288
                                                                     --------           --------

CASH SURRENDER VALUE OF OFFICERS LIFE

INSURANCE POLICIES                                                      3,265              2,934

UNAMORTIZED DEBT ISSUANCE COSTS, NET                                      315                142

NOTES RECEIVABLE FROM RELATED PARTIES                                     548                452

OTHER ASSETS                                                              500                539
                                                                     --------           --------
                                                                     $ 40,296           $ 40,832
                                                                     ========           ========

</TABLE>






           The accompanying Notes to Consolidated Financial Statements
                    are an integral part of these statements.



                                       27
<PAGE>




                    WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             JUNE 30, 2002 AND 2001
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                       2002               2001
                                                                       ----               ----


<S>                                                                  <C>                <C>
CURRENT LIABILITIES:

  Short-term borrowings                                              $  7,596           $  9,870
  Current portion of long term debt                                       235                175
  Accounts payable                                                      6,754              6,932
  Accrued liabilities                                                   3,975              4,291
                                                                     --------            -------
      Total current liabilities                                        18,560             21,268
                                                                     --------            -------

TERM DEBT - LONG-TERM PORTION                                             935               --

OTHER LONG-TERM DEBT, NET OF CURRENT PORTION                               15               532

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:

Preferred stock, $0.01 par value per share:
authorized and unissued 2,000 shares                                     --                 --
Common stock, $0.01 par value per share:
22,000 shares authorized; 1,003 and 998
shares issued and outstanding, respectively                                99                 99
Class B common stock, $.01 par value per
share: 6,000 shares authorized; 214 issued and
outstanding in each year                                                   21                 21
Paid-in capital                                                        21,760             21,752
Retained deficit                                                         (123)            (1,708)
                                                                     --------            -------

                                                                       21,757             20,164
   Accumulated other comprehensive loss                                  (971)            (1,132)
                                                                     --------            -------

      Total stockholders' equity                                       20,786             19,032
                                                                     --------            -------
                                                                     $ 40,296            $40,832
                                                                     ========            =======
</TABLE>

           The accompanying Notes to Consolidated Financial Statements
                    are an integral part of these statements.



                                       28
<PAGE>



                    WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                            Fiscal Year Ended June 30,
                                                                                            --------------------------
                                                                                   2002               2001                2000
                                                                                   ----               ----                ----
<S>                                                                             <C>                 <C>                 <C>
Net sales                                                                       $  70,425           $  71,370           $  80,710
Cost of sales                                                                      47,253              49,890              59,259
                                                                                ---------           ---------           ---------
Gross profit                                                                       23,172              21,480              21,451
Selling, general and administrative expenses                                       21,535              21,763              27,094
Restructuring and impairment charges (Note 4)                                        --                   350               9,720
                                                                                ---------           ---------           ---------
Operating income (loss)                                                             1,637                (633)            (15,363)
Gain on sale of Barnett, net (Note 2)                                                --                47,473                --
Loss on sale of Medal, net (Note 5)                                                  --                (1,105)               --
Loss on sale of WAMI, net (Note 5)                                                   --                  --                (2,024)
Equity earnings of Barnett                                                           --                 1,370               6,511
Amortization of deferred U.S. Lock gain                                              --                 7,815                 202
Interest expense                                                                      723               5,414              18,201
                                                                                ---------           ---------           ---------
Income (loss) before extraordinary item and income
taxes and extraordinary loss                                                          914              49,506             (28,875)
(Benefit) provision for income taxes                                                 (671)              1,680                 (27)
                                                                                ---------           ---------           ---------
Income (loss) before extraordinary gain                                             1,585              47,826             (28,848)
Extraordinary gain                                                                   --                52,222                --
                                                                                ---------           ---------           ---------
Net income (loss)                                                               $   1,585           $ 100,048           $ (28,848)
                                                                                =========           =========           =========

Other comprehensive income (loss):

Foreign currency translation adjustment                                               161                (473)                370
                                                                                ---------           ---------           ---------
Comprehensive income (loss)                                                     $   1,746           $  99,575           $ (28,478)
                                                                                =========           =========           =========

</TABLE>





           The accompanying Notes to Consolidated Financial Statements
                    are an integral part of these statements.


                                       29
<PAGE>



                    WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                 Fiscal Year Ended June 30,
                                                                                 --------------------------
                                                                             2002           2001         2000
                                                                             ----           ----         ----

<S>                                                                         <C>          <C>          <C>
Basic income (loss) per share:

Income (loss) before extraordinary gain                                     $1.30        $ 39.46      $ (23.91)

Extraordinary gain                                                             --          43.09            --
                                                                            -----        -------      --------
Net income (loss)                                                           $1.30        $ 82.55      $ (23.91)
                                                                            =====        =======      =========
Diluted income (loss) per share:

Income (loss) before extraordinary gain                                     $1.30        $ 39.46      $ (23.91)

Extraordinary gain                                                             --          43.09            --
                                                                            -----        -------      --------
Net income (loss)                                                           $1.30        $ 82.55      $ (23.91)
                                                                            =====        =======      ========

Weighted average number of common shares outstanding                        1,215          1,212         1,207
                                                                            =====        =======      ========
</TABLE>




           The accompanying Notes to Consolidated Financial Statements
                    are an integral part of these statements.



                                       30
<PAGE>

                    WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
            FOR THE FISCAL YEARS ENDING JUNE 30, 2002, 2001 AND 2000

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                                        Accumulated      Total
                                                                Class B                                    Other      Stockholders'
                                                     Common      Common       Paid-in      Retained   Comprehensive   (Deficit)
                                                      Stock      Stock        Capital       Deficit   Income (Loss)      Equity
                                                     ------     -------       -------      --------   -------------  -----------
<S>                                                <C>          <C>          <C>          <C>          <C>            <C>
Balance June 30, 1999                              $      98    $      21    $  21,732    $ (72,908)   $  (1,029)     $ (52,086)

    Net loss                                              --           --           --      (28,848)          --        (28,848)

    Employee Stock Purchase Plan                           1           --           20           --           --             21
       purchases

    Currency translation adjustment                       --           --           --           --          370            370
                                                   ---------    ---------    ---------    ---------    ---------      ---------

Balance June 30, 2000                                     99           21       21,752     (101,756)        (659)       (80,543)

     Net income                                           --           --           --      100,048           --        100,048

     Currency translation adjustment                      --           --           --           --         (473)          (473)
                                                   ---------    ---------    ---------    ---------    ---------      ---------

Balance June 30, 2001                                     99           21       21,752       (1,708)      (1,132)        19,032

     Net income                                           --           --           --        1,585           --          1,585

     Conversions of Class B common stock                  --           --           --           --           --             --

     Employee Stock Purchase Plan
        purchases                                         --           --            8           --           --              8

     Currency translation adjustment                      --           --           --           --          161            161
                                                   ---------    ---------    ---------    ---------    ---------      ---------

Balance June 30, 2002                              $      99    $      21    $  21,760    $    (123)   $    (971)     $  20,786
                                                   =========    =========    =========    =========    =========      =========


</TABLE>


           The accompanying Notes to Consolidated Financial Statements
                    are an integral part of these statements.



                                       31
<PAGE>



                    WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                          Fiscal Year Ended June 30,
                                                                                          --------------------------
Cash From (Used For):                                                                  2002          2001          2000
                                                                                       ----          ----          ----
<S>                                                                                  <C>          <C>           <C>
Operations:
   Net income (loss)                                                                 $ 1,585      $100,048      $(28,848)
   Adjustments to reconcile net income (loss) to net cash used
   for operations:
   Extraordinary item -- debt defeasance                                                  --       (52,222)           --
   Non-cash restructuring and impairment charges                                          --         1,050        11,677
   Gain on sale of Barnett stock, net                                                     --       (47,473)           --
   Loss on sale of Medal                                                                  --         1,105            --
   Loss on sale of WAMI                                                                   --            --         2,024
   Non-cash interest                                                                     182            83           250
   Amortization of deferred U.S. Lock gain                                                --        (7,815)         (203)
   Equity earnings of Barnett                                                             --        (1,370)       (6,511)
   Depreciation and amortization                                                       1,346         2,314         2,767
   Deferred income taxes                                                                  --           367           173
   Bad debt provision                                                                    371           215           242
   Changes in assets and liabilities:
            Trade and other receivables                                                  113         1,307        (1,840)
            Inventories                                                                1,398         1,860          (600)
            Prepaid expenses and other                                                   (52)       (1,922)         (437)
            Accounts payable                                                            (178)          749          (315)
            Accrued liabilities                                                         (316)       (8,484)        4,022
            Net change in operating assets and liabilities of  U.S. Lock                  --            --           185
            Other, net                                                                   161          (473)          249
                                                                                     -------      -------       --------
         Net cash  provided by (used for) operations                                   4,610       (10,661)      (17,165)
                                                                                     -------      -------       --------
Investments:
     Capital expenditures, net                                                        (1,399)       (1,229)       (1,794)
     Change in other assets                                                             (388)        2,764        (2,388)
     Net proceeds from sales of businesses                                                --        94,503         1,800
                                                                                     -------      -------       --------
         Net cash (used for) provided by investments                                  (1,787)       96,038        (2,382)
                                                                                     -------      --------      --------

</TABLE>




           The accompanying Notes to Consolidated Financial Statements
                    are an integral part of these statements.




                                       32
<PAGE>






<TABLE>
<CAPTION>


Financing:                                                            2002         2001          2000
                                                                      ----         ----          ----
<S>                                                                <C>           <C>          <C>
   Net change in short-term borrowings                               (2,274)      (10,016)       19,419
   Proceeds from long-term debt                                       1,155            --            --
   Repayment of long-term debt                                         (677)         (248)         (277)
   Debt issuance costs                                                 (355)           --          (137)
   Retirement of 11 1/8% Senior Secured Notes                            --       (35,855)           --
   Retirement of 123/4% Deferred Coupon Notes                            --       (39,329)
    Issuance of common stock                                              8            --            21
                                                                   --------      --------      --------

         Net cash (used for) provided by financing                   (2,143)      (85,448)       19,036
                                                                   --------      --------      --------
Net increase (decrease) in cash and cash equivalents                    680           (71)         (511)
Balance, beginning of year                                              740           811         1,322
                                                                   --------      --------      --------
Balance, end of year                                               $  1,420      $    740      $    811
                                                                   ========      ========      ========

</TABLE>






           The accompanying Notes to Consolidated Financial Statements
                    are an integral part of these statements.



                                       33
<PAGE>


                    WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                FOR THE YEARS ENDED JUNE 30, 2002, 2001 AND 2000

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         A.       BASIS OF CONSOLIDATION AND DESCRIPTION OF THE COMPANY

         The accompanying consolidated financial statements include the accounts
of Waxman Industries, Inc. ("Waxman Industries") and its wholly-owned
subsidiaries (collectively, the "Company"). All significant intercompany
transactions and balances are eliminated in consolidation. Certain
reclassifications have been made to the prior year statements in order to
conform to the current year presentation. Until September 29, 2000, the Company
owned 44.2% of the common stock of Barnett Inc. ("Barnett Common Stock"), a
direct marketer and distributor of plumbing, electrical and hardware products,
and accounted for Barnett Inc. ("Barnett") under the equity method of
accounting. See Management's Discussion and Analysis "Significant Developments -
Comprehensive Financial Restructuring" section and Note 2 in these Notes to
Consolidated Financial Statements for information regarding the sale of the
Company's interest in Barnett.

        The Company is a supplier of specialty plumbing, floor and surface
protection and other hardware products to the repair and remodeling market in
the United States. The Company distributes its products to approximately 680
customers, including a wide variety of large national and regional retailers,
independent retail customers and wholesalers. The Company conducts its business
primarily through its wholly-owned subsidiaries, Waxman Consumer Products Group
Inc. ("Consumer Products"), WAMI Sales, Inc. ("WAMI Sales") and TWI,
International, Inc. ("TWI International"). Consumer Products, the Company's
largest operation, is a supplier of specialty plumbing, floor and surface
protection and other hardware products to a wide variety of large retailers.
WAMI Sales distributes galvanized, black, chrome and brass pipe nipples and
fittings to industrial and wholesale distributors. TWI International includes
TWI International Taiwan Inc. and its sales operation, TWI Industrial Inc.
(collectively, "TWI"), located primarily in Taiwan, and CWI International China,
Ltd. ("CWI"), located in China. TWI and CWI manufacture, package, source and
assemble product purchased by Consumer Products and non-affiliated businesses.
Until March 31, 2001, the Company also supplied plumbing and hardware products
to hardware stores and smaller independent retailers through Medal of
Pennsylvania, Inc. ("Medal"), formerly known as WOC Inc. ("WOC"), when
substantially all of the assets, subject to certain liabilities, of this
business were sold (see Note 5). Until the sale of Western American
Manufacturing Inc. ("WAMI") effective March 31, 2000, TWI also included a
manufacturing operation in Mexico that threaded galvanized, black, brass, and
chrome pipe and imported malleable fittings. Consumer Products utilizes the
Company's and non-affiliated foreign sourcing suppliers.

         B.       CASH AND CASH EQUIVALENTS

         In accordance with the terms of the PNC Revolving Credit, Term Loan and
Security Agreement ("PNC Bank Facility") and the Congress Financial Loan and
Security Agreement (as discussed in Note 7), all restricted cash balances have
been excluded from cash and have been applied against outstanding borrowings.
Cash balances include certain unrestricted operating accounts and accounts of
foreign operations. The Company considers all highly liquid temporary cash
investments with original maturities of less than three months to be cash
equivalents. Cash investments are valued at cost plus accrued interest, which
approximates market value.

         C.       TRADE RECEIVABLES

         Trade receivables are presented net of allowances for doubtful accounts
of $0.6 million and $0.5 million at June 30, 2002 and 2001, respectively. Bad
debt expense totaled $0.4 million in fiscal 2002, $0.2 million in fiscal 2001
and $0.2 million in fiscal 2000.

         The Company sells specialty plumbing, floor and surface protection and
other hardware products throughout the United States to do-it-yourself ("D-I-Y")
retailers, mass merchandisers, smaller independent retailers and wholesalers.
The Company performs ongoing credit evaluations of its customers' financial
conditions. The Company's largest customers are retailers. As a percentage of
the Company's net sales, the largest customers accounted for the following
percentages in fiscal 2002, 2001 and 2000, respectively: Wal-Mart, accounted for
16.3%, 12.8% and 9.2%, Kmart accounted for 8.9%, 10.0% and 10.3%, and Lowes
accounted for 15.7%, 9.6% and 5.8%. During the same periods, the Company's ten
largest customers



                                       34
<PAGE>

accounted for approximately 57.8%, 51.1% and 43.6% of net sales and
approximately 53.7% and 51.0% of accounts receivable at June 30, 2002 and 2001,
respectively.

         D.       INVENTORIES

         At June 30, 2002 and 2001, inventories, consisting primarily of
finished goods, are carried 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, slow-moving and/or nonsalable
inventories. In fiscal 2002, 2001 and 2000, the Company recorded charges of $0.1
million, $0.6 million and $0.1 million, respectively, in connection with its
evaluation of its inventory carrying value.

         E.       PROPERTY AND EQUIPMENT

         Property and equipment are stated at cost. For financial reporting
purposes, buildings and equipment are depreciated on a straight-line basis over
the estimated useful lives of the related assets. Depreciable lives are 15 to 40
years for buildings and 3 to 15 years for equipment. Leasehold improvements are
amortized on a straight-line basis over the term of the lease or the useful life
of the asset, whichever is shorter. For income tax purposes, accelerated methods
of depreciation are used. Depreciation expense in each of the last three fiscal
years ended June 30, 2002, 2001 and 2000 totaled $1.3 million, $1.4 million and
$1.6 million, respectively. Repairs and maintenance are expensed as incurred.

         F.       COST OF BUSINESSES IN EXCESS OF NET ASSETS ACQUIRED

         In the fourth quarter of fiscal 2000, management evaluated its goodwill
in accordance with Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to Be
Disposed Of," on an originating entity basis considering future undiscounted
operating cash flows and the inconsistency of the Company's earnings. In fiscal
2000, based on the lack of operating cash flow from operations to support future
growth, the inconsistency of the Company's and Consumer Products' earnings, the
competitiveness of the industry in supplying customers in the D-I-Y retail
market and the cash flow expectations of the business, as compared to the
contribution of those product lines, along with the Company's comprehensive
financial restructuring plan, the Company wrote off $6.7 million of goodwill at
its Consumer Products operation, which relates to two product lines acquired in
December 1986 and May 1988. In prior years, the cost of businesses in excess of
net assets acquired was being amortized primarily over 40 years using the
straight-line method. Goodwill amortization expense totaled $0.3 million in
fiscal 2000.

         G.       UNAMORTIZED DEBT ISSUANCE COSTS

         Unamortized debt issuance costs relate to the Company's long-term and
short-term debt (See Note 7) and are amortized over the life of the related
debt. Amortization expense totaled $0.3 million in fiscal 2002, $0.4 million in
fiscal 2001 and $0.8 million in fiscal 2000, and is included in interest expense
in the accompanying consolidated statements of operations. The Company incurred
an extraordinary charge in fiscal 2001 related to the accelerated amortization
of unamortized debt issuance costs (See Note 6).

         H.       PROCUREMENT CHARGES

           The Financial Accounting Standards Board ("FASB") has reviewed the
industry practices regarding the accounting for up-front "slotting fees" charged
by retailers for the right to shelf space and issued EITF Issue No. 00-25
related to these types of charges. The FASB has concluded that charges of this
nature should be reported as a reduction in revenue beginning in annual or
interim periods after December 15, 2001, with financial statements for prior
periods being reclassified to comply with this requirement. The Company adopted
this standard in the quarter ended September 30, 2001.

         Prior to the adoption of this standard, the Company reported and
expensed these costs in the period paid or incurred. The Company reported
certain types of business procurement costs as a separate category in its
operating costs. These business procurement costs included costs incurred in
connection with a customer's agreement to purchase products from the Company for
a specific period, including the consideration paid to the new or existing
customer (i) for the right to supply such customer for a specified period and
(ii) to assist such customer in reorganizing its store aisles and displays in
order to accommodate the Company's products. The Company classified a third type
of business procurement cost as a contra sale in prior years. This type was
associated with the purchase of a competitor's merchandise that the customer has
on hand when it changes suppliers, less the salvage value received by the
Company. Beginning in fiscal 2002, the Company began recording all of these
business procurement costs as a reduction in sales.



                                       35
<PAGE>

         The Company reduced its net sales by $2.4 million, $2.4 million and
$0.65 million in fiscal 2002, 2001 and 2000, respectively, for a combination of
the above mentioned procurement costs. Of the amounts in fiscal 2001 and 2000,
the Company previously reported $0.9 million and $1.5 million, respectively, in
contra sales, and reclassified $2.1 million and $0.7 million of costs originally
recorded as an operating expense as a reduction of net sales.

         I.       FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS

         All balance sheet accounts of foreign subsidiaries are translated at
the exchange rate as of the end of the fiscal year. Income statement items are
translated at the average currency exchange rates during the fiscal year. The
resulting translation adjustment is recorded as a component of stockholders'
equity and comprehensive loss. Foreign currency transaction gains or losses are
included in the consolidated statements of operations as incurred.

         J.       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 and the disclosure of contingent 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.

         K.       EARNINGS PER SHARE

         In February 1997, The Financial Accounting Standards Board ("FASB")
issued SFAS No. 128, "Earnings per Share" to be effective for financial
statements issued for periods ending after December 15, 1997. Under SFAS No.
128, primary earnings per share have been replaced by "basic earnings per
share", which represents net income divided by the weighted average number of
common shares outstanding. Diluted earnings per share utilizes the weighted
average number of common stock and common stock equivalents, which include stock
options and warrants. In fiscal 2002, the Company cancelled all of the
outstanding stock options issued pursuant to an Exchange Offer (see Note 13) and
the warrants were anti-dilutive due to the stock price being below the strike
price of the warrants. For fiscal 2001, the impact of the options and warrants
is anti-dilutive as the price of the Company's stock was below the exercise
prices of those instruments. In fiscal 2000, the Company was in a loss position
and the impact of the options and warrants was anti-dilutive, therefore the
Company has disclosed basic earnings per share as basic and diluted for these
years.

         As further described in Note 12, the Company's shareholders voted in
favor of a 1 for 10 reverse stock split, which became effective on February 20,
2001. Accordingly, the share information presented below and on the face of the
income statement has been restated to reflect the reverse stock split.

         The number of common shares used to calculate basic and diluted
earnings per share are as follows (in thousands):

                           2002           2001           2000
                          -----          -----          -----
         Basic            1,215          1,212          1,207
         Diluted          1,215          1,212          1,207


         L.       REVENUE RECOGNITION

         Revenue is recognized as risk and title to the product transfers to the
customer, which usually occurs at the time shipment is made. In December 1999,
the Securities and Exchange Commission (the "SEC") issued Staff Accounting
Bulletin (SAB) 101, "Revenue Recognition in Financial Statements," which
summarizes the SEC's views in applying generally accepted accounting principles
to revenue recognition. The Company has determined that SAB 101's revenue
recognition guidelines are consistent with the Company's existing revenue
recognition policies; therefore, SAB 101 did not have a material impact on the
Company's consolidated financial statements.

         M.       SHIPPING AND HANDLING FEES

         In May 2000, the Emerging Issues Task Force (EITF) of the Financial
Accounting Standards Board (FASB) reached a consensus with respect to EITF Issue
00-10, "Accounting for Shipping and Handling Fees and Costs." EITF 00-10
recognizes the inconsistencies in practice of the recording of shipping and
handling costs incurred by most companies that sell goods. The Company has
historically recorded freight and any directly related associated cost of




                                       36
<PAGE>

transporting finished product to customers as a component of its selling,
general and administrative expenses. The amounts of $2.2, $2.9 and $3.6 for
fiscal years 2002, 2001 and 2000, respectively, are recorded in selling, general
and administrative expenses.

         N.       SPLIT-DOLLAR LIFE INSURANCE POLICIES

Split-dollar life insurance policies are maintained for the following officers
and directors: (1) three policies for Melvin Waxman providing for total death
benefits of $8,535,000, (2) two policies for Armond Waxman providing for total
death benefits of $12,000,000, (3) one policy for Laurence Waxman providing for
death benefits of $1,274,000 and (4) one policy for John Peters providing for
death benefits of $1,250,000. In the event of the death of any of the
above-referenced insureds, the Company will be repaid for the aggregate premiums
paid by the Company for such policies from the insurance proceeds paid to the
split-dollar life insurance trusts which own such policies.

2.       BARNETT

          In April 1996, the Company completed an initial public offering of the
Barnett Common Stock, reducing its interest in the former wholly-owned
subsidiary to 49.9% of the outstanding Barnett Common Stock and, together with
certain convertible non-voting preferred stock owned by the Company,
approximately a 54% economic interest. In April 1997, the Company completed a
secondary offering of 1.3 million shares of Barnett Common Stock, reducing its
voting and economic interests to 44.5% and, accordingly, began to account for
its interest in Barnett under the equity method of accounting. In July 2000, the
Company announced that it had reached an agreement to monetize the remaining
7,186,530 shares of Barnett Common Stock for $13.15 per share as part of the
purchase of all of Barnett's outstanding shares in connection with the Barnett
Merger. In September 2000, the Barnett Merger was approved by Barnett's
shareholders and the Company sold its remaining shares of Barnett Common Stock.

         The gross proceeds from the sale of the 7,186,530 shares of Barnett
Common Stock amounted to $94.5 million. The Company's equity investment in
Barnett amounted to $44.3 million immediately prior to the sale, including
equity earnings recognized by the Company in the quarter ended September 30,
2000 of $1.4 million. The Company reported a net gain on the sale of Barnett of
$47.5 million, after the write-off of $2.7 million in transaction related costs
associated with the Barnett Merger and other costs associated with the
comprehensive financial restructuring of the Company. In addition, the Company
recognized $7.8 million in deferred gain on the sale of U.S. Lock in the quarter
ended September 30, 2000, which was being recognized as Barnett amortized the
goodwill associated with its purchase of U.S. Lock.

3.       COMPREHENSIVE FINANCIAL RESTRUCTURING PLAN / CONFIRMATION OF
         CHAPTER 11 FILING

         Over a several year period concluding in fiscal 2001, the Company
endeavored to reduce its high level of debt through the monetization of assets
and to improve the efficiencies of its continuing businesses. As a result, the
Company undertook various initiatives to raise cash, improve its cash flow and
reduce its debt obligations and / or improve its financial flexibility during
that period. However, the Company believed that it would have been unable to
continue to make all of the interest and principal payments under its debt
obligations without the development of a comprehensive financial restructuring
plan, which would include the monetization of the value of the shares of the
Barnett Common Stock owned by the Company. The key developments in the
comprehensive financial restructuring were as follows:

         -  On December 13, 1999, the Company and an ad hoc committee (the
            "Committee") representing the holders of approximately 87.6% of the
            $92.8 million outstanding principal amount of Waxman Industries' 12
            3/4% Senior Secured Deferred Coupon Notes due 2004 (the "Deferred
            Coupon Notes") and approximately 65% of the 11 1/8% Senior Notes due
            2001 (the "Senior Notes") of Waxman USA Inc., a direct wholly-owned
            subsidiary of the Company, entered into an agreement (the "Debt
            Reduction Agreement") that provided, subject to certain conditions
            (including Bankruptcy Court approval), for the process that would
            lead to the full satisfaction of the Deferred Coupon Notes and the
            Senior Notes as part of a comprehensive financial restructuring of
            the Company.

         -  On July 10, 2000, the Company announced that it had reached
            agreements with the Committee, among others, for the monetization of
            its Barnett Common Stock and the financial restructuring of Waxman
            Industries. These agreements included the Company's agreement to
            vote its 7,186,530 shares of Barnett Common Stock owned by Waxman
            USA Inc. in favor of the acquisition of Barnett by Wilmar
            Industries, Inc. for $13.15 per share.


                                       37
<PAGE>

         -  On August 28, 2000, the Company and the Committee commenced the
            solicitation for the approval of the Deferred Coupon Note holders
            for the jointly sponsored, prepackaged plan of reorganization in
            advance of its filing with the United States Bankruptcy Court (the
            "Joint Plan"). Under the Joint Plan, the holders of the Deferred
            Coupon Notes were the only impaired class of creditors; none of the
            Company's operating subsidiaries or divisions were included in the
            filing and they paid their trade creditors, employees and other
            liabilities under normal conditions.

         -  On September 1, 2000, the Company sold to Barnett 160,723 shares of
            Barnett Common Stock to fund the interest due on the Company's
            Senior Notes.

         -  On September 27, 2000, the Barnett shareholders approved the Barnett
            Merger.

         -  On September 28, 2000, the holders of approximately 97% of the
            Deferred Coupon Notes voted in favor of accepting the Joint Plan,
            with the remaining holders not voting.

         -  On September 29, 2000, the Company received gross proceeds from the
            sale of the remaining Barnett Common Stock, which together with the
            shares sold to Barnett on September 1, 2000, amounted to $94.5
            million. The Company utilized the proceeds from the sale of the
            Barnett Common Stock in the following order:

               -  paid or reserved for payment approximately $1.35 million for
                  state and federal taxes associated with the sale of the
                  Barnett shares.

               -  reduced its borrowings under its working capital credit
                  facility by approximately $10 million.

               -  retired all of its approximately $35.9 million principal
                  amount of Senior Notes, plus accrued interest.

               -  paid approximately $6.0 million in semi-annual interest due on
                  June 1, 2000 to its Deferred Coupon Note holders.

               -  funded a dedicated account with the remaining gross proceeds
                  of approximately $39.0 million, which was used for the full
                  satisfaction of the Deferred Coupon Notes, including accrued
                  interest, upon confirmation of the Joint Plan.

         -  On October 2, 2000, the Company, excluding Waxman USA Inc. and all
            of its direct and indirect operating subsidiaries, filed a petition
            for reorganization under Chapter 11 of the U.S. Bankruptcy Code in
            the United States Court for the District of Delaware. The petition
            sought confirmation by the court of the Joint Plan to settle, at a
            discount, all amounts due on the Company's Deferred Coupon Notes.
            Under the Joint Plan, the only impaired creditors were the Deferred
            Coupon Note holders.

         -  On November 14, 2000, the Company's Joint Plan was approved by the
            Court

         -  On November 16, 2000, the Company's Joint Plan became effective, and
            the Company paid its obligation to the Deferred Coupon Note holders.

         -  On March 14, 2001, the Court closed the Chapter 11 case, and the
            Company emerged from bankruptcy.

         Included in accrued liabilities at June 30, 2002 and 2001 are accrued
restructuring charges in the amount of $980,000.

4.       MANAGEMENT'S REVIEW OF OPERATIONS -- RESTRUCTURING AND IMPAIRMENT
         CHARGES

         Since fiscal 1994, the Company's strategic effort has been to reduce
its high level of debt through the monetization of assets and to improve the
efficiencies from its continuing businesses. As a result, the Company has
undertaken various initiatives to raise cash, improve its cash flow and reduce
its debt obligations or improve its financial flexibility during that period.
Accordingly, management performed strategic reviews of its business operations
in past fiscal years that resulted in the Company recording significant charges
as follows.

FISCAL 2001 --

         Distribution and packaging operations consolidation: Included in the
results for the fiscal 2001 are $0.35 million in additional costs and
restructuring charges recorded by Consumer Products during the quarter ended
September 30, 2000 which were associated with its warehouses closed in prior
years.

FISCAL 2000 --

         Product line consolidation: In the second quarter of fiscal 2000,
Consumer Products recorded a restructuring charge of $1.3 million related to the
consolidation of its packaged plumbing products under the Plumbcraft(R) brand




                                       38
<PAGE>

name. The Plumbcraft(R) packaging, which was re-designed, and the consolidation
of brands has resulted in cost savings by reducing the amount of inventory
needed to support the business and creating workforce efficiencies.

         Distribution and packaging operations consolidation: In the fourth
quarter of fiscal 2000, Consumer Products recorded a $0.6 million restructuring
charge to consolidate its Grand Prairie, Texas warehouse into its national
distribution center in Groveport, Ohio, and to move its packaging operations
from Tijuana, Mexico to the Company's operations in China. The facilities were
closed at a time when leases expired, therefore, there are no future leases
costs for the closed facilities. The warehouse closure costs included costs
associated with the incremental employee salaries and benefits associated with
closing the warehouse of $0.2 million and other miscellaneous moving and closing
costs of $0.4 million. All but $0.1 million of these costs were paid in fiscal
2000. Consumer Products also wrote off $1.7 million in packaging material and
other inventory associated with these closings, which are recorded in cost of
sales.

         Asset impairment: In the fourth quarter of fiscal 2000, Consumer
Products recorded an asset impairment charge of $6.7 million related to a
write-off of goodwill as required by SFAS No. 121 "Accounting for the Impairment
of Long-Lived Assets and Long-Lived Assets to Be Disposed Of", for two product
lines that were acquired by Consumer Products in December 1986 and May 1988.
This charge has been reported as a separate component in operating expenses and
reflects the lack of operating cash flow from operations to support future
growth, the inconsistency of the Company's and Consumer Products' earnings, the
competitiveness of the industry in supplying customers in the D-I-Y retail
market and the cash flow expectations of the business, as compared to the
contribution of those product lines, along with management's plans associated
with the Company's comprehensive financial restructuring plan.

         Closure of operations: During the fourth quarter of fiscal 2000, TWI
closed Premier Faucet Corporation, one of its facilities in China that
manufactured faucets and faucet components. The closure resulted in a charge of
$1.2 million to write down fixed assets and other long term assets to their fair
value and provide for miscellaneous costs to close the facility. In addition,
the operation recorded a charge of $0.5 million to write down inventory and
other assets, which is recorded in cost of sales and $0.4 million to write down
accounts receivable, which was charged to sales. The loss from this operation in
fiscal 2000 and 1999 amounted to $2.0 million and $0.6 million, respectively.

5.       DISPOSAL OF BUSINESSES:

         A.       SALE OF MEDAL OF PENNSYLVANIA, INC. -- FISCAL 2001

         The Company sold substantially all of the assets and certain
liabilities of Medal of Pennsylvania, Inc. ("Medal"), to a newly formed
corporation, Medal USA, Inc. for approximately $0.8 million in cash and the
assumption of certain liabilities (the "Medal Sale"). The Medal Sale was
effective March 31, 2001, resulting in a net pretax loss of $1.1 million in the
quarter ended March 31, 2001.

         The Company consolidated Medal's financial information in its results
through March 31, 2001. The impact of not consolidating Medal's results would
have been to reduce consolidated net sales and improve the Company's net income
(loss) as follows (in thousands, except per share data):

                                              Fiscal 2001          Fiscal 2000
                                              -----------          -----------

          Net sales                             $  3,407            $   4,724
          Net loss                              $ (  151)           $  (  103)
          Basic and diluted loss per share      $ ( 0.12)           $  ( 0.09)

         B.       SALE OF WESTERN AMERICAN MANUFACTURING INC. -- FISCAL 2000

         Effective March 31, 2000, the Company sold substantially all of the
assets and certain liabilities of Western American Manufacturing Inc., a
division of TWI, to a Mexican company, Niples Del Norte, S.A. de C.V. for
approximately $1.8 million in cash (the "WAMI Sale"), resulting in a net pretax
loss of $2.0 million, including approximately $1.0 million for the write-off of
goodwill.

         The Company consolidated WAMI's financial information in its results
through March 31, 2000. The impact of not consolidating WAMI's results would
have been to reduce the consolidated net sales and net loss for the Company as
follows (in thousands, except per share data):



                                       39
<PAGE>

                                               Fiscal 2000
                                               -----------

          Net sales                               $  2,923
          Net loss                                $   (273)
          Basic and diluted loss per share        $  (0.23)

6.       EXTRAORDINARY ITEMS

         In September 2000, the Company retired Waxman USA's Senior Notes,
utilizing a portion of the proceeds from the Barnett Merger. As a result, the
Company wrote off $57,000, net of taxes of $38,000, of deferred loan costs
associated with these notes.

         In November 2000, the Company reported net extraordinary income of
$52.2 million, which included a gain of $56.5 million from the retirement of the
Company's $92.8 million of Deferred Coupon Notes at a discount, the write-off of
$1.9 million of unamortized debt issuance costs associated with the Deferred
Coupon Notes and $2.4 million of expenses associated with the debt
restructuring. The Company did not provide a tax provision on the extraordinary
gain due to the tax regulations on the treatment of debt defeasance income in a
bankruptcy.

7.       DEBT

         A.       LONG-TERM DEBT

         Total other long-term debt consists of the following at June 30, 2002
and 2001 (in thousands of dollars):

<TABLE>
<CAPTION>
                                                                                                          2002          2001
                                                                                                          ----          ----

<S>                                                                                                    <C>            <C>
Bank Agreement                                                                                         $  7,298       $  9,870
Term Loan maturing in 2005, bearing interest at prime plus 1%, secured by the Company's                   1,100             --
corporate land and building
Capital leases maturing in 2003 to 2006, bearing interest at 6.93% - 17.33%, secured by leased               85            169
equipment
Other debt, maturing in 2002, bearing interest at 5.7%, secured by TWI's land and building                  298             --
Other debt, maturing through 2009, bearing interest at 7.4%, secured by TWI's land and building              --            538
                                                                                                       --------       --------
                                                                                                          8,781         10,577
Less:  current portion                                                                                   (7,831)       (10,045)
                                                                                                       --------       --------
Long-term debt, net of current portion                                                                 $    950       $    532
                                                                                                       ========       ========
</TABLE>

         In February 2002, the Company refinanced the Loan and Security
Agreement with Congress Financial Corporation, which was scheduled to expire on
June 18, 2002, and replaced it with a working capital and term loan facility
from PNC Bank, NA. The Company incurred $0.2 million in early termination fees
to Congress Financial Corporation. The PNC Revolving Credit, Term Loan and
Security Agreement ("PNC Bank Facility") is between Waxman Industries, Inc.,
Consumer Products, WAMI Sales and Waxman USA, as borrowers (the "Borrowers").
The PNC Bank Facility provides, among other things, for revolving credit
advances of up to $15.0 million. The Term Loan facility provided an initial loan
on the Company's corporate office building of $1,155,000, to be amortized over 7
years. As of June 30, 2002, the Company had $7.3 million in borrowings under the
revolving credit line of the facility and had approximately $2.4 million
available under such facility.

         The PNC Bank Facility provides for revolving credit advances of (a) up
to 85.0% of the amount of eligible accounts receivable and (b) up to the lesser
of (i) $7.5 million or (ii) 60% of the amount of eligible raw and finished goods
inventory. Revolving credit advances bear interest at a rate equal to the higher
of (a) the PNC Bank, NA base prime rate plus 0.5% or (b) Federal Funds Rate plus
1.0%. The Term Loan advance bears interest at a rate equal to the higher of (a)
the PNC Bank, NA base prime rate plus 1.0% or (b) Federal Funds Rate plus 1.5%.
The PNC Bank Facility includes a letter of credit subfacility of $1.0 million,
with none outstanding at June 30, 2002. Borrowings under the PNC



                                       40
<PAGE>

Revolving Credit Loan is secured by the accounts receivable, inventories,
certain general intangibles, and unencumbered fixed assets of Waxman Industries,
Inc., Consumer Products, WAMI Sales, and a pledge of 65% of the stock of various
foreign subsidiaries. The PNC Bank Facility requires the Borrowers to maintain
cash collateral accounts into which all available funds are deposited and
applied to service the facility on a daily basis. The PNC Bank Facility prevents
dividends and distributions by the Borrowers except in certain limited instances
including, so long as there is no default or event of default and the Borrowers
are in compliance with certain financial covenants, and contains customary
negative, affirmative and financial covenants and conditions. The Company was in
compliance with all loan covenants at June 30, 2002. The PNC Bank Facility also
contains a material adverse condition clause, which allows PNC Bank, NA to
terminate the loan facility under certain circumstances.

         B.       SENIOR SECURED DEFERRED COUPON NOTES

         In November 2000, the Company's Joint Plan became effective and the
Company paid its Deferred Coupon Note obligation to the Deferred Coupon Note
holders (see Note 3). The Deferred Coupon Notes were issued in May 1994, when
the Company exchanged $50 million principal amount of its 13 3/4% Senior
Subordinated Notes due June 1, 1999 ("Senior Subordinated Notes") for Deferred
Coupon Notes having an initial accreted value of $50 million, along with
detachable warrants to purchase 295,000 post-split shares of the Company's
common stock. The Deferred Coupon Notes were fully accreted at June 1, 1999, and
began accruing cash interest at a rate of 12 3/4% which became payable on
December 1, 1999 and semi-annually thereafter.

         The warrants are exercisable through June 1, 2004. As a result of the
Company's reverse stock split in February 2001, the original 2.95 million
warrants exercisable at $2.45 per share became 295,000 warrants exercisable at
$24.50 per share. A portion of the initial accreted value of the Deferred Coupon
Notes had been allocated to the warrants and as a result, paid-in capital
increased by $2.5 million. The related $2.5 million reduction in the recorded
initial accreted value of the Deferred Coupon Notes was being amortized as
interest expense over the life of the Deferred Coupon Notes, and was accelerated
with the settlement of the Deferred Coupon Notes in connection with the
effectuation of the Joint Plan (see Note 3).

         C.       SENIOR NOTES

         On September 29, 2001, the Company redeemed its remaining Senior Notes
as part of its Debt Reduction Agreement and comprehensive financial
restructuring, paying the principal and interest in full. The Senior Notes were
initiated in April 1996, when the Company, through its wholly-owned subsidiary,
Waxman USA, consummated an offer to exchange $48.8 million principal amount of
Senior Notes for a like amount of the Company's outstanding Senior Subordinated
Notes, and in connection therewith solicited consents to certain amendments to
the indenture pursuant to which the Senior Subordinated Notes were issued.
Approximately $43.0 million of Senior Subordinated Notes were exchanged in
fiscal 1996. In fiscal 1997, the Company initiated a similar exchange offer and
exchanged an additional $4.9 million of Senior Subordinated Notes, bringing the
total amount exchanged to $47.9 million.

         In May 1997, the Company commenced an offer to purchase $12.0 million
principal amount of Senior Notes at par (the "Purchase Offer"). The offer
expired on July 2, 1997, with $2.5 million of the notes being purchased. On July
3, 1997, the Company called for the redemption of $9.5 million of Senior Notes
that had not been tendered in the Purchase Offer, and on August 4, 1997, the
Company completed the note redemption. The Company used a portion of the net
proceeds from the Barnett Secondary Offering to purchase the Senior Notes. The
Company recorded an extraordinary charge of $0.2 million in the first quarter of
fiscal 1998 related to the write-off of unamortized deferred financing costs
associated with the purchase and redemption of these Senior Notes

         D.       CAPITAL LEASES

         The Company has certain obligations under capital leases which are
included in the debt balances in the Long-Term Debt table provided in Note 7A.
The obligations under capital leases have fixed interest rates ranging from
6.93% to 7.75% and are collateralized by property, plant and equipment. Property
under capitalized leases consists of the following:

                                              2002                    2001
                                              ----                    ----
         Machinery and equipment             $ 432                   $ 411




                                       41
<PAGE>

         Less: Accumulated depreciation        280                      93
                                             -----                   -----
                                             $ 152                   $ 318
                                             =====                   =====

         The future minimum rentals for property under capital leases are as
follows:

         2003                                                      $73
         2004                                                        6
         2005                                                        5
         2006                                                        5
         2007                                                        1
                                                                  ----
         Total minimum lease obligation                             90
         Less interest                                               5
                                                                  ----
         Present value of total minimum lease obligation          $ 85
                                                                  ====

         E.       TERM DEBT

         The PNC Bank Facility provides for a Term Loan facility on the
Company's corporate office building. The initial loan amount was $1,155,000, to
be amortized over 7 years and bears an interest rate of prime plus 1.0%. Monthly
principal payments of $13,750 plus interest are made. Since inception, the
Company made $55,000 in principal payments and principal payments of $165,000
will be made in each fiscal year beginning with fiscal 2003 through fiscal 2008,
with $110,000 being made in fiscal 2009.

         F.       MISCELLANEOUS

         The Company made cash interest payments of $0.6 million, $9.3 million
and $11.3 million in fiscal 2002, 2001 and 2000, respectively. The Company made
its June 1, 2000 interest payment to the Deferred Coupon Note Holders in
September 2000, with a portion of the proceeds from the Barnett Merger as part
of an agreement with the Ad Hoc Committee. The Ad Hoc Committee had provided
instructions to the Trustee for the Deferred Coupon Notes not to take any action
with respect to the failure to pay the June interest payment, pending the
anticipated completion of the Barnett Merger. The Company reported interest
income of $0.3 million in fiscal 2001, but did not have interest income in
fiscal 2002 or fiscal 2000. Prior to fiscal 2001, the Company also had a
significant amount of non-cash interest, accrued interest and interest cost from
the amortization of deferred financing costs, which made up the balance of the
interest expense presented in the accompanying consolidated statements of
operations.

         Management believes the carrying value of its bank loan approximates
its fair value as it bears interest based upon the bank's prime lending rates.

8.       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 the asset
and liability method, where deferred tax assets and liabilities are recognized
for the future tax consequences attributable to net operating loss carryforwards
and to differences between the financial statement carrying amounts of assets
and liabilities and their respective tax basis. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which these temporary differences are expected to be
recovered or settled.

         The components of income (loss) from continuing operations before
income taxes and extraordinary gain are as follows (in thousands of dollars):


                                       42
<PAGE>
<TABLE>
<CAPTION>
                                                                                     Fiscal Year Ended June 30,
                                                                                     --------------------------
                                                                                  2002          2001          2000
                                                                                  ----          ----          ----
<S>                                                                             <C>         <C>         <C>
        Domestic                                                                $ (80)      $ 47,895    $ (26,683)
        Foreign                                                                    994         1,611       (2,192)
                                                                                ------      --------     ---------
        Total                                                                   $  914      $ 49,506     $(28,875)
                                                                                ======      ========     =========

</TABLE>

         The components of the provision for income taxes are (in thousands of
dollars):

<TABLE>
<CAPTION>
                                                                                   Fiscal Year Ended June 30,
                                                                                   --------------------------
        Currently payable:                                                       2002         2001          2000
                                                                                 ----         ----          ----
<S>                                                                             <C>         <C>             <C>
        U.S. Federal                                                            $  (773)     $   740        $   --
        Foreign, state and other                                                    102          573          (200)
                                                                                -------       ------        ------
             Total current                                                         (671)       1,313          (200)
        Deferred:  State                                                             --          367           173
                                                                                -------       ------        ------
             Total provision                                                    $  (671)     $ 1,680         $ (27)
                                                                                =======      =======        ======
</TABLE>

         The following table reconciles the U.S. statutory rate to the Company's
effective tax rate:

<TABLE>
<CAPTION>
                                                                                   2002         2001          2000
                                                                                   ----         ----          ----
<S>                                                                               <C>          <C>           <C>
        U.S. statutory rate                                                        35.0%        35.0%         35.0%
        Domestic losses not benefited                                                --           --         (21.5)
        State taxes, net                                                            1.8          0.8           0.4
        Goodwill amortization                                                        --           --          (9.6)
        Foreign tax items                                                         (13.0)        (0.6)         (3.1)
        Change in valuation allowance                                                --        (32.0)           --
        Change in tax law                                                         (84.6)          --            --
        Nondeductible compensation                                                   --           --            --
        Original issue discount                                                      --           --          (0.9)
        Other, net                                                                (12.6)         0.2          (0.2)
                                                                                 ------       ------        ------
             Effective tax rate                                                   (73.4)%        3.4%          0.1%
                                                                                 ======       ======        ======
</TABLE>


         The deferred tax assets and liabilities as of June 30, 2002 and 2001
are as follows (in thousands of dollars):



                                       43
<PAGE>
<TABLE>
<CAPTION>
                                                     2002                           2001
                                                     ----                           ----
<S>                                                 <C>                           <C>
Net operating loss carryforwards                    $ 6,082                       $ 6,130
Accrued expenses                                         97                           163
Inventories                                             409                           405
Accounts receivable                                     188                           188
Procurement costs                                       910                         1,005
Alternative minimum tax credit                          718                         1,743
Other                                                   472                           448
                                                    -------                       -------
     Deferred tax asset                               8,876                        10,082
                                                    -------                       -------
Property                                               (941)                         (962)
                                                    -------                       -------
     Deferred tax liabilities                          (941)                         (962)
                                                    -------                       -------
     Net deferred tax asset                           7,935                         9,120
    Valuation allowance                              (7,935)                       (9,120)
                                                    -------                       -------
                                                    $    --                       $    --
                                                    =======                       =======
</TABLE>


         SFAS No. 109 requires the Company to assess the realizability of its
deferred tax assets based on whether it is more likely than not that the Company
will realize the benefit from these deferred tax assets in the future. If the
Company determines the more likely than not criteria is not met, SFAS No. 109
requires the deferred tax assets be reduced by a valuation allowance. In
assessing the realizability of its net deferred tax asset as of June 30, 2002,
the Company considered the historic performance of the Company and uncertainty
of it being able to generate enough domestic taxable income to utilize these
assets. At June 30, 2002 and 2001, the Company's net deferred tax assets were
fully offset by a valuation allowance. At June 30, 2002, the Company had $17.4
million of available domestic net operating loss carryforwards for income tax
purposes, which will expire in 2010 through 2022.

         In fiscal 2002, the Company recorded a net tax benefit of $0.7 million,
which represents a tax benefit of $0.8 million for a change in tax law related
to the carryforward of an alternative minimum tax net operating loss to fiscal
2001, a benefit of $0.1 million for the reversal of tax reserves related to the
2001 financial restructuring and a provision for various state and foreign
taxes. The fiscal 2001 provision for income taxes amounted to $1.7 million. The
Company's tax provision for fiscal 2001 provided for federal taxes based on the
alternative minimum tax method and for state and various foreign taxes. The
Company utilized a portion of its net operating loss carryforwards in fiscal
2001 to offset its federal tax due based on the regular method of computing tax
liability. In addition to the net operating losses utilized, the Company's net
operating loss carryforward and alternative minimum tax credit carryforward were
reduced as a result of the bankruptcy. In fiscal 2001, the Company did not
record a tax provision on the extraordinary gain from the defeasance of debt due
to its favorable treatment in a bankruptcy.

         Undistributed earnings of the Company's foreign operations was
approximately $1.0 million for fiscal 2002. These earnings are considered to be
indefinitely reinvested and accordingly, no U.S. federal or state taxes have
been provided.

         The Company made no federal income tax payments in fiscal 2002 and
2000, but made payments of $0.8 for fiscal 2001. The Company's foreign
operations made payments of $0.1 million in fiscal 2002, as compared to $0.1
million and $0.2 million for fiscal 2001 and fiscal 2000, respectively. The
Company paid approximately $114,000, $330,000 and $914,000 in state taxes for
fiscal 2002, 2001 and 2000, respectively. Refunds received totaled $28,000 in
fiscal 2002, $6,000 in fiscal 2001 and $445,000 in fiscal 2000.

9.       LEASE COMMITMENTS



                                       44
<PAGE>

         The Company leases certain warehouse and office facilities and
equipment under operating lease agreements, which expire at various dates
through 2008.

         Future minimum rental payments are as follows (in thousands of
dollars):

                  2003                                      $942

                  2004                                       822

                  2005                                       710

                  2006                                       678

                  2007                                       672

                  Thereafter                                 606
                                                          ------
                                                          $4,430

         Total rent expense charged to operations was $0.9 million, $0.8 million
and $1.5 million in fiscal 2002, 2001 and 2000, respectively. Consumer Products
leases certain warehouse space from related parties. Related parties' rent
expense totaled $0.3 million in each of fiscal 2002, fiscal 2001 and fiscal
2000. Those related party relationships consist of the following:

         -  Aurora Investment Co., a partnership owned by Melvin Waxman,
            Chairman of the Board and Co-Chief Executive Officer of the Company,
            and Armond Waxman, President and Co-Chief Executive Officer of the
            Company, together with certain other members of their families, is
            the owner and lessor of the building used by Consumer Products for
            its executive offices, administrative functions and, until the move
            of the warehouse to Groveport, Ohio, one of its distribution
            facilities. Rent expense under this lease was $326,712 in each of
            fiscal 2002, 2001 and 2000. All but 97,000 square feet of the
            warehouse portion of this facility was subleased to Handl-it, Inc.
            (see Note 10 for information regarding related party ownership of
            Handl-it) through the June 30, 2002 term of the lease. Consumer
            Products renewed the lease for the 9,000 square feet of office space
            and 20,000 square feet of warehouse space that it uses effective
            July 1, 2002.

         -  Handl-it Inc., a corporation owned by John S. Peters, a director and
            consultant to the Company, together with certain other members of
            his family, Melvin Waxman and Armond Waxman, sublet warehouse space
            from Consumer Products through June 30, 2002. The Company reported
            rental income from Handl-it, Inc. of $191,079, $290,496 and $290,970
            in fiscal 2002, 2001 and 2000, respectively, for subleasing the
            warehouse in Bedford Hts., Ohio. See Note 10 for additional
            information regarding this related party transaction.

         -  From July 1, 1999 through April 2001, WAMI Sales utilized Handl-it
            Inc. to provide all warehousing, labor and shipping functions in
            Cleveland, Ohio for a fee equal to a percentage of monthly sales
            plus other direct expenses from this operation. The charge amounted
            to $67,000 in fiscal 2001 and $74,000 in fiscal 2000. The Company
            believes these terms are comparable to those that would be available
            from unaffiliated third parties.

10.      RELATED-PARTY TRANSACTIONS

         The Company purchases certain products, which it can not manufacture
with its existing operations, from WDI International, Inc., a company owned in
part by certain members of the Waxman family and other non-affiliated
individuals. In fiscal 2002, 2001 and 2000, purchases from WDI International
amounted to $1.6 million, $1.7 million and $3.7 million, respectively. The
Company believes that the prices it receives are on terms comparable to those
that would be available from unaffiliated third parties.

         The Company leases certain facilities from Aurora Investment Co., a
partnership owned by members of the Waxman family (see Note 9 for additional
information regarding this arrangement). Aurora Investments developed the
building currently leased by Consumer Products for office and warehouse space in
Bedford Hts., Ohio. The lease, which expired on June 30, 2002, was renewed for
the office area and a portion of the warehouse being used by Consumer Products
for a period of 5 years. Rent expense under this lease was $326,712 in each of
fiscal 2002, 2001 and 2000. All



                                       45
<PAGE>

but 97,000 square feet of the warehouse portion of this facility was subleased
to Handl-it, Inc. (see below for information regarding affiliated ownership of
Handl-it Inc.) through the June 30, 2002 term of the lease. Beginning in fiscal
2003, Consumer Products's annual payment to Aurora Investments Co. will be
approximately $96,000 for lease of 9,000 square feet of office space and 20,000
square space of warehouse space.

         At June 30, 2002 and 2001, the Company had the following receivables
from related parties (in thousands):

                         Related Party                 2002          2001
                         -------------                 ----          ----
      Melvin Waxman, Co-CEO                            $ 60          $ 60
      Armond Waxman, Co-CEO                             135            86
      Waxman Development                                 84            72
      Aurora Investments Co.                             71            71
      Handl-it Inc.                                     134            99
      All other related parties                          64            64
                                                       ----          ----
           Total                                       $548          $452
                                                       ====          ====

         All of the related party notes receivable are documented by a
promissory note, which will begin to bear interest in July 2002 at the minimum
rates established by the Internal Revenue Service to avoid imputed interest
attribution. Principal payments of $10,000 will be made by each officer
beginning in fiscal 2003, as well as quarterly interest payments. The receivable
from Waxman Development relates to a real estate development venture initially
formed to build facilities for Barnett, a former affiliate, and other
operations. The Barnett stock owned by the Company was disposed of in September
2000. The promissory notes for Waxman Development and Aurora Investments bear
interest at the minimum rates established by the Internal Revenue Service to
avoid imputed interest. Aurora Investments has been paying interest, while
Waxman Development will begin to pay interest in fiscal 2003. Principal payments
on the Aurora Investments and Waxman Development notes begin in fiscal 2007 and
are payable over a ten year period.

         Handl-it Inc., a corporation owned by John S. Peters, a director and
consultant to the Company, together with another member of his family, and
Melvin Waxman and Armond Waxman, sublet warehouse space in Bedford Hts., Ohio
from Consumer Products through June 30, 2002. In order to facilitate Consumer
Products move to a more efficient warehouse that was also logistically
beneficial in serving their customer base, Handl-it agreed to sublease 97,000
square feet of office space, which it would attempt to utilize for the
warehousing needs of its customers. Due to the prolonged economic downturn in
this area, Handl-it was unable to fully utilize the warehouse, and negotiated an
adjustment with Consumer Products to offset its revenue shortfall for this
warehouse. Accordingly, Consumer Products reduced its rental charge to Handl-it
by approximately $99,000, and received concessions of $26,000 over the next 26
months from Aurora Investments. The Company charged Handl-it, Inc. $191,079 in
fiscal 2002 (after the rent adjustment), $290,496 in fiscal 2001 and $290,970 in
fiscal 2000 for the subleasing of warehouse space. At June 30, 2002 and 2001,
Handl-it owed Consumer Products $134,000 and $99,000 in unpaid rent,
respectively, which is evidenced by a promissory note, which bears interest at a
rate of 5.25% per annum. Effective July 1, 2002, Consumer Products entered into
an agreement to sublease 17,000 square feet of space from Handl-it at a monthly
charge of $5,100. Consumer Products will offset the receivable it has from
Handl-it by the future monthly rental payments that would otherwise be paid to
Handl-it until the receivable has been repaid. Consumer Products also utilizes
Con-Pak Inc., an outside packaging operation, in certain instances where the
packaging can not be performed by the Company's operations in Asia. Con-Pak,
Inc. was acquired by Handl-it in 1999, received $377,599, $234,368 and $110,577
for these services in fiscal 2002, 2001 and 2000, respectively. Consumer
Products also paid Handl-it Inc. approximately $27,000 and $40,000 for the cost
of transportation of products in fiscal 2001 and 2000, respectively. Handl-it is
also compensated for the consulting services provided to the Company by Mr.
Peters, which amounted to approximately $115,000, $73,000 and $45,000 in fiscal
2002, 2001 and 2000, respectively.

         Melvin Waxman and Armond Waxman are directors and co-owners of
Handl-it, and each received director fees of $8,000 and consulting income of
$20,000 from Handl-it in the twelve months ended June 30, 2002.

11.      RETIREMENT PLANS

         The eligible employees of the Company's corporate office and certain
domestic subsidiaries of the Company participate in a trusteed, profit sharing
and 401(k) retirement plan. Contributions are discretionary and are determined
by the Company's Board of Directors. There were no profit sharing contributions
in fiscal 2002, 2001 or 2000; however, the Company contributed a 50% match of up
to the first 4% of salary deferral by employees, which amounted to $0.1 million
in fiscal 2002, 2001 and 2000. The Company's domestic operations currently
offers no other retirement, post-retirement



                                       46
<PAGE>

or post-employment benefits. Beginning July 1, 2002, the Company modified the
401(k) retirement plan to meet the Department of Labor's Safe Harbor Match
provisions. Accordingly, the Company match will increase to 100% of the first 3%
and 50% for the next 2% of deferral by employees. Under the new provisions, all
contributions are 100% vested.

         The Company's operation in Taiwan has a retirement plan covering all
regular employees, which provides for payment of benefits based on length of
service and basic pay at the time of retirement, making a monthly contribution
of 2% of salary and wages to the retirement fund. Contributions approximated
$20,000 in fiscal 2002 and 2001 and $48,000 in fiscal 2000.

12.      CAPITAL STOCK AND REVERSE STOCK SPLIT

         Each share of the Company's common stock (the "Common Stock") entitles
its holder to one vote, while each share of Class B common stock entitles its
holder to ten votes. Cash dividends on the Class B common stock may not exceed
those on the Common Stock. Due to restricted transferability, there is no
trading market for the Class B common stock. However, the Class B common stock
may be converted, at the stockholder's option, into Common Stock on a
share-for-share basis at any time, without cost to the stockholder.

         The Company is authorized to issue two million shares of preferred
stock in series, with terms fixed by resolution of the Board of Directors. No
preferred shares have been issued as of June 30, 2002.

         On February 6, 2001, the Company's shareholders approved a 1 for 10
reverse stock split, which became effective on February 20, 2001 (the "Reverse
Stock Split"). As a result of the Reverse Stock Split, every ten shares of the
Company's common stock and class B common stock were converted into one share of
common stock and class B common stock, respectively. The Company did not issue
certificates for fractional shares. Instead, shareholders who otherwise were
entitled to a fractional share received a full share for such fractional share
interest. The Company did not change the par value or number of authorized
shares of Common Stock or Class B Common Stock under its Certificate of
Incorporation, which is set at 22,000,000 shares of Common Stock and 6,000,000
shares of Class B Common Stock.

         On the record date for the Reverse Stock Split, there were 9,976,974
shares of Common Stock and 2,141,496 shares of Class B Common Stock outstanding
(not considering the effect of the proposed Reverse Stock Split). An additional
1,800,000 shares of Common Stock had been reserved for issuance under the 1992
Stock Option Plan, 100,000 shares of Common Stock had been reserved for issuance
under the 1996 Non-employee Director Incentive Plan and 500,000 shares of Common
Stock had been reserved for issuance under the Stock Appreciation Rights Plan.
In addition, 2,142,058 shares of Common Stock had been reserved for issuance
upon conversion of the Class B Common Stock. Each of these amounts decreased
ten-fold as a result of the Reverse Stock Split, and the exercise price of the
options issued under the aforementioned plans have been multiplied by ten.

         As a result of the Reverse Stock Split, the number of shares
purchasable upon exercise of the warrants issued to the holders of the Company's
former Deferred Coupon Notes (the "Warrants") were adjusted. The pre-split
Warrants representing the rights of the holders to purchase an aggregate of
2,950,000 Warrant Shares at $2.45 per share became, on a post-split basis, the
right to purchase an aggregate of 295,000 Warrant Shares at $24.50 per share.

         Each stockholder's percentage share of total voting rights in the
Company was the same as it was prior to the Stock Split, except for the de
minimus effect of certain stockholders receiving an additional share of Common
Stock or Class B Common Stock in lieu of fractional shares. The number of
additional shares issued in lieu of fractional shares increased the number of
post-split shares by 154 for the Common Stock and 49 for the Class B Common
Stock. There was no change in the number of stockholders as a result of the
Stock Split. The Company expects to seek stockholder approval at the 2002 Annual
Meeting to reduce the number of authorized shares of Common Stock, Class B
Common Stock and Preferred Stock.

         The Company's Common Stock is quoted on the Over-The-Counter Bulletin
Board ("OTCBB"), which is expected to cease as an exchange in 2003. The Nasdaq
has advised companies that it expects to establish a new Bulletin Board Exchange
(the "BBX") with improved order processing and automatic trading features. The
Company is evaluating the criteria to be listed on this and other exchanges, and
expects that its stock will continue to be listed on an exchange.

13. STOCK OPTION PLANS, RESTRICTED SHARE PLANS, STOCK APPRECIATION RIGHTS AND
    EMPLOYEE STOCK PURCHASE PLAN

         In December 2001, the Company's Board of Directors (including directors
who are controlling shareholders) of



                                       47
<PAGE>

the Company, voted to establish a new stock incentive plan (the "2002 Stock
Incentive Plan") and to submit the plan for shareholder approval at the
Company's 2002 Annual Meeting of Shareholders. The 2002 Stock Incentive Plan
reserves 275,000 shares of Common Stock to replace existing stock options and
Stock Appreciation Rights, and for future grants to attract, reward and provide
incentive to the Company's officers, directors, employees and consultants.

         In December 2001, the Company offered to exchange a promise to grant
new options under the 2002 Stock Incentive Plan for an equivalent number of
options under the Company's prior equity incentive plans (the "Exchange Offer").
The Exchange Offer provided current option holders the opportunity to cancel
options they had under The 1992 Non-Qualified and Incentive Stock Option Plan,
as amended (the "1992 Stock Option Plan") and the 1994 Non-Employee Directors
Stock Option Plan (the "1994 Non-Employee Director Plan") for an equivalent
number of options under the 2002 Stock Incentive Plan. On January 8, 2002, the
Exchange Offer expired with all of the offerees accepting the offer. The stock
options and stock appreciation rights (which were exchanged on terms
substantially the same as in the Exchange Offer) were cancelled on January 9,
2002. The replacement options were granted on July 10, 2002 (six months and one
day after the expiration of the Exchange Offer to preserve fixed accounting for
the options). In connection with the successful completion of the Exchange
Offer, the 1992 Stock Option Plan and the 1994 Non-Employee Director Plan were
terminated.

         In fiscal 1996, the Board of Directors adopted the 1996 Non-Employee
Directors Restricted Share Plan (the "1996 Plan"). Pursuant to the 1996 Plan,
500 restricted shares of Common Stock were granted to each non-employee director
for each five years of service as a director. The restricted shares vest on the
last day of the second consecutive year during which the individual served as a
director after the date of the award. There were no awards made since fiscal
1998 and effective December 2001, the 1996 Plan was terminated.

         Also in fiscal 1996, the Stock Option Committee granted Stock
Appreciation Rights ("SAR") for 20,000 shares to each of the Co-Chief Executive
Officers of the Company and for 10,000 shares to the President of Consumer
Products, in each case at a base price of $33.75. Each SAR was scheduled to
expire ten years from the date of grant and vested in whole, three years after
the date of grant. Each SAR was exercisable, at the election of the grantee, for
either cash or Common Stock. Due to the market price of the Company's stock
being below the exercise price of the SAR's, no expense had been recorded for
the value of this plan since fiscal 1997. The SAR's were cancelled in January
2002.

         In fiscal 1994, the Board of Directors of the Company adopted the 1994
Non-Employee Directors Option Plan pursuant to which each current non-employee
director of the Company was granted an option to purchase an aggregate of 2,000
shares of the Company's Common Stock the current market price at that time.
Until their cancellation in January 2002 pursuant to the Exchange Offer
(described below), 3 persons held 5,000 options at an average price of $22.50.

         The Company applied APB Opinion No. 25 and related Interpretations in
accounting for these stock options. Accordingly, no compensation costs had been
recognized for these stock based compensation awards. The 1992 Stock Option Plan
authorized the issuance of an aggregate of 180,000 shares of Common Stock in the
form of stock options to officers and key employees of the Company or its
subsidiaries. Under the terms of the 1992 Stock Option Plan, all options granted
were at an option price not less than the market value at the date of grant and
were exercisable for a period not exceeding 10 years from the date of grant. In
January 2002, the Company cancelled 130,155 options held by 33 persons at an
average price of $21.75, pursuant to the Exchange Offer.

         Pro forma net income and earnings per share for the fiscal years ended
June 30, 2001 and 2000 assuming compensation costs for the Company had been
determined consistent with SFAS No. 123, "Accounting for Stock-Based
Compensation", are presented in the following table (in thousands of dollars,
except per share data), while fiscal 2002 results are not presented since all
stock based compensation plans were terminated.

<TABLE>
<CAPTION>
                  Pro forma net income and earnings per share                2001            2000
                  -------------------------------------------                ----            ----
<S>                                                                        <C>             <C>
             Net income (loss) as reported                                 $100,808        $(28,848)
             Pro forma net income (loss)                                    $98,970        $(29,102)

             Basic and diluted income (loss) per share as reported           $82.55         $(23.91)
             Pro forma basic and diluted income (loss) per share             $82.48         $(24.12)
</TABLE>

         Pro forma disclosure for companies using APB Opinion No. 25 requires
calculating compensation cost for the effects of all awards granted in the first
fiscal year beginning after December 15, 1994. 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 used for grants



                                       48
<PAGE>

made since July 1, 1995: no dividends; expected volatility of 138.9%; average
risk-free interest rate of 6.0%; and expected life of 8.9 to 10 years. Because
the cost of calculating compensation under SFAS No. 123 has not been applied to
options granted before July 1, 1995, the resulting pro forma expense may not be
representative of the actual expense that may be incurred in the future.

         Changes in stock options outstanding for the 1992 Stock Option Plan and
the 1994 Non-Employee Directors Stock Option Plan are as follows (in thousands,
except per share prices), with no options being outstanding at June 30, 2002:

<TABLE>
<CAPTION>
                                         1992 Plan -                         1994 Plan -
                                          Shares        Option Price         Shares        Option Price
    Stock Options                        Outstanding    Per Share            Outstanding   Per Share
    -------------                        -----------    ---------            -----------   ---------
<S>                                      <C>          <C>                    <C>           <C>
    Balance - June 30, 1999                  151      $10.00 - $56.25             5           $22.50
    Granted                                    9                $4.10            --               --
    Exercised                                 --                   --            --               --
    Expired or terminated                    (17)      $4.10 - $40.63            --               --
                                            ----                                ---
    Balance - June 30, 2000                  143      $10.00 - $56.25             5           $22.50
    Granted                                   --                   --            --               --
    Exercised                                 --                   --            --               --
    Expired or terminated                    (13)      $4.10 - $56.25            --               --
                                            ----                                ---
    Balance - June 30, 2001                  130       $4.10 - $56.25             5           $22.50
    Granted                                   --                   --            --               --
    Exercised                                 --                   --            --               --
    Expired or terminated                   (130)      $4.10 - $56.25            (5)          $22.50
                                            ----                                ---
    Balance - June 30, 2002                   --                                 --
                                            ====                                ===
</TABLE>

         Through December 31, 2001, the Company also allowed employees to defer
a portion of their salary to participate in an Employee Stock Purchase Plan (the
"ESPP"). The ESPP allowed employees to make an election to purchase shares at
the lower of 85 percent of the closing market price of the Company's stock on
the first or last day of the calendar year. In fiscal 2002, 6,129 shares were
purchased by employees, while there were no purchases in fiscal 2001. The
Company allowed this plan to expire without renewing it.

14.      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 consolidated financial statements or results of
operations.

         The Company or one of its indirect subsidiaries have been threatened
with litigation by two separate California public interest groups alleging
unlawful discharge of chemicals under California's Safe Drinking Water and Toxic
Enforcement Act of 1986. The Company is researching the merits of the
allegations and intends to contest and vigorously defend itself. Any potential
liability related to this threatened litigation cannot be assessed at this time
as the Company is in the very preliminary stages of its investigation.

15.      SEGMENT INFORMATION

         The Company's businesses distribute specialty plumbing products, floor
and surface protection products, galvanized, black, brass and chrome pipe
nipples, imported malleable fittings and other products. Since the foreign
sourcing and manufacturing operations sell a significant portion of their
products through the Company's wholly-owned operations, which primarily sell to
retailers, and to Barnett, a distributor, the Company has classified its
business segments into retail and non-retail categories. Products are sold to
(i) retail operations, including large national and regional retailers, D-I-Y
home centers and smaller independent retailers in the United States, and (ii)
non-retail operations, including wholesale and industrial supply distributors in
the United States. Sales outside of the United States are not significant. Until
the January 1, 1999 sale of U.S. Lock, the Company also distributed security
hardware to non-retail operations, including security hardware installers and
locksmiths. Set forth below is certain financial data relating to the Company's
business segments (in thousands of dollars).


                                       49
<PAGE>
<TABLE>
<CAPTION>
                                                                       Corporate and
                                          Retail         Non-Retail         Other         Elimination        Total
                                          ------         ----------         -----         -----------        -----
<S>                                       <C>           <C>              <C>              <C>             <C>
Reported net sales:
Fiscal 2002                               $ 52,643      $ 25,638               --         $ (7,856)       $  70,425
Fiscal 2001                                 54,759        24,177               --           (7,856)          71,370
Fiscal 2000                                 60,361        30,597               --          (10,248)          80,710

Operating income (loss):
Fiscal 2002                               $  4,039      $    588         $ (2,990)              --        $   1,637
Fiscal 2001                                  1,459           628           (2,720)              --             (633)
Fiscal 2000                                (11,578)         (857)          (2,928)              --          (15,363)

Identifiable assets:
June 30, 2002                             $ 27,474      $  9,892         $  5,930               --        $  40,296
June 30, 2001                               26,907         9,135            4,790               --           40,832
</TABLE>

         The Company's foreign operations manufacture, assemble, source and
package products that are distributed by the Company's wholly-owned operations,
Barnett, retailers and other non-retail customers. Net sales for those foreign
operations amounted to $35.3 million, $34.5 million and $40.2 million for the
fiscal years ended June 30, 2002, 2001 and 2000, respectively. Of these amounts,
approximately $7.9 million, $7.6 million and $10.2 million were intercompany
sales for the fiscal years ended June 30, 2002, 2001 and 2000, respectively.
Identifiable assets for the foreign operations were $13.5 million and $12.6
million at June 30, 2002 and 2001, respectively.

                       SUPPLEMENTARY FINANCIAL INFORMATION

         Quarterly Results of Operations:

         Presented below is a summary of the unaudited quarterly results of
operations for the fiscal years ended June 30, 2002 and 2001 (in thousands,
except per share amounts).

<TABLE>
<CAPTION>
FISCAL 2002                                                 1ST QTR.        2ND QTR.        3RD QTR.        4TH QTR.
-----------                                                 --------        --------        --------        --------
<S>                                                        <C>             <C>             <C>            <C>
Net sales                                                  $ 18,733        $ 18,116        $ 15,552        $ 18,024
Gross profit                                                  6,055           5,606           5,445           6,066
Operating income (loss)                                         896             656             166             (81)
Income before provision (benefit) for income taxes              658             472              24            (240)
Net income (loss)                                          $    584        $    384        $    673        $    (56)
Basic loss per share:
   Net income                                              $   0.48        $   0.32        $   0.55        $  (0.05)
Diluted loss per share:
   Net income                                              $   0.48        $   0.32        $   0.55        $  (0.05)
</TABLE>

<TABLE>
<CAPTION>
FISCAL 2001                                                 1ST QTR.        2ND QTR.        3RD QTR.        4TH QTR.
-----------                                                 --------        --------        --------        --------
<S>                                                        <C>             <C>             <C>             <C>
Net sales                                                  $ 17,289        $ 17,660        $ 19,974        $ 16,447
Gross profit                                                  5,093           5,687           6,410           4,290
Restructuring and impairment charges                            350              --              --              --
Operating income (loss)                                        (916)            234             645            (596)
Gain on sale of Barnett, net                                 47,473              --              --              --
Loss on sale of Medal, net                                       --              --          (1,105)             --
Amortization of U.S. Lock gain                                7,815              --              --              --
</TABLE>


                                       50
<PAGE>

<TABLE>
<S>                                                        <C>             <C>             <C>             <C>
Income (loss) before provision (benefit) for income taxes
And extraordinary items                                      51,017             157            (798)         (870)
Extraordinary items                                             (57)         52,279              --            --
Net income (loss)                                          $ 48,210        $ 52,636        $   (848)       $   50

FISCAL 2001
-----------
Basic loss per share:                                      $  39.83        $   0.29        $  (0.70)       $ 0.04
   Net income (loss) before extraordinary items
   Extraordinary items                                         (.05)          43.14              --            --
                                                           --------        --------        --------        ------
   Net income (loss)                                       $  39.78        $  43.43        $  (0.70)       $ 0.04
                                                           ========        ========        ========        ======

Diluted loss per share:
   Net income (loss) before extraordinary items            $  39.83        $   0.29        $  (0.70)       $ 0.04
   Extraordinary items                                        (0.05)          43.14              --            --
                                                           --------        --------        --------        ------
   Net income (loss)                                       $  39.78        $  43.43        $  (0.70)       $ 0.04
                                                           ========        ========        ========        ======
</TABLE>

         In fiscal 2002, the Company adopted a FASB Emerging Issues Task Force
pronouncement and began to record all business procurement charges as an offset
to sales, with prior period results being restated. There was no impact on
operating income or net income since the Company previously reported business
procurement costs as a contra sale or an operating expense in prior years. Net
income for the fiscal 2002 third quarter were affected by a $0.8 million tax
benefit for a change in the tax law. Operating income for the fiscal 2002 third
quarter was affected by $246,000 in SG&A expenses associated with the write-off
of costs and early termination of the bank facility with Congress Financial. If
the fiscal 2002 fourth quarter, the Company reported foreign exchange losses due
to the weakening U.S. Dollar of approximately $228,000, as compared to exchange
gains of $317,000 in the same period last year.

         Results for the fiscal 2001 first quarter were affected by the $47.5
million gain on the sale of the Company's remaining interest in Barnett, the
recognition a $7.8 million deferred gain on the sale of U.S. Lock and $0.35
million of restructuring charges to provide for additional future costs for
facilities closed in fiscal 2000. In the fiscal 2001 second quarter, the Company
reported a net extraordinary gain of $52.3 million on the defeasance of debt. In
the fiscal 2001 third quarter, results were affected by the $1.1 million loss on
the sale of substantially all of the assets of Medal. In the fiscal 2001 fourth
quarter, the Company's tax provision was adjusted, resulting in a benefit of
$0.9 million.

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTING AND FINANCIAL DISCLOSURE
                                 Not applicable


                                    PART III

         Part III, except for certain information relating to Executive Officers
included in Part I, Item 4A, is omitted inasmuch as the Company intends to file
with the Securities and Exchange Commission within 120 days of the close of its
fiscal year ended June 30, 2002 a definitive proxy statement pursuant to
Regulation 14A of the Securities Exchange Act of 1934.



                                       51
<PAGE>


                                     PART IV

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

     (a)      (1)     The following consolidated financial statements are
                      included in Part II, Item 8:

                      Report of Independent Public Accountants

                      Balance Sheets--June 30, 2002 and 2001

                      Statements of Operations--For the Years Ended June 30,
                      2002, 2001 and 2000

                      Statements of Stockholders' Equity--For the Years Ended
                      June 30, 2002, 2001 and 2000

                      Statements of Cash Flows--For the Years Ended June 30,
                      2002, 2001 and 2000

                      Notes to Financial Statements For the Years Ended June 30,
                      2002, 2001 and 2000

                      Supplementary Financial Information

     (a)      (2)     All schedules have been omitted because the required
                      information is not present or not present in amounts
                      sufficient to require submission of the schedule, or
                      because the information required is included in the
                      consolidated financial statements including notes thereto.

     (a)      (3)     Exhibits

     3.1*             Certificate of Incorporation of the Company dated October
                      27, 1989 (Exhibit 3(a) to the Company's Form S-8 filed
                      December 4, 1989, File No. 0-5888, incorporated herein by
                      reference).

     3.2*             By-laws of the Company (Exhibit 3.2 to Annual Report on
                      Form 10-K for the year ended June 30, 1990, File No.
                      0-5888, incorporated herein by reference).

     4.7*             Warrant Agreement, dated as of May 20, 1994, by and
                      between Waxman Industries, Inc. and The Huntington
                      National Bank, as Warrant Agent (Exhibit 4.2 to Waxman
                      Industries, Inc.'s Form S-4 filed June 20, 1994,
                      incorporated herein by reference).

     4.8*             Warrant Certificate (Exhibit 4.3 to Waxman Industries,
                      Inc.'s Form S-4 filed June 20, 1994, incorporated herein
                      by reference).

     4.9*             Securities Purchase Agreement for Notes and Warrants dated
                      as of September 17, 1991, among the Company and each of
                      the Purchasers referred to therein (Exhibit 4.4 to Annual
                      Report on Form 10-K for the year ended June 30, 1991, File
                      No. 0-5888, incorporated herein by reference).

     4.10*            Revolving Credit, Term Loan and Security Agreement, dated
                      as of February 13, 2002, by and among PNC Bank, National
                      Association, as Lender and as Agent, and Waxman
                      Industries, Inc., Waxman Consumer Products Group Inc.,
                      Waxman USA Inc. and WAMI Sales, Inc., as Borrowers
                      (Exhibit 10.1 on Report 8-K filed February 27, 2002,
                      incorporated herein by reference).

     10.1*            Lease between the Company as Lessee and Aurora Investment
                      Co. as Lessor dated June 30, 1992 (Exhibit 10.1 to Annual
                      Report on Form 10-K for the year ended June 30, 1992, File
                      No. 0-5888, incorporated herein by reference).

     10.2*            Policy Statement (revised as of June 1, 1980) regarding
                      the Company's Profit Incentive Plan (Exhibit 10(c)-1 to
                      Annual Report on Form 10-K for the year ended June 30,
                      1984, File No. 0-5888, incorporated herein by reference).

                                       52
<PAGE>

     10.6*            Tax Sharing Agreement dated May 20, 1994 among Waxman
                      Industries, Waxman USA, Waxman Consumer Products Group
                      Inc., WOC Inc. and Western American Manufacturing, Inc.
                      (Exhibit 10.6 to Waxman Industries, Inc.'s Form S-4 filed
                      June 20, 1994, incorporated herein by reference).

     10.7*            Waxman Industries, Inc. 2002 Stock Incentive Plan, adopted
                      as of December 6, 2001 (Exhibit 8 to Schedule to Tender
                      Offer Statement filed on December 7, 2001, incorporated
                      herein by reference).

     10.8*            Intercorporate Agreement dated May 20, 1994 among Waxman
                      Industries, Waxman USA, Waxman Consumer Products Group
                      Inc., WOC Inc. and Western American Manufacturing, Inc.
                      (Exhibit 10.7 to Waxman Industries, Inc.'s Form S-4).

     10.10*           Employment Agreement dated November 1, 1994 between Waxman
                      Consumer Products Group Inc. and Laurence Waxman (Exhibit
                      10.5 to Waxman Industries, Inc.'s Amendment No. 4 to
                      Registration Statement on Form S-2 filed October 10, 1995,
                      Registration No. 33-54211, incorporated herein by
                      reference).

     10.11*           Intercorporate Agreement dated March 28, 1996 among Waxman
                      Industries, Inc., Waxman USA Inc., Waxman Consumer
                      Products Group Inc., WOC Inc. and TWI, International, Inc.
                      (Exhibit 10.8 to Waxman Industries, Inc.'s Amendment No. 8
                      to Registration Statement on Form S-2 filed April 15,
                      1996, Registration No. 33-54211, incorporated herein by
                      reference).

     10.26*           Merger Agreement, dated as of July 10, 2000, by and among
                      Wilmar Industries, Inc. ("Wilmar"), BW Acquisition, Inc.
                      ("BW Acquisition") and Barnett Inc. ("Barnett") (Exhibit
                      10.1 to Current Report on Form 8-K filed July 17, 2000,
                      File No. 0-5888, incorporated herein by reference).

     10.27*           Stockholder Agreement, dated as of July 10, 2000, by and
                      among the Company, Waxman USA, Wilmar and BW Acquisition
                      (Exhibit 10.2 to Current Report on Form 8-K filed July 17,
                      2000, File No. 0-5888, incorporated herein by reference).

     10.28*           Voting Trust Agreement, dated as of July 10, 2000, by and
                      among Waxman USA, Wilmar, BW Acquisition, Barnett and
                      American Stock Transfer & Trust Company. (Exhibit 10.3 to
                      Current Report on Form 8-K filed July 17, 2000, File No.
                      0-5888, incorporated herein by reference).

     10.29*           Agreement, dated as of July 7, 2000, by and between Waxman
                      USA and Barnett (Exhibit 10.4 to Current Report on Form
                      8-K filed July 17, 2000, File No. 0-5888, incorporated
                      herein by reference).

     21.1*            Subsidiaries (Exhibit 21.1 to Waxman Industries, Inc.'s
                      Form S-4 filed June 20, 1994, incorporated herein by
                      reference).

     23.1             Consent of Meaden & Moore, Ltd.

     23.2             Consent of TN Soong & Co.

     23.3             Consent of Chien Chyuan & Co.

     99.1             Certification Pursuant to 18 U.S.C. Section 1350, As
                      Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
                      of 2002



* Incorporated herein by reference as indicated.

  (b)      REPORTS ON FORM 8-K

               None


                                       53
<PAGE>



                                   SIGNATURES

         Pursuant to the requirements of Section 13 of 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.

                             WAXMAN INDUSTRIES, INC.

April 30, 2003                     By:  /s/  Mark Wester
                                       ----------------------
                                       Mark Wester
                                       Chief Financial Officer and
                                       Senior Vice President



                                       54
<PAGE>

                                  CERTIFICATION

I, Mark Wester, certify that:

1)  I have reviewed this annual report on Form 10-K/A (Amendment No. 1) of
    Waxman Industries, Inc.;

2)  Based on my knowledge, this annual report does not contain any untrue
    statement of a material fact or omit to state a material fact necessary to
    make the statements made, in light of the circumstances under which such
    statements were made, not misleading with respect to the period covered by
    this annual report;

3)  Based on my knowledge, the financial statements, and other financial
    information included in this annual report, fairly present in all material
    respects the financial condition, results of operations and cash flows of
    the registrant as of, and for, the periods presented in this annual report;

4)  The registrant's other certifying officers and I are responsible for
    establishing and maintaining disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)  Designed such disclosure controls and procedures to ensure that material
    information relating to the registrant, including its consolidated
    subsidiaries, is made known to us by others within those entities,
    particularly during the period in which this annual report is being
    prepared;

b)  Evaluated the effectiveness of the registrant's disclosure controls and
    procedures as of a date within 90 days prior to the filing date of this
    annual report (the "Evaluation Date"); and

c)  Presented in this annual report our conclusions about the effectiveness of
    the disclosure controls and procedures based on our evaluation as of the
    Evaluation Date;

5)  The registrant's other certifying officers and I have disclosed, based on
    our most recent evaluation, to the registrant's auditors and the audit
    committee of registrant's board of directors (or persons performing the
    equivalent functions);

a)  All significant deficiencies in the design or operation of internal controls
    which could adversely affect the registrant's ability to record, process,
    summarize and report financial data and have identified for the registrant's
    auditors any material weaknesses in internal controls; and

b)  Any fraud, whether or not material, that involves management or other
    employees who have a significant role in the registrant's internal controls;
    and

6)  The registrant's other certifying officers and I have indicated in this
    annual report whether or not there were significant changes in internal
    controls or in other factors that could significantly affect internal
    controls subsequent to the date of our most recent evaluation, including any
    corrective actions with regard to significant deficiencies and material
    weaknesses.

Date:  April 30, 2003    By: /s/ Mark W. Wester
                             ----------------------------
                                  Mark W. Wester
                                  Senior Vice President and
                                  Chief Financial Officer
                                  (principal financial and accounting officer)


                                       55
<PAGE>



                                  CERTIFICATION

I, Armond Waxman, certify that:

1)  I have reviewed this annual report on Form 10-K/A (Amendment No. 1) of
    Waxman Industries, Inc.;

2)  Based on my knowledge, this annual report does not contain any untrue
    statement of a material fact or omit to state a material fact necessary to
    make the statements made, in light of the circumstances under which such
    statements were made, not misleading with respect to the period covered by
    this annual report;

3)  Based on my knowledge, the financial statements, and other financial
    information included in this annual report, fairly present in all material
    respects the financial condition, results of operations and cash flows of
    the registrant as of, and for, the periods presented in this annual report;

4)  The registrant's other certifying officers and I are responsible for
    establishing and maintaining disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)  Designed such disclosure controls and procedures to ensure that material
    information relating to the registrant, including its consolidated
    subsidiaries, is made known to us by others within those entities,
    particularly during the period in which this annual report is being
    prepared;

b)  Evaluated the effectiveness of the registrant's disclosure controls and
    procedures as of a date within 90 days prior to the filing date of this
    annual report (the "Evaluation Date"); and

c)  Presented in this annual report our conclusions about the effectiveness of
    the disclosure controls and procedures based on our evaluation as of the
    Evaluation Date;

5)  The registrant's other certifying officers and I have disclosed, based on
    our most recent evaluation, to the registrant's auditors and the audit
    committee of registrant's board of directors (or persons performing the
    equivalent functions);

a)  All significant deficiencies in the design or operation of internal controls
    which could adversely affect the registrant's ability to record, process,
    summarize and report financial data and have identified for the registrant's
    auditors any material weaknesses in internal controls; and

b)  Any fraud, whether or not material, that involves management or other
    employees who have a significant role in the registrant's internal controls;
    and

6)  The registrant's other certifying officers and I have indicated in this
    annual report whether or not there were significant changes in internal
    controls or in other factors that could significantly affect internal
    controls subsequent to the date of our most recent evaluation, including any
    corrective actions with regard to significant deficiencies and material
    weaknesses.

Date:  April 30, 2003                 By: /s/ Armond Waxman
                                          ------------------------------
                                              Armond Waxman
                                              President and
                                              Co-Chief Executive Officer


                                       56
<PAGE>


                                  CERTIFICATION

I, Melvin Waxman, certify that:

1)  I have reviewed this annual report on Form 10-K/A (Amendment No. 1) of
    Waxman Industries, Inc.;

2)  Based on my knowledge, this annual report does not contain any untrue
    statement of a material fact or omit to state a material fact necessary to
    make the statements made, in light of the circumstances under which such
    statements were made, not misleading with respect to the period covered by
    this annual report;

3)  Based on my knowledge, the financial statements, and other financial
    information included in this annual report, fairly present in all material
    respects the financial condition, results of operations and cash flows of
    the registrant as of, and for, the periods presented in this annual report;

4)  The registrant's other certifying officers and I are responsible for
    establishing and maintaining disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)  Designed such disclosure controls and procedures to ensure that material
    information relating to the registrant, including its consolidated
    subsidiaries, is made known to us by others within those entities,
    particularly during the period in which this annual report is being
    prepared;

b)  Evaluated the effectiveness of the registrant's disclosure controls and
    procedures as of a date within 90 days prior to the filing date of this
    annual report (the "Evaluation Date"); and

c)  Presented in this annual report our conclusions about the effectiveness of
    the disclosure controls and procedures based on our evaluation as of the
    Evaluation Date;

5)  The registrant's other certifying officers and I have disclosed, based on
    our most recent evaluation, to the registrant's auditors and the audit
    committee of registrant's board of directors (or persons performing the
    equivalent functions);

a)  All significant deficiencies in the design or operation of internal controls
    which could adversely affect the registrant's ability to record, process,
    summarize and report financial data and have identified for the registrant's
    auditors any material weaknesses in internal controls; and

b)  Any fraud, whether or not material, that involves management or other
    employees who have a significant role in the registrant's internal controls;
    and

6)  The registrant's other certifying officers and I have indicated in this
    annual report whether or not there were significant changes in internal
    controls or in other factors that could significantly affect internal
    controls subsequent to the date of our most recent evaluation, including any
    corrective actions with regard to significant deficiencies and material
    weaknesses.

Date:  April 30, 2003                    By: /s/ Melvin Waxman
                                             -------------------------------
                                                  Melvin Waxman
                                                  Chairman of the Board and
                                                  Co-Chief Executive Officer

                                       57