<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


(Mark One)

    [X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
                                                              --------------
                                       OR

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


                         Commission File Number 333-3689

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

             DELAWARE                                       34-1761514
             --------                                       ----------
     (State of Incorporation)            (I.R.S. Employer Identification Number)

                  24460 AURORA ROAD
                BEDFORD HEIGHTS, OHIO                             44146
                ---------------------                             -----
   (Address of Principal Executive Offices)                    (Zip Code)

                                 (440) 439-1830
                                 --------------
               (Registrant's Telephone Number Including Area Code)

                                 NOT APPLICABLE
                                 --------------
     (Former name, former address and former fiscal year, if changed since
                                  last report)


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  ___
                                     ----

100 shares of Common Stock, $.01 par value, were outstanding as of May 1, 2000.


                                       1
<PAGE>   2

                        WAXMAN USA INC. AND SUBSIDIARIES
                        --------------------------------
                               INDEX TO FORM 10-Q
                               ------------------


<TABLE>
<CAPTION>
                                                                                                 PAGE
                                                                                                 ----

PART I.  FINANCIAL INFORMATION
------------------------------

Item 1.  Financial Statements (Unaudited)

<S>                                                                                                <C>
            Condensed Consolidated Statements of Operations - For the Nine and Three
            Months Ended March 31, 2000 and 1999...........................................         3

            Condensed Consolidated Balance Sheets - March 31, 2000 and June 30, 1999....         4 -5

            Condensed Consolidated Statements of Cash Flows -
            Nine Months Ended March 31, 2000 and 1999.....................................          6

            Notes to Condensed Consolidated Financial Statements...........................    7 - 12

Item 2.  Management's Discussion and Analysis of Financial

            Condition and Results of Operations.........................................      13 - 20


PART II. OTHER INFORMATION
--------------------------

Item 5.  Other Information................................................................         21

Item 6.  Exhibits and Reports on Form 8-K...............................................           21
</TABLE>


SIGNATURES
----------

EXHIBIT INDEX
-------------


                                       2
<PAGE>   3

PART I.  FINANCIAL INFORMATION
------------------------------
ITEM 1.  FINANCIAL STATEMENTS

                        WAXMAN USA INC. AND SUBSIDIARIES
                        --------------------------------

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 -----------------------------------------------
                                   (UNAUDITED)

           FOR THE NINE AND THREE MONTHS ENDED MARCH 31, 2000 AND 1999
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                     Nine Months            Three Months
                                                     -----------            ------------
                                                 2000         1999       2000         1999
                                                 -----        ----       -----        ----

<S>                                            <C>         <C>         <C>         <C>
Net sales                                      $ 62,361    $ 79,613    $ 19,822    $ 22,186

Cost of sales                                    43,110      55,617      13,647      15,939
                                               --------    --------    --------    --------

Gross profit                                     19,251      23,996       6,175       6,247

Selling, general and administrative expenses     17,872      20,599       6,059       5,760

Non-recurring and procurement charges             1,950       4,250         500       2,900

Corporate charge                                  1,445       2,310         458         653
                                               --------    --------    --------    --------

Operating loss                                   (2,016)     (3,163)       (842)     (3,066)

Equity earnings of Barnett                        5,333       5,024       1,729       1,693

(Loss) gain on sale of operations, net           (1,966)      9,860      (1,966)      9,860

Amortization of deferred U.S. Lock gain             147          --          49          --

Interest expense, net                             3,999       4,385       1,524       1,338
                                               --------    --------    --------    --------

Income (loss) before income taxes                (2,501)      7,336      (2,554)      7,149

Provision (benefit) for income taxes               (751)      2,968        (811)      2,897
                                               --------    --------    --------    --------

Net (loss)income                               $ (1,750)   $  4,368    $ (1,743)   $  4,252
                                               ========    ========    ========    ========

COMPREHENSIVE INCOME:
Foreign currency translation adjustment             434         130         229        (288)
                                               --------    --------    --------    --------
Comprehensive (loss) income                    $ (1,316)   $  4,498    $ (1,514)   $  3,964
                                               ========    ========    ========    ========
</TABLE>




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



                                       3
<PAGE>   4

                        WAXMAN USA INC. AND SUBSIDIARIES
                        --------------------------------
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                      -------------------------------------
                        MARCH 31, 2000 AND JUNE 30, 1999

                                 (IN THOUSANDS)

                                     ASSETS




<TABLE>
<CAPTION>
                                                                                           March 31,                June 30,
                                                                                              2000                    1999
                                                                                          (Unaudited)               (Audited)
                                                                                          -----------               ---------
<S>                                                                                         <C>                   <C>
         CURRENT ASSETS:
           Cash and cash equivalents                                                        $   369               $    1,376
           Trade receivables, net                                                            12,970                   10,686
           Other receivables                                                                  4,810                    4,212
           Inventories                                                                       18,844                   19,052
           Prepaid expenses                                                                   2,764                    2,276
                                                                                             ------                   ------
             Total current assets                                                            39,757                   37,602
                                                                                             ------                   ------

         INVESTMENT IN BARNETT                                                               41,718                   36,385
                                                                                             ------                   ------

         PROPERTY AND EQUIPMENT:
           Land                                                                                 443                      430
           Buildings                                                                          3,192                    3,004
           Equipment                                                                         10,758                   12,675
                                                                                           --------                  -------
                                                                                             14,393                   16,109
           Less accumulated depreciation and amortization                                  (  5,826)                (  5,998)
                                                                                           --------                 --------
           Property and equipment, net                                                        8,567                   10,111
                                                                                            -------               ----------

         COST OF BUSINESSES IN EXCESS OF NET ASSETS ACQUIRED, NET                             6,751                    7,920
         UNAMORTIZED DEBT ISSUANCE COSTS, NET                                                   487                      565
         DEFERRED TAX ASSET                                                                     530                      540
         OTHER ASSETS                                                                           797                      451
                                                                                             ------                   ------
                                                                                        $    98,607               $   93,574
                                                                                         ==========                =========
</TABLE>


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


                                       4
<PAGE>   5

                        WAXMAN USA INC. AND SUBSIDIARIES
                        --------------------------------

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                      -------------------------------------

                        MARCH 31, 2000 AND JUNE 30, 1999

                                 (IN THOUSANDS)

                      LIABILITIES AND STOCKHOLDER'S EQUITY

<TABLE>
<CAPTION>
                                                                                       March 31,                    June 30,
                                                                                         2000                         1999
                                                                                      (Unaudited)                  (Audited)
                                                                                      -----------                 -----------
<S>                                                                                     <C>                          <C>
CURRENT LIABILITIES:
  Current portion of long-term debt                                                     $  20,566                    $  812
  Accounts payable                                                                          6,807                     6,837
  Accrued liabilities                                                                       2,081                     2,982
  Accrued income taxes payable                                                                565                     1,314
  Accrued interest                                                                            332                     1,330
                                                                                        ---------                  --------
      Total current liabilities                                                            30,351                    13,275
                                                                                         --------                  --------

OTHER LONG-TERM DEBT, NET OF CURRENT PORTION                                                  768                       933

SENIOR NOTES                                                                               35,855                    35,855
DEFERRED GAIN ON SALE OF U.S. LOCK                                                          7,606                     7,753


STOCKHOLDER'S EQUITY:
  Preferred stock, $.10 par value per share:                                                   --                        --
    Authorized and unissued 1,000 shares
  Common Stock, $.01 par value per share:                                                      --                        --
    Authorized 9,000 shares; 100 shares issued and
    outstanding
  Advances to Waxman Industries, Inc.                                                     (18,784)                   (8,369)
  Paid-in capital                                                                          21,462                    21,462
  Retained earnings                                                                        21,944                    23,694
                                                                                         --------                    -------
                                                                                           24,622                    36,787
  Accumulative other comprehensive income                                                    (595)                   (1,029)
                                                                                         --------                    -------

    Total stockholder's equity                                                             24,027                    35,758
                                                                                        ---------                   -------
                                                                                       $   98,607                 $  93,574
                                                                                        =========                  ========
</TABLE>


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


                                       5
<PAGE>   6

                        WAXMAN USA INC. AND SUBSIDIARIES
                        --------------------------------

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 -----------------------------------------------
                                   (UNAUDITED)
                FOR THE NINE MONTHS ENDED MARCH 31, 2000 AND 1999
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                                            2000               1999
                                                                                          ---------          ---------
<S>                                                                                  <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
-------------------------------------
  Net (loss) income                                                                  $       (1,750)         $   4,368
  Adjustments to reconcile net (loss) income to
    net cash used in operating activities:
      Loss (gain) on sale of operations, net                                                  1,966             (9,860)
      Amortization of deferred U.S. Lock gain                                                  (147)                --
      Equity earnings of Barnett                                                             (5,333)            (5,024)
      Depreciation and amortization                                                           1,412              1,613
      Deferred income taxes                                                                      10                 --
  Changes in assets and liabilities:
    Trade receivables, net                                                                   (2,374)               711
    Inventories                                                                                (708)            (1,033)
    Other assets                                                                                107             (1,861)
    Accounts payable                                                                            (30)             1,619
    Accrued liabilities                                                                        (935)              (275)
    Accrued interest                                                                           (998)              (966)
    Net change in assets and liabilities of operations sold                                     185                281
    Accrued taxes                                                                              (749)               796
    Other, net                                                                                  313                130
                                                                                       -------------           --------
      Net Cash Used in Operating Activities                                                 ( 9,031)            (9,501)
                                                                                       -------------           --------

CASH FLOWS FROM INVESTING ACTIVITIES:
-------------------------------------
   Net proceeds from sale of business                                                            --             25,972
  Capital expenditures, net                                                                  (1,173)            (1,342)
                                                                                       -------------           --------
      Net Cash (Used in) Provided by Investing Activities                                    (1,173)            24,630
                                                                                       -------------           --------

CASH FLOWS FROM FINANCING ACTIVITIES:
-------------------------------------
  Borrowings under credit agreements                                                         60,369             49,290
  Payments under credit agreements                                                          (40,615)           (58,812)
  Debt issuance costs                                                                          (137)                --
  Advances (to) from parent                                                                 (10,415)             2,971
  Repayments of long-term debt, net                                                              (5)              (170)
                                                                                       -------------           --------

      Net Cash Provided by (Used in)
         Financing Activities                                                                 9,197             (6,721)
                                                                                       -------------           --------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                         (1,007)             8,408

BALANCE, BEGINNING OF PERIOD                                                                  1,376                 73
                                                                                       -------------           --------

BALANCE, END OF PERIOD                                                                 $        369       $      8,481
                                                                                       =============           ========
</TABLE>

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


                                       6
<PAGE>   7

                        WAXMAN USA INC. AND SUBSIDIARIES
                        --------------------------------

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
              ----------------------------------------------------
                                   (UNAUDITED)

                                 MARCH 31, 2000

NOTE 1 - BASIS OF PRESENTATION
         ---------------------

         The accompanying condensed consolidated financial statements include
the accounts of Waxman USA Inc. ("Waxman USA") and its wholly-owned subsidiaries
(collectively, the "Company"). All significant intercompany transactions and
balances are eliminated in consolidation. As of March 31, 2000, the Company
owned 44.3% 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 accounts for Barnett Inc. ("Barnett") under the equity
method of accounting.

         The condensed consolidated statements of operations for the nine and
three months ended March 31, 2000 and 1999, the condensed balance sheet as of
March 31, 2000 and the condensed statements of cash flows for the nine months
ended March 31, 2000 and 1999 have been prepared by the Company without audit,
while the condensed balance sheet as of June 30, 1999 was derived from audited
financial statements. In the opinion of management, these financial statements
include all adjustments, all of which are normal and recurring in nature,
necessary to present fairly the financial position, results of operations and
cash flows of the Company as of March 31, 2000 and for all periods presented.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States have been condensed or omitted. The Company believes that
the disclosures included herein are adequate and provide a fair presentation of
interim period results. Interim financial statements are not necessarily
indicative of financial position or operating results for an entire year or
other interim periods. It is suggested that these condensed interim financial
statements be read in conjunction with the audited financial statements and the
notes thereto included in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1999, filed with the Securities and Exchange
Commission.

         Over the past several years, the Company and Waxman Industries, Inc.
("Waxman Industries"), the Company's parent, have endeavored to reduce their
significant amount of debt through the monetization of assets and by improving
the efficiencies of their continuing businesses. As a result, the Company and
Waxman Industries have undertaken various initiatives to raise cash, improve
cash flow and reduce their debt obligations and / or improve their financial
flexibility during that period. In the spring of 1999, Waxman Industries began
having discussions with some of its bondholders regarding its high level of debt
and cash flow issues.

         On December 13, 1999, Waxman Industries and an ad hoc committee (the
"Committee") representing the holders of approximately 87% of the $92.8 million
outstanding principal amount of the 12 3/4% Senior Secured Deferred Coupon Notes
due 2004 of Waxman Industries (the "Deferred Coupon Notes") and approximately
65% of the 11 1/8% Senior Notes due 2001 (the "Senior Notes") of the Company
entered into an agreement (the "Debt Reduction Agreement") that provides,
subject to certain conditions (including Bankruptcy Court approval), for the
full satisfaction of the Deferred Coupon Notes and the Senior Notes as part of a
comprehensive financial restructuring of Waxman Industries.

         The key provisions of the financial restructuring plan are:
         -     The Debt Reduction Agreement contemplates that Barnett will
               engage an investment banker to conduct an orderly process to sell
               itself, or otherwise maximize shareholder value, in connection
               with such transaction. To that end, on December 13, 1999, Barnett
               issued a press release announcing the engagement of Deutsche Bank
               Alex. Brown to pursue initiatives to maximize shareholder value.
         -     If Barnett's efforts to maximize shareholder value result in a
               sale, the Company would sell all of its 7,186,530 shares of
               Barnett common stock.
         -     Waxman Industries would apply the proceeds of any sale of the
               Barnett Common Stock, net of applicable taxes, in the following
               order:
                    -    approximately $35.9 million, plus accrued interest, to
                         repay in full the Senior Notes
                    -    approximately $10 million to reduce borrowings under
                         its working capital credit facility,

                                       7
<PAGE>   8

                         which were used to fund approximately $6 million in
                         interest paid to the Deferred Coupon Note holders on
                         December 1, 1999, $2 million in interest paid to the
                         Senior Note holders on March 1, 2000, and up to $2
                         million in other costs associated with the financial
                         restructuring transaction, and
                    -    the remaining net proceeds to a trust account to be
                         used for the full satisfaction of the Deferred Coupon
                         Notes of Waxman Industries.

         The Debt Reduction Agreement contemplates the completion of the sale of
the Barnett Common Stock as the first step in the financial restructuring plan.
Following the anticipated sale of the Company's interest in Barnett, Waxman
Industries and the Committee would file a jointly sponsored, prepackaged plan of
reorganization with the United States Bankruptcy Court (the "Joint Plan") to
effectuate the terms of the Debt Reduction Agreement. Under the Joint Plan, the
holders of the Deferred Coupon Notes will be the only impaired class of
creditors; neither the Company nor any of Waxman Industries' operating
subsidiaries or operating divisions will be included in the filing and they will
continue to pay their trade creditors, employees and other liabilities under
normal conditions.

         Waxman Industries is discussing several options to fund its interest
payment of $6.0 million due on June 1, 2000 to the Deferred Coupon Note Holders
and, based on discussions with the Committee, believes that it will be able to
amend the Debt Reduction Agreement to include the resolution of this payment.
Various solutions are being discussed, including the sale or collateralization
of a portion of the Barnett Common Stock owned by the Company to fund all or a
portion of this payment. Excluding the cash required for this interest payment,
the Company and Waxman Industries believe that operating cash flow, together
with borrowings under their working capital credit facilities, will be
sufficient to fund their working capital requirements until the expected
completion of the above mentioned financial reorganization. Based on discussions
with the Company's current working capital lender, Congress Financial
Corporation, the Company believes that debtor in possession financing will not
be necessary, and Congress will continue to provide financing during and after
the financial reorganization. In the event the financial reorganization is not
consummated by Waxman Industries, the Company and Waxman Industries believe that
operating cash flow, together with borrowings under their working capital credit
facilities and the monetization, from time to time, of a portion of the Barnett
Common Stock or other selected assets, will be sufficient to fund their working
capital requirements. However, ultimately, the Company and Waxman Industries
will not be able to continue to make all of the interest and principal payments
under their debt obligations without a significant appreciation in, and
monetization of, the value of the shares of common stock of Barnett owned by the
Company and/or a restructuring of such debt instruments.

         In furtherance of its effort to enhance its liquidity position, the
Company sold substantially all of the assets and certain liabilities of Western
American Manufacturing Inc. effective March 31, 2000 for $1.8 million, excluding
trade receivables, trade payables and certain other obligations, which were
retained by the Company.

         The Company believes that the completion of the transactions set forth
in the Debt Reduction Agreement will result in it and Waxman Industries being
stronger companies, with an amount of debt that can be supported by the
operating cash flow of the Company's subsidiaries. In addition to the reduced
debt levels of the Company, the Company's balance sheet will be strengthened
significantly as a result of the anticipated net after tax gain on the sale of
Barnett Common Stock and the realization for accounting purposes of the deferred
gain on the sale of U.S. Lock. Furthermore, the elimination of the indebtedness
from the Senior Notes will reduce the Company's annual interest expense by
approximately $4 million.

         Although Waxman Industries has entered into the Debt Reduction
Agreement, there is no agreement, at this time, that would monetize the
Company's investment in Barnett. The Company and Waxman Industries believe that
an agreement will be completed during the fiscal 2000 fourth quarter.
Accordingly, the accompanying condensed consolidated financial statements have
been prepared assuming the Company will continue as a going concern and, as
such, adjustments to the financial statements, if any, that may be required for
presentation on another basis have not been considered.


NOTE 2 - BUSINESS
         --------

        The Company is a direct, wholly-owned subsidiary of Waxman Industries.
The common stock of Waxman

                                       8
<PAGE>   9

Industries is quoted on the Over-The-Counter Bulletin Board under the symbol
"WAXX." The Company is a supplier of specialty plumbing, hardware and other
products to the repair and remodeling market in the United States. The Company
distributes its products to approximately 1,400 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"), WOC
Inc. ("WOC") and TWI, International, Inc. ("TWI"). WOC is comprised of Medal
Distributing, a supplier of hardware products and, included the operations of
U.S. Lock, a distributor of a full line of security hardware products, prior to
its January 1, 1999 sale to Barnett. TWI includes the Company's foreign
operations, including manufacturing, packaging and sourcing operations in China
and Taiwan, and WAMI Sales, a domestic U.S. operation that distributes
galvanized, black, brass, and chrome pipe nipples and malleable fittings to
industrial and wholesale distributors. Consumer Products, WOC and Barnett
utilize the Company's and non-affiliated foreign suppliers.

         At March 31, 2000, the Company owned 44.3% of Barnett, a direct
marketer and distributor of an extensive line of plumbing, electrical, hardware,
and security hardware products to approximately 73,000 active customers
throughout the United States. Barnett offers approximately 21,000 name brand and
private label products through its industry-recognized Barnett(R) and U.S.
Lock(R) catalogs and telesales operations. Barnett markets its products through
six distinct, comprehensive catalogs that target professional contractors,
independent hardware stores, maintenance managers, security hardware installers,
liquid propane gas dealers, and locksmiths. In January 1999, the Company
completed the sale of U.S. Lock to Barnett. Barnett's net sales for fiscal 1999
were $241.4 million. The Company recorded equity earnings from this investment
of $5.3 million and $5.0 million for the nine months ended March 31, 2000 and
1999, respectively, and $1.7 million for the quarters ended March 31, 2000 and
1999. The Barnett Common Stock trades on the Nasdaq National Market under the
symbol "BNTT". See Note 1 and Management's Discussion and Analysis - Recent
Developments section in this Form 10-Q for a discussion of the Company's
intention to sell its interest in Barnett as part of a comprehensive financial
restructuring of Waxman Industries.

NOTE 3 - SALE OF  DIVISION
         -----------------

         WESTERN AMERICAN MANUFACTURING INC.- FISCAL 2000:

         In April 2000, the Company completed an agreement to sell 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"). The WAMI Sale was
effective March 31, 2000, resulting in a net pretax loss of $2.0 million in the
quarter ended March 31, 2000, which includes an approximate $1.0 million
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 reduced the consolidated net sales and resulted in the following
improvements in the Company's net operating results:

              Nine months        Nine months      Three months     Three months
               March 31,          March 31,         March 31,        March 31,
                  2000              1999              2000             1999
                  ----              ----              ----             ----
Net sales      $  2,923          $  2,536           $   776          $   656
Net income          428               826               357              667


         U.S. LOCK - FISCAL 1999:
         In December 1998, the Company announced it had entered into an
agreement to sell certain of the assets and liabilities of U.S. Lock, a division
of WOC, to Barnett for approximately $33.0 million in cash, less certain post
closing adjustments (the "U.S. Lock Sale"). The U.S. Lock Sale was effective
January 1, 1999, resulting in an estimated net pretax gain of $17.7 million, of
which approximately $7.8 million was originally reported as a deferred gain for
financial statement purposes due to the Company's continued ownership of 44.3%
of Barnett, the acquirer of U.S. Lock. The remaining gain of $9.9 million was
recognized in the quarter ended March 31, 1999. The

                                       9
<PAGE>   10

Company will recognize the deferred gain as the goodwill generated by the
purchase of U.S. Lock is amortized by Barnett, or as the Company reduces its
ownership interest in Barnett. The Company utilized a portion of Waxman
Industries' net operating loss carryforwards to offset a portion of the tax on
the net gain from the U.S. Lock Sale.

         The Company consolidated U.S. Lock's financial information in its
results through December 31, 1998. Therefore, there is no impact on the
Company's net sales or earnings from U.S. Lock's operating results in the
quarter ended March 31, 1999. The impact of not consolidating U.S. Lock's
results would have reduced the consolidated net sales and resulted in a lower
net income for the Company as follows:

                                     Nine months      Three months
                                      March 31,         March 31,
                                         1999             1999
                                         ----             ----
Net sales                              $13,361             --
Net income                               1,000             --


NOTE 4 - 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 bases. 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 Company participates in the consolidated tax group of which Waxman
Industries is the common parent. Commencing July 1, 1994, the Company began
participating in a tax sharing agreement with Waxman Industries. Under this
agreement, the Company's federal tax liability is equal to the lesser of (i) the
federal tax liability calculated on a stand-alone basis or (ii) Waxman
Industries' federal tax liability. Waxman Industries had approximately $46.8
million of available domestic net operating loss carryforwards for income tax
purposes at June 30, 1999, which expire 2009 through 2013. The Company files
separate income tax returns in certain states based on the results of operations
within the applicable states.

         Deferred taxes and amounts payable to Waxman Industries are included in
Advances to Waxman Industries, Inc. in the accompanying condensed consolidated
balance sheets.

         The Company's tax provisions for the nine and three months ended March
31, 2000 and 1999 represent the Company's stand-alone tax provisions.


NOTE 5 - BARNETT
         -------

                  The Company owns 7,186,530 shares, or 44.3%, of the Barnett
Common Stock as of March 31, 2000. This investment is accounted for under the
equity method of accounting. See Note 1 and Management's Discussion and Analysis
- Recent Developments section in this Form 10-Q for a discussion of the
Company's intention to sell its interest in Barnett as part of a comprehensive
financial restructuring of Waxman Industries.

         The following table presents unaudited summary financial data for
Barnett at March 31, 2000 and June 30, 1999 and for the nine and three months
ended March 31, 2000 and 1999 (in thousands of dollars):


                  Statement of income data:           2000            1999
                                                  ----------      ----------
                  Nine Months:
                  Net sales                        $ 211,820       $ 174,390
                  Gross profit                        69,548          58,060
                  Net income                          12,051          11,333

                                       10
<PAGE>   11

                  Three Months:
                  Net sales                        $  73,348       $  63,879
                  Gross profit                        24,463          21,606
                  Net income                           3,921           3,827

                                                     3/31/00         6/30/99
                                                     -------         -------
                  Balance sheet data:
                  Current assets                   $ 106,242       $  94,941
                  Non-current assets                  55,259          54,245
                  Current liabilities                 24,543          24,615
                  Non-current liabilities             33,000          33,000

NOTE 6 - NON-RECURRING AND PROCUREMENT CHARGES
         -------------------------------------

         In the second quarter of fiscal 2000, Consumer Products recorded a
non-recurring charge of $1.3 million related to the consolidation of its
packaged plumbing products under the Plumbcraft(R) brand name. The Company
believes the Plumbcraft(R) packaging, which was recently re-designed, and the
consolidation of brands will result in cost savings by reducing the amount of
inventory needed to support the business and creating workforce efficiencies.

         In the first quarter of fiscal 1999, Consumer Products recorded a
non-recurring charge of $1.35 million related to the relocation of its Bedford
Heights, Ohio warehouse to Groveport, Ohio. Included in the charge were
severance benefits for personnel and the loss on the write-off of tangible
assets at the Bedford Heights warehouse. The Company believes that the
relocation to a more modern and efficient facility has enabled Consumer Products
to provide more sophisticated distribution services to its customers and has
helped it remain competitive through annual cost savings. In the third quarter
of fiscal 1999, Consumer Products recorded an additional non-recurring charge of
$0.45 million for additional costs involved with the move, the training of
personnel and the future shortfall on subleasing the warehouse in Bedford
Heights.

         Procurement costs represent the amount paid by the Company in
connection with a customer's agreement to purchase products from the Company for
a specific period. The amount includes the consideration paid to the new or
existing customer (i) for the right to supply such customer for a specified
period, (ii) to assist such customer in reorganizing its store aisles and
displays in order to accommodate the Company's products and (iii) to purchase
competitor's merchandise that the customer has on hand when it changes
suppliers, less the salvage value received by the Company. The Company expenses
these costs in the fiscal year incurred. Procurement costs for (i) above totaled
$150,000 in the first quarter, none in the second quarter and $500,000 in the
third quarter of fiscal 2000. The Company incurred $2.0 million of this type of
cost in the fiscal 1999 third quarter and nine month periods. The Company did
not incur procurement costs related to (ii) above in the fiscal 2000, but
incurred $0.45 million in fiscal 1999 third quarter and nine month periods for
this type of charge. These types of procurement costs are included as
procurement charges in the accompanying consolidated statements of operations.
Procurement costs for (iii) above totaled $0.4 million and $1.3 million in the
third quarter and $1.1 million and $2.2 million for the first nine months of
fiscal 2000 and 1999, respectively, which are included as a contra-sales amount
in net sales in the accompanying consolidated statements of operations.


NOTE 7 - SUPPLEMENTAL CASH FLOW INFORMATION
         ----------------------------------

         Cash payments during the nine months and three months ended March 31,
2000 and 1999 included interest of $4.8 million and $5.1 million (nine months)
and $2.4 million and $2.2 million (three months), respectively. The Company made
no federal income tax payments to Waxman Industries in the nine months or third
quarter of fiscal 2000 or fiscal 1999. However, the Company paid $0.8 million in
state taxes for the nine months ended March 31, 2000. Waxman USA's cash flow,
within certain restrictions, is upstreamed to Waxman Industries to service
interest payments and administrative costs.

NOTE 8 - EARNINGS PER SHARE
         ------------------

                                       11
<PAGE>   12

         Earnings per share data is not presented and is not meaningful, as the
Company is a wholly-owned subsidiary of Waxman Industries.

NOTE 9 - SEGMENT INFORMATION
         -------------------

         The Company's businesses distribute specialty plumbing 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 other 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, do-it-yourself ("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).

                                               Corporate
                           Retail  Non-Retail  and Other  Elimination   Total
                           ------  ----------  ---------  -----------   -----
Reported net sales:
Fiscal 2000 three months  $ 14,778   $  8,168       --     $ (3,124)   $ 19,822
Fiscal 1999 three months    18,681      6,496       --       (2,991)     22,186
Fiscal 2000 nine months     46,883     25,514       --      (10,036)     62,361
Fiscal 1999 nine months     53,777     36,120       --      (10,284)     79,613



Operating income (loss):
Fiscal 2000 three months  $   (143)  $   (241)  $   (458)      --      $   (842)
Fiscal 1999 three months    (1,443)      (970)      (653)      --        (3,066)
Fiscal 2000 nine months       (842)       271     (1,445)      --        (2,016)
Fiscal 1999 nine months     (1,843)       990     (2,310)      --        (3,163)



Identifiable assets:
March 31, 2000            $ 43,244   $ 16,393   $ 38,970       --      $ 98,607
June 30, 1999               45,017     15,866     32,691       --        93,574

         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 $10.3 million and $11.1 million for the third quarter of
fiscal 2000 and 1999, respectively. Of these amounts, approximately $3.1 million
and $3.0 million were intercompany sales for the third quarter of fiscal 2000
and 1999, respectively. For the nine months ended March 31, 2000 and 1999, net
sales for those foreign operations amounted to $32.8 million and $32.4 million,
respectively. Of these amounts, approximately $10.0 million and $10.3 million
were intercompany sales for the nine months ended March 31, 2000 and 1999,
respectively. Identifiable assets for the foreign operations were $17.5 million
and $18.7 million at March 31, 2000 and June 30, 1999, respectively.


                                       12
<PAGE>   13

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         -------------------------------------------------
            CONDITION AND RESULTS OF OPERATIONS
            -----------------------------------

         This Quarterly Report 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, the risk that the
Company and/or Waxman Industries may not be able to complete their deleveraging
strategy in the intended manner, 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.

RECENT DEVELOPMENTS

         The Company and Waxman Industries have endeavored over the past several
years to reduce their significant amount of debt through the monetization of
assets and by improving the efficiencies of their continuing businesses. As a
result, the Company and Waxman Industries have undertaken various initiatives to
raise cash, improve cash flow and reduce debt obligations and / or improve their
financial flexibility during that period. In the spring of 1999, Waxman
Industries began having discussions with some of its bondholders regarding its
high level of debt and cash flow issues. Waxman Industries is also discussing
several options to fund its interest payment of $6.0 million due on June 1, 2000
to the Deferred Coupon Note Holders and, based on discussions with the
Committee, believes that it will be able to amend the Debt Reduction Agreement,
as defined below, to include the resolution of this payment. Various solutions
are being discussed, including the sale or collateralization of a portion of the
Barnett Common Stock owned by the Company to fund all or a portion of this
payment. Excluding the cash requirements for this interest payment, the Company
and Waxman Industries believe that operating cash flow, together with borrowings
under their working capital credit facilities, will be sufficient to fund their
working capital requirements until the expected completion of the financial
reorganization of Waxman Industries, as discussed below. In the event the
financial reorganization is not completed by Waxman Industries, the Company and
Waxman Industries believe that operating cash flow, together with borrowings
under their working capital credit facilities and the monetization, from time to
time, of a portion of the Barnett Common Stock or other selected assets, will be
sufficient to fund their working capital requirements. However, ultimately, the
Company and Waxman Industries will not be able to continue to make all of the
interest and principal payments under their debt obligations without a
significant appreciation in, and monetization of, the value of the shares of
common stock of Barnett owned by the Company and/or a restructuring of such debt
instruments.

         On December 13, 1999, Waxman Industries and an ad hoc committee (the
"Committee") representing the holders of approximately 87% of the $92.8 million
outstanding principal amount of the 12 3/4% Senior Secured Deferred Coupon Notes
due 2004 of Waxman Industries (the "Deferred Coupon Notes") and approximately
65% of the 11 1/8% Senior Notes due 2001 (the "Senior Notes") of the Company
entered into an agreement (the "Debt Reduction Agreement") that provides,
subject to certain conditions (including Bankruptcy Court approval), for the
full satisfaction of the Deferred Coupon Notes and the Senior Notes as part of a
comprehensive financial restructuring of Waxman Industries.

         The key provisions of the financial restructuring plan are:

         -     The Debt Reduction Agreement contemplates that Barnett will
               engage an investment banker to conduct an orderly process to sell
               itself, or otherwise maximize shareholder value, in connection
               with such transaction. To that end, on December 13, 1999, Barnett
               issued a press release announcing the engagement of Deutsche Bank
               Alex. Brown to pursue initiatives to maximize shareholder value.
         -     If Barnett's efforts to maximize shareholder value result in a
               sale, the Company would sell all of its

                                       13
<PAGE>   14

               7,186,530 shares of Barnett common stock.
         -     The Company would apply the proceeds of any sale of the Barnett
               Common Stock, net of applicable taxes, in the following order:
                    -    approximately $35.9 million, plus accrued interest, to
                         repay in full the Senior Notes
                    -    approximately $10 million to reduce borrowings under
                         its working capital credit facility, which were used to
                         fund approximately $6 million in interest paid to the
                         Deferred Coupon Note holders on December 1, 1999, $2
                         million in interest paid to the Senior Note holders on
                         March 1, 2000, and up to $2 million in other costs
                         associated with the financial restructuring
                         transaction, and
                    -    the remaining net proceeds to a trust account to be
                         used for the full satisfaction of the Deferred Coupon
                         Notes of Waxman Industries.

         The Debt Reduction Agreement contemplates the completion of the sale of
the Barnett Common Stock as the first step in the financial restructuring plan.
Following the anticipated sale of the Company's interest in Barnett, Waxman
Industries and the Committee would file a jointly sponsored, prepackaged plan of
reorganization with the United States Bankruptcy Court (the "Joint Plan") to
effectuate the terms of the Debt Reduction Agreement. Under the Joint Plan, the
holders of the Deferred Coupon Notes will be the only impaired class of
creditors; neither the Company nor any of Waxman Industries' operating
subsidiaries or operating divisions will be included in the filing and they will
continue to pay their trade creditors, employees and other liabilities under
normal conditions.

         Excluding the June 1, 2000 interest payment discussed above, Waxman
Industries and the Company believe that operating cash flow, together with
borrowings under their working capital credit facilities, will be sufficient to
fund their working capital requirements until the expected completion of the
above mentioned financial reorganization of Waxman Industries. Based on
discussions with the Company's current working capital lender, Congress
Financial Corporation, the Company believes that debtor in possession financing
will not be necessary, and Congress will continue to provide financing during
and after the financial reorganization. In the event the financial
reorganization is not consummated, Waxman Industries and the Company believe
that operating cash flow, together with borrowings under their working capital
credit facilities and the monetization, from time to time, of a portion of the
Barnett Common Stock or other selected assets, will be sufficient to fund their
working capital requirements. However, ultimately, Waxman Industries and the
Company will not be able to continue to make all of the interest and principal
payments under their debt obligations without a significant appreciation in, and
monetization of, the value of the shares of common stock of Barnett owned by the
Company and/or a restructuring of such debt instruments.

         In furtherance of its effort to enhance its liquidity position, the
Company sold substantially all of the assets and certain liabilities of Western
American Manufacturing Inc. effective March 31, 2000 for $1.8 million, excluding
trade receivables, trade payables and certain other obligations, which were
retained by the Company. Cash from this transaction was not received until April
2000.

         The Company and Waxman Industries believe that the completion of the
transactions set forth in the Debt Reduction Agreement will result in stronger
companies, with an amount of debt that can be supported by the operating cash
flow of the Company's subsidiaries. In addition to the reduced debt levels of
the Company, the Company's balance sheet will be strengthened significantly as a
result of the anticipated net after tax gain on the sale of Barnett Common Stock
and the realization for accounting purposes of the deferred gain on the sale of
U.S. Lock. Furthermore, the elimination of the indebtedness from the Senior
Notes will reduce the Company's annual interest expense by approximately $4
million.

         Waxman Industries believes that the Joint Plan should proceed through
the judicial process in a timely manner due to the overwhelming support of the
Deferred Coupon Note holders, the only impaired class of creditors. Waxman
Industries expects to complete the Joint Plan by the fall of 2000.

         Although Waxman Industries has entered into the Debt Reduction
Agreement, at this time, Waxman Industries does not have an agreement that would
monetize the Company's investment in Barnett. Waxman Industries believes such an
agreement will be completed during the fiscal 2000 fourth quarter. Accordingly,
the accompanying condensed consolidated financial statements have been prepared
assuming the Company will continue as a going concern and, as such, adjustments
to the financial statements, if any, that may be required for

                                       14
<PAGE>   15

presentation on another basis have not been considered.

         The Company continues to evaluate various options to streamline its
operations, reduce expenses and improve cash flow and margins. As part of that
process, the Company disposed of WAMI effective March 31, 2000 as it believes
that sourcing pipe nipples will result in improved profit levels for the
operations that distribute those products. The Company is also reviewing the
logistics of its distribution facilities in an effort to improve efficiencies
and reduce costs. The Company expects to complete this review and initiate
various expense reduction plans within the next three months.


A.       RESULTS OF OPERATIONS
         ---------------------

FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
--------------------------------------------------

NET SALES

         Net sales for the fiscal 2000 third quarter ended March 31, 2000
totaled $19.8 million, as compared to $22.2 million for the fiscal 1999 third
quarter. The net sales decrease was due to weaker than anticipated net sales to
retailers, including sales made through the direct import program from our Asian
operations. In addition, sales to the now defunct Hechinger / Builders Square
operations in the prior year third quarter contributed $0.4 million to the
decrease in net sales in the current quarter.

         Net sales to retailers amounted to $14.8 million for the third quarter
ended March 31, 2000, a decrease from the $18.7 million for the same period last
year. Weaker sales to several of the larger retailers accounted for nearly all
of the decrease. In addition, net sales for the third quarter of fiscal 1999
included $0.4 million in sales to the now defunct Hechinger / Builders Square
operations. The Company's new sales programs with several retailers were not
sufficient to offset the sluggish sales to some national retailers and the loss
of the Hechinger / Builders Square business. The Company believes that many of
these retailers reduced inventories for year-end inventory and cash management
purposes. Sales improved in the month of March and, indications are for improved
sales in May and June 2000.

         Effective March 31, 2000, the Company sold substantially all of the
assets and certain liabilities of WAMI, excluding trade receivables, trade
payables and certain other liabilities, which were retained by the Company. The
net sales and operating results of WAMI have been consolidated in the results of
operations for the quarter ended March 31, 2000. The net sales of WAMI for the
three month periods ended March 31, 2000 and 1999 were $0.8 million and $0.7
million, respectively.

GROSS PROFIT

         Gross profit for the fiscal 2000 third quarter was $6.2 million, with a
gross profit margin of 31.2 percent, as compared to gross profit of $6.2 million
and a gross profit margin of 28.2 percent for the three months ended March 31,
1999. The gross profit was relatively the same, although the gross profit margin
improved due to an adjustment in the prior year to the gross profit of the pipe
nipple manufacturing and distribution operations, which decreased profits and
the profit margin. The current year profit and margins were also affected by the
termination of the packaged plumbing program sales to Hechinger / Builders
Square.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

         Selling, general and administrative expenses ("SG&A expenses")
increased from $5.8 million for the quarter ended March 31, 1999 to $6.1 million
for the quarter ended March 31, 2000. SG&A expenses for the foreign operations
accounted for all of the increase in SG&A expenses. As a percentage of net
sales, SG&A expenses increased from 26.0% for the fiscal 1999 third quarter to
30.6% for the fiscal 2000 third quarter. The increased percentage of SG&A
expenses to net sales is due to a combination of higher expenses and a lower net
sales base.

NON-RECURRING AND PROCUREMENT CHARGES

                                       15
<PAGE>   16

         In the third quarter of fiscal 2000, Consumer Products recorded a
procurement charge of $0.5 million, representing the amount paid by the Company
in connection with a customer's agreement to purchase products from the Company.
In the fiscal 1999 third quarter, the Company's Consumer Products business
recorded a business procurement charge of $2.45 million and $0.45 million in
non-recurring charges related to additional costs involved in the relocation of
the Consumer Products' Bedford Heights warehouse to Groveport, Ohio, the
training of personnel and the future shortfall on subleasing the warehouse in
Bedford Heights, Ohio.

EQUITY EARNINGS OF BARNETT

         The Company recorded equity earnings from its ownership interest in
Barnett of $1.7 million for the quarters ended March 31, 2000 and 1999.

(LOSS) GAIN ON SALES OF OPERATIONS AND AMORTIZATION OF DEFERRED GAIN ON SALE OF
U.S. LOCK

         In April 2000, the Company completed an agreement to sell 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"). The WAMI Sale was
effective March 31, 2000, resulting in a net pretax loss of $2.0 million in the
quarter ended March 31, 2000, which includes an approximate $1.0 million
write-off of goodwill.

         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 $17.7 million, with approximately $9.9
million being recognized in the fiscal 1999 third quarter. The remaining $7.8
million was originally reported as a deferred gain in the Company's consolidated
balance sheet due to the Company's continued ownership of 44.3% of Barnett, the
acquirer of U.S. Lock. The Company is recognizing the deferred gain as the
goodwill generated by the purchase of U.S. Lock is amortized by Barnett, or as
the Company reduces its ownership interest in Barnett. In the fiscal 2000 third
quarter, the Company recognized $49,000 of this deferred gain.

INTEREST EXPENSE

         For the quarter ended March 31, 2000, net interest expense totaled $1.5
million, as compared to $1.3 million in the fiscal 1999 third quarter. Average
borrowings for the current year's quarter amounted to $52.9 million, with a
weighted average interest rate of 10.8%, as compared to $45.2 million in the
same quarter last year, with a weighted average interest rate of 10.8%. The
average borrowings were lower in the prior year due to the proceeds received
from the sale of U.S. Lock effective January 1, 1999, while the weighted average
interest rate remained consistent.

PROVISION  (BENEFIT) FOR INCOME TAXES

         The benefit for income taxes amounted to $0.8 million for the third
quarter of fiscal 2000, as compared to the provision of $2.9 million for the
same quarter last year. The provisions represent Waxman USA's tax provision on a
stand-alone basis, including various state and foreign taxes of the Company's
wholly-owned operations. For the fiscal 2000 and 1999 third quarters, the
difference between the effective and statutory tax rates is primarily due to
goodwill amortization and state and foreign taxes.

NET (LOSS) INCOME

         The Company's net loss for the quarter ended March 31, 2000 amounted to
$1.7 million, as compared to the net income of $4.3 million in the fiscal 1999
third quarter. The third quarter of fiscal 2000 was affected by the $0.5 million
procurement charge and the $2.0 million loss on the sale of substantially all of
the assets and certain liabilities of WAMI. The fiscal 1999 third quarter was
affected by the $9.9 million gain on the sale of U.S. Lock, business procurement
charges of $2.45 million and $0.45 million of costs associated with the
relocation of Consumer Products' warehouse.


FOR THE NINE MONTHS ENDED MARCH 31, 2000 AND 1999
-------------------------------------------------

                                       16
<PAGE>   17

NET SALES

         Net sales for the nine months ended March 31, 2000 totaled $62.4
million as compared to $66.2 million for the same period in the prior fiscal
year, excluding the results of U.S. Lock, which was sold effective January 1,
1999. Including U.S. Lock's net sales for the nine months ended March 31, 1999
of $13.4 million, the Company's net sales amounted to $79.6 million. The
decrease in comparable net sales of $3.8 million between years is attributable
to the loss of the Hechinger / Builders Square account relationship, which
accounted for a $3.4 million reduction in net sales for the Company and to lower
than anticipated sales to other retailers in the current fiscal year. The net
sales to Hechinger / Builders Square for the nine months ended March 31, 2000
and 1999 amounted to $75,000 and $3.5 million, respectively.

GROSS PROFIT

         The gross profit for the nine months ended March 31, 2000 decreased to
$19.3 million, as compared to $19.6 million excluding U.S. Lock or $24.0 million
including U.S. Lock. For the nine months ended March 31, 2000, the gross profit
margin improved to 30.9% from 29.6% for the nine months ended March 31, 1999,
excluding U.S. Lock. The pipe nipple manufacturing and distribution operations
accounted for most of the improvement due to certain financial statement
adjustments in the third quarter of fiscal 1999, which decreased the margins for
the prior year period.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

         SG&A expenses, excluding U.S. Lock, amounted to $17.9 million for both
nine month periods ended March 31, 2000 and 1999. Including U.S. Lock, SG&A
expenses amounted to $20.6 million for the nine month period ended March 31,
1999. As a percentage of net sales, SG&A expenses, excluding U.S. Lock,
increased from 27.0% for the nine month period in fiscal 1999 to 28.7% for the
nine months ended March 31, 2000. Including U.S. Lock, the SG&A expenses as a
percentage of sales for the nine months ended March 31, 1999 was 25.9%. The
increase in the percentage for the nine month period ended March 31, 2000 was
primarily due to the decrease in net sales.

NON-RECURRING AND PROCUREMENT CHARGES

         Consumer Products recorded non-recurring charges for the nine months
ended March 31, 2000, including procurement costs of $650,000 related to
customer agreements to purchase product for a period of time, and $1.3 million
for the consolidation of its packaged plumbing products under the Plumbcraft(R)
brand name.

         In the fiscal 1999 nine months ended March 31, 1999, Consumer Products
recorded a non-recurring charge of $1.8 million related to the relocation of its
Bedford Heights, Ohio warehouse to Groveport, Ohio. Included in the charge were
severance benefits for personnel and the loss on the write-off of tangible
assets at the Bedford Heights warehouse. The relocation to a more modern and
efficient facility, which was completed in November 1998, has enabled Consumer
Products to provide more sophisticated distribution services to its customers
and has helped it remain competitive through significant annual savings.

         In addition to the non-recurring charge for the relocation of its
warehouse, Consumer Products also recorded a business procurement charge of
$2.45 million in the nine months ended March 31, 1999.

EQUITY EARNINGS OF BARNETT

         The Company recorded equity earnings from its 44.3% ownership interest
in Barnett of $5.3 million for the nine months ended March 31, 2000. For the
comparable period in fiscal 1999, the Company recorded equity earnings of $5.0
million.

(LOSS) GAIN ON SALES OF OPERATIONS AND AMORTIZATION OF DEFERRED GAIN ON SALE OF
U.S. LOCK

         In April 2000, the Company completed an agreement to sell 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. The WAMI Sale was

                                       17
<PAGE>   18

effective March 31, 2000, resulting in a net pretax loss of $2.0 million in the
quarter ended March 31, 2000, which includes an approximate $1.0 million
write-off of goodwill.

         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 $17.7 million, with approximately $9.9
million being recognized in the fiscal 1999 third quarter. The remaining $7.8
million was originally reported as a deferred gain in the Company's consolidated
balance sheet due to the Company's continued ownership of 44.3% of Barnett, the
acquirer of U.S. Lock. The Company is recognizing the deferred gain as the
goodwill generated by the purchase of U.S. Lock is amortized by Barnett, or as
the Company reduces its ownership interest in Barnett. In the fiscal 2000 nine
month period, the Company recognized $147,000 of this deferred gain.

INTEREST EXPENSE

         For the nine months ended March 31, 2000, interest expense totaled $4.0
million, a decrease from the $4.4 million in the comparable period last year.
The decrease is primarily due to a decrease in borrowings under its bank credit
agreement. Average borrowings for the nine months ended March 31, 2000 amounted
to $45.9 million, with a weighted average interest rate of 10.9%, as compared to
$51.2 million in the same period last year, with a weighted average interest
rate of 10.6%. The average borrowings are lower due to the proceeds received
from the sale of U.S. Lock effective January 1, 1999, while the weighted average
interest rate increased due to the reduction of debt with a lower rate and the
increase in interest rates.


PROVISION (BENEFIT) FOR INCOME TAXES

         The benefit for income taxes amounted to $0.8 million for the nine
months ended March 31, 2000, as compared to a provision of $3.0 million for the
same period last year. The provisions represent Waxman USA's tax provision on a
stand-alone basis, including various state and foreign taxes of the Company's
wholly-owned operations. For the nine month periods in fiscal 2000 and 1999, the
difference between the effective and statutory tax rates is primarily due to
goodwill amortization and state and foreign taxes.

NET (LOSS) INCOME

         The Company's net loss for the nine months ended March 31, 2000
amounted to $1.8 million, as compared to the net income of $4.4 million for the
same period in fiscal 1999. The nine months ended March 31, 2000 were affected
by procurement charges of $0.65 million, the $2.0 million loss on the sale of
substantially all of the assets of WAMI and the $1.3 million non-recurring
charge for the consolidation of Consumer Products' packaged plumbing products
under the Plumbcraft(R) brand name. The fiscal 1999 nine month period was
affected by the $10.2 million gain on the sale of U.S. Lock, business
procurement charges of $2.45 million and $0.45 million of costs associated with
the relocation of Consumer Products' warehouse.

B.       LIQUIDITY AND CAPITAL RESOURCES
         -------------------------------

         Over the past several years, the Company and Waxman Industries have
endeavored to reduce their high level of debt through the monetization of assets
and by improving the efficiencies of their continuing businesses. As a result,
the Company and Waxman Industries have undertaken various initiatives to raise
cash, improve cash flow and reduce their debt obligations and / or improve their
financial flexibility during that period. These efforts recently resulted in
Waxman Industries reaching an agreement with an ad hoc committee representing
the holders of approximately 87% of its Deferred Coupon Notes and approximately
65% of the Company's Senior Notes. See Note 1 and "Management's Discussion and
Analysis - Recent Developments" in this Form 10-Q for a discussion of the Waxman
Industries agreement to sell the Company's interest in Barnett as part of a
comprehensive financial reorganization.

         Waxman Industries is also discussing several options to fund its
interest payment of $6.0 million due on June 1, 2000 to the Deferred Coupon Note
Holders and, based on discussions with the Committee, believes that it will be
able to amend the Debt Reduction Agreement to include the resolution of this
payment. Various solutions

                                       18
<PAGE>   19

are being discussed, including the sale or collateralization of a portion of the
Barnett Common Stock owned by the Company to fund all or a portion of this
payment. Excluding the cash requirements for this interest payment, the Company
and Waxman Industries believe that operating cash flow, together with borrowings
under their working capital credit facilities, will be sufficient to fund their
working capital requirements until the expected completion of the Waxman
Industries financial reorganization effort contemplated by the Debt Reduction
Agreement. In the event the financial reorganization is not completed, the
Company and Waxman Industries believe that operating cash flow, together with
borrowings under their working capital credit facilities and the monetization,
from time to time, of a portion of the Barnett Common Stock or other selected
assets, will be sufficient to fund their working capital requirements. However,
ultimately, the Company and Waxman Industries will not be able to continue to
make all of the interest and principal payments under their debt obligations
without a significant appreciation in, and monetization of, the value of the
shares of common stock of Barnett owned by the Company and/or a restructuring of
such debt instruments.

         In furtherance of its effort to enhance its liquidity position, the
Company sold substantially all of the assets and certain liabilities of Western
American Manufacturing Inc. effective March 31, 2000 for $1.8 million, excluding
trade receivables, trade payables and certain other obligations, which were
retained by the Company. Cash from this transaction was not received until April
2000.

         The Waxman Industries' financial reorganization plan does not involve
the Company or any of its operating subsidiaries, which have their own bank
credit facility. These operating companies will continue to pay all of their
trade creditors, employees and other liabilities under normal trade conditions.
Waxman Industries believes that the Joint Plan should proceed through the
judicial process quickly because it has the overwhelming support of the Deferred
Coupon Note holders, the only impaired class of creditors. Waxman Industries
expects to complete the Joint Plan by the fall of 2000.

         In June 1999, the Company entered into the Loan and Security Agreement
with Congress Financial Corporation to replace the Credit Agreement with
BankAmerica Business Credit, Inc. that was to expire on July 15, 1999. The Loan
and Security Agreement is between Consumer Products, WOC, WAMI and WAMI Sales,
as borrowers (the "Borrowers"), with the Company, Waxman USA Inc. ("Waxman USA")
and TWI as guarantors. In March 2000, the Company and Congress Financial
Corporation amended the loan agreement to, among other changes, increase the
facility by up to $3.0 million, utilizing inventory and accounts receivable that
were already collateralized under the original agreement. The Loan and Security
Agreement provides for, among other things, revolving credit advances of up to
$22.0 million. As of March 31, 2000, the Company had $19.4 million in borrowings
under the revolving credit line of the facility and had approximately $1.7
million available under such facility. The Loan and Security Agreement expires
on September 1, 2001, but may be extended under certain conditions. In April
2000, the Loan and Security Agreement was further amended to allow the sale of
substantially all of the assets of WAMI.

         The Loan and Security Agreement provides for revolving credit advances
of (a) up to 85.0% of the amount of eligible accounts receivable, (b) up to the
lesser of (i) $10.0 million or (ii) 60% of the amount of eligible raw and
finished goods inventory and (c) up to the lesser of (i) $5.0 million or (ii)
70% of the fair market value of 500,000 shares of Barnett Inc. common stock. In
December 1999, the Loan and Security Agreement was amended to provide Congress
Financial an additional 500,000 shares of Barnett Inc. common stock (which,
together with the initial 500,000 shares, constitutes approximately 6.2% of all
outstanding stock of Barnett Common Stock), as collateral and allowing the
Company to borrow up to the lesser of i) $10,000,000 or ii) 70% of the fair
value of the 1,000,000 shares of Barnett Inc. common stock. Revolving credit
advances bear interest at a rate equal to (a) First Union National Bank's prime
rate plus 0.5% or (b) LIBOR plus 2.50%. The Loan and Security Agreement includes
a letter of credit subfacility of $10.0 million, with none outstanding at March
31, 2000. Borrowings under the Loan and Security Agreement are secured by the
accounts receivable, inventories, certain general intangibles, and unencumbered
fixed assets of Waxman Industries, Inc., Consumer Products, TWI, International
Inc. and WOC, and a pledge of 65% of the stock of various foreign subsidiaries.
The Loan and Security Agreement 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 Loan and Security Agreement 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, the payment of interest on
the Senior Notes and the Company's Deferred Coupon Notes, and contains customary
negative, affirmative and financial covenants and conditions. The Company was in
compliance with or has obtained a waiver for all loan covenants at March 31,

                                       19
<PAGE>   20

2000. The Loan and Security Agreement also contains a material adverse condition
clause which allows Congress Financial Corporation to terminate the Agreement
under certain circumstances.

         Since the consummation of the Barnett Initial Public Offering, the cash
flow generated by Barnett is no longer available to the Company. The Company
relies primarily on Consumer Products and, prior to January 1, 1999, U.S. Lock
for cash flow. The sale of U.S. Lock further increases the Company's dependence
on Consumer Products' business. 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 the 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. One of Consumer Products' largest customers, Kmart, accounted for
approximately 20.8% of net sales for Consumer Products in fiscal 1999. In July
1997, Kmart agreed to sell its Builders Square chain to Leonard Green &
Partners, a merchant-banking firm. Leonard Green also acquired another home
improvement retailer, Hechinger Co., and combined the two companies to form the
nation's third largest home improvement chain. In August 1998, Consumer Products
was informed that the Hechinger / Builders Square operations were consolidating
their supplier relationships and Consumer Products would retain only the bulk
plumbing business, beginning in January 1999. The combined operations of
Hechinger / Builders Square accounted for approximately $3.7 million, or 7.8% of
Consumer Products and 3.8% of the Company's net sales in fiscal 1999. Hechinger
/ Builders Square filed for Chapter 11 bankruptcy protection in June 1999, and
for Chapter 7 liquidation in September 1999. Consumer Products' accounts
receivable from Hechinger / Builders Square was $0.3 million at the time of the
bankruptcy filing. In the event Consumer Products were to lose any additional
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 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
additional material adverse changes in its customer relationships were to occur.

         The Company paid $0.8 million in income taxes in the first nine months
of fiscal 2000. In the event Waxman Industries completes a financial
reorganization, which includes the sale of its investment in Barnett and
recognizes a gain from that sale, the Company will be able to use Waxman
Industries' net operating loss carryforwards to offset income taxes that will be
payable.

         The Company has total future lease commitments for various facilities
and other leases totaling $2.7 million, of which approximately $1.2 million is
due in fiscal 2000 and $0.9 million was paid in the first nine months of fiscal
2000. The Company does not have any other commitments to make substantial
capital expenditures. The fiscal 2000 capital expenditure plan includes
expenditures to improve the efficiencies of the Company's operations, to provide
new data technology and certain expansion plans for the Company's foreign
operations.

         At March 31, 2000, the Company had working capital of $9.4 million and
a current ratio of 1.3 to 1.

DISCUSSION OF CASH FLOWS

         Net cash used for operations was $9.0 million for the first nine months
of fiscal 2000 principally due to an increase in trade receivables, and decrease
in various accruals. The most significant items affecting cash used for
operations were the $2.0 million net loss on the sale of certain assets and
liabilities of WAMI and the $5.3 million in equity earnings of Barnett.
Excluding these items, net cash used by operations was $5.7 million. Cash flow
used in investments totaled $1.2 million, attributable to capital expenditures.
Cash flow provided by financing activities, and net borrowings under the
Company's credit facilities, totaled approximately $9.2 million.

YEAR 2000

The Company utilizes management information systems, software technology and
non-information technology systems that were Year 2000 compliant, prior to
December 31, 1999. The Company continues to monitor its operations, as well as
its customers and suppliers to ensure its systems continue to meet its internal
and external requirements. The Company does not believe that it has been or will
be negatively impacted by the Year 2000.


                                       20
<PAGE>   21

PART II. OTHER INFORMATION
         -----------------

ITEM 5.  OTHER INFORMATION
         -----------------

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
         --------------------------------

                  a) See Exhibit 27.

                  b) Form 8-K

                           None


All other items in Part II are either inapplicable to the Company during the
quarter ended March 31, 2000 or the answer is negative or a response has been
previously reported and an additional report of the information need not be
made, pursuant to the instructions to Part II.




                                   SIGNATURES
                                   ----------

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                                 WAXMAN USA INC.
                                                 ---------------
                                                 REGISTRANT





DATE:  MAY 10, 2000                            BY: /S/ MARK W. WESTER
                                                     MARK W. WESTER
                                                     VICE PRESIDENT-FINANCE
                                                     AND CHIEF FINANCIAL OFFICER
                                                     (PRINCIPAL FINANCIAL AND
                                                     ACCOUNTING OFFICER)



                                       21
<PAGE>   22

                                  EXHIBIT INDEX
                                  -------------


EXHIBIT                                                           PAPER (P) OR
-------                                                           ------------
NUMBER                     DESCRIPTION                            ELECTRONIC (E)
------                     -----------                            --------------



(27)                       Financial Data Schedule                E
                           (submitted to the Securities
                           and Exchange Commission in
                           Electronic Format)


                                       22