<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, 1998
                                                                --------------

                                       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 4, 1998.


<PAGE>   2



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



<TABLE>
<CAPTION>


                                                                                     PAGE
                                                                                     ----

<S>       <C>                                                                          <C> 

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

Item 1.  Financial Statements (Unaudited)

            Condensed Consolidated Statements of Operations for the Nine Months and
               Three Months Ended March 31, 1998 and 1997..........................    3

            Condensed Consolidated Balance Sheets -
               March 31, 1998 and June 30, 1997....................................    4-5

            Condensed Consolidated Statements of Cash Flows -
               Nine Months Ended March 31, 1998 and 1997 ..........................    6

            Notes to Condensed Consolidated Financial Statements...................    7-10

Item 2.  Management's Discussion and Analysis of Financial Condition
            and Results of Operations..............................................    10-14


PART II. OTHER INFORMATION

Item 5.  Other Information ........................................................    15


Item 6.  Exhibits and Reports on Form 8-K..........................................    15


SIGNATURES
----------


EXHIBIT INDEX
-------------
</TABLE>








                                       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 MONTHS AND THREE MONTHS ENDED MARCH 31, 1998 AND 1997

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                           Nine Months            Three Months
                                                           -----------            ------------
                                                        1998        1997        1998        1997
                                                        ----        ----        ----        ----

<S>                                                   <C>         <C>         <C>         <C>    
Net sales                                             $79,409     $92,999     $24,444     $28,422

Cost of sales                                          52,000      62,945      15,900      19,149
                                                      -------     -------     -------     -------

Gross profit                                           27,409      30,054       8,544       9,273

Selling, general and administrative expenses           19,712      22,475       6,522       7,463

Restructuring and non-recurring charges                   133        --          --           --

Corporate charge                                        2,524       2,463         859         813
                                                      -------     -------     -------     -------

Operating income                                        5,040       5,116       1,163         997

Equity earnings of Barnett                              4,622       4,394       1,454       1,548

Interest expense, net                                   4,123       5,326       1,439       1,947
                                                      -------     -------     -------     -------

Income before income taxes and extraordinary loss       5,539       4,184       1,178         598

Provision for income taxes                              2,114         686         449         220
                                                      -------     -------     -------     -------

Income before extraordinary loss                        3,425       3,498         729         378

Extraordinary loss, net of tax                            115          --          --          --
                                                      -------     -------     -------     -------

Net income                                            $ 3,310     $ 3,498     $   729     $   378
                                                      =======     =======     =======     =======
</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, 1998 AND JUNE 30, 1997

                                 (IN THOUSANDS)

                                     ASSETS

<TABLE>
<CAPTION>



                                                             March 31,      June 30,
                                                               1998          1997
                                                            (Unaudited)    (Audited)
                                                            -----------    ---------
<S>                                                          <C>           <C>     
CURRENT ASSETS:
  Cash and cash equivalents                                  $    715      $  9,326
  Trade receivables, net                                       15,552        13,617
  Other receivables                                             2,171         2,828
  Inventories                                                  27,257        24,411
  Prepaid expenses                                              2,149         2,143
  Net assets held for sale                                        -           3,945
                                                             --------      --------
  Total current assets                                         47,844        56,270
                                                             --------      --------

INVESTMENT IN BARNETT                                          27,922        22,700
                                                             --------      --------

PROPERTY AND EQUIPMENT:
  Land                                                            423           482
  Buildings                                                     4,010         4,009
  Equipment                                                    11,996        10,917
                                                             --------      --------
                                                               16,429        15,408
  Less accumulated depreciation and amortization               (7,938)       (7,065)
                                                             --------      --------
  Property and equipment, net                                   8,491         8,343
                                                             --------      --------

COST OF BUSINESSES IN EXCESS OF NET ASSETS ACQUIRED, NET        8,256         8,771
UNAMORTIZED DEBT ISSUANCE COSTS, NET                              637         1,043
OTHER ASSETS                                                    2,168           817
                                                             --------      --------
                                                             $ 95,318      $ 97,944
                                                             ========      ========
</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, 1998 AND JUNE 30, 1997

                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

                      LIABILITIES AND STOCKHOLDER'S EQUITY

<TABLE>
<CAPTION>

                                                      March 31,       June 30,
                                                        1998           1997
                                                     (Unaudited)     (Audited)
                                                       --------      --------
<S>                                                    <C>           <C>     
CURRENT LIABILITIES:
  Current portion of long-term debt                    $ 13,148      $  5,920
  Accounts payable                                        9,561         8,615
  Accrued liabilities                                     6,415         8,570
  Accrued income taxes payable                              905            46
  Accrued interest                                          387         1,807
                                                       --------      --------
      Total current liabilities                          30,416        24,958
                                                       --------      --------

OTHER LONG-TERM DEBT, NET OF CURRENT PORTION                630           307

SENIOR NOTES                                             35,855        47,855

SENIOR SUBORDINATED NOTES                                   895           895


STOCKHOLDER'S EQUITY:
  Preferred stock, $.01 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.                   (12,926)      (13,903)
  Paid-in capital                                        21,462        21,462
  Retained earnings                                      20,021        16,711
                                                       --------      --------
                                                         28,557        24,270
  Cumulative currency translation adjustment             (1,035)         (341)
                                                       --------      --------

    Total stockholder's equity                           27,522        23,929
                                                       --------      --------
                                                       $ 95,318      $ 97,944
                                                       ========      ========
</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, 1998 AND 1997
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>


                                                                    1998         1997
                                                                 --------      --------
<S>                                                              <C>           <C>     
CASH FLOWS FROM OPERATING ACTIVITIES:
-------------------------------------
  Net income                                                     $  3,310      $  3,498
  Adjustments to reconcile net income to net
    cash provided by (used in) operating activities:
      Extraordinary loss - deferred financing cost write-off          115           -
      Equity earnings of Barnett                                   (4,622)       (4,394)
      Depreciation and amortization                                 1,752           905
       Other non-cash charges                                         -             (49)
  Changes in assets and liabilities:
    Trade receivables, net                                         (1,935)       (2,198)
    Other receivables                                                 657           -
    Inventories                                                    (2,846)        1,744
    Prepaid expenses and other assets                                (901)        1,022
    Accounts payable                                                  946        (2,826)
    Accrued liabilities                                            (2,155)       (3,104)
    Accrued income taxes                                              859           296
    Accrued interest                                               (1,420)         (338)
    Other, net                                                       (694)          (35)
                                                                 --------      --------
      Net Cash Used in Operating Activities                        (6,934)       (5,479)
                                                                 --------      --------

CASH FLOWS FROM INVESTING ACTIVITIES:
-------------------------------------
  Net cash proceeds from sale of business                           3,203           -
  Capital expenditures, net                                        (1,408)       (1,084)
                                                                 --------      --------
      Net Cash Provided by (Used in) Investing Activities           1,795        (1,084)
                                                                 --------      --------

CASH FLOWS FROM FINANCING ACTIVITIES:
-------------------------------------
  Borrowings under credit agreements                               80,376        93,485
  Payments under credit agreements                                (73,148)      (84,944)
  Repurchase of Senior Notes                                      (12,000)          -
  Borrowings (Repayments)of long-term debt                            323           (45)
  Advances from (to) parent                                           977        (2,003)
                                                                 --------      --------
      Net Cash Provided by (Used in) Financing Activities          (3,472)        6,493
                                                                 --------      --------

NET DECREASE IN CASH                                               (8,611)          (70)

BALANCE, BEGINNING OF PERIOD                                        9,326         2,453
                                                                 --------      --------

BALANCE, END OF PERIOD                                           $    715      $  2,383
                                                                 ========      ========
</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, 1998 AND 1997

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"). As of March 31, 1998, Waxman USA owned
approximately 44.6% of the common stock of Barnett Inc. ("Barnett Common Stock")
and accounts for Barnett Inc. ("Barnett") under the equity method of accounting.
The condensed consolidated statements of operations for the three months and
nine months ended March 31, 1998 and 1997, the condensed balance sheet as of
March 31, 1998 and the condensed statements of cash flows for the nine months
ended March 31, 1998 and 1997 have been prepared by the Company without audit,
while the condensed balance sheet as of June 30, 1997 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, 1998 and for all periods presented.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
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. 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
Form 10-K for the fiscal year ended June 30, 1997, filed with the Securities and
Exchange Commission.

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

        The Company is a direct, wholly-owned subsidiary of Waxman Industries,
Inc. ("Waxman Industries"). The common stock of Waxman Industries trades on the
New York Stock Exchange under the symbol "WAX." The Company believes it is one
of the leading suppliers of specialty plumbing, security hardware and other
products to the repair and remodeling market in the United States. The Company
distributes its products to approximately 6,800 customers, including a wide
variety of large national and regional retailers, professional security
installers and independent retail customers.

        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 two
divisions, U.S. Lock ("U.S. Lock"), a distributor of a full line of security
hardware products, and Medal Distributing, a supplier of hardware products. TWI
includes the Company's foreign sourcing operations, including manufacturing,
packaging and sourcing operations in China and Taiwan, and an operation in
Mexico that threads galvanized, black and bronze pipe and imports malleable
fittings. Consumer Products, WOC and Barnett utilize the Company's and
non-affiliated foreign sourcing suppliers.

        The Company currently owns 44.6% of Barnett, a direct marketer and
distributor of an extensive line of plumbing, electrical, hardware, HVAC and
other products to approximately 64,000 active customers throughout the United
States. Barnett offers approximately 11,600 name brand and private label
products through its industry recognized Barnett(R) catalogs and telesales
operations. Barnett markets its products through three distinct, comprehensive
catalogs that target professional contractors, independent hardware stores and
maintenance managers. In the three months and nine months ended March 31, 1998,
the Company recognized $1.5 million and $4.6 million in equity income from this
investment, respectively.



                                       7
<PAGE>   8



         In April 1996, the Company completed an initial public offering of the
Barnett Common Stock at $14.50 per share, 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, approximately a
54% economic interest (the "Barnett Initial Public Offering"). In April 1997,
the Company completed a secondary offering of 1.3 million shares of Barnett
Common Stock at $17.50 per share, reducing its voting and economic interest to
44.5% (the "Barnett Secondary Offering") and, accordingly, began to account for
its interest in Barnett under the equity method of accounting. At June 30, 1997,
the Company owned nearly 7.2 million shares of Barnett's outstanding common
stock. In July 1997, as a result of the sale of a substantial portion of the
business of LeRan Gas Products ("LeRan"), one of WOC's operations, to Barnett,
the Company received cash and an additional 24,730 shares of Barnett Common
Stock which increased the Company's ownership to 44.6%. The Barnett Common Stock
trades on the Nasdaq National Market under the symbol "BNTT."

NOTE 3 - INCOME TAXES
         ------------

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

         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 new 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 $48.3
million of available domestic net operating loss carryforwards for income tax
purposes at June 30, 1997, which expire between 2009 and 2010. Upon consummation
of the Barnett Initial Public Offering, Barnett is no longer included in the
consolidated tax group. The Company's liability for taxes at March 31, 1998
includes state and various foreign taxes. 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 in the accompanying condensed consolidated
balance sheets.

NOTE 4 - BARNETT
         -------

         The Company owns 7,186,530 shares, or 44.6%, of the Barnett Common
Stock as of March 31, 1998, which is accounted for under the equity method of
accounting. In April 1996, the Company completed the Barnett Initial Public
Offering, receiving net proceeds of $92.6 million, after the underwriters'
discount, and recorded a $65.9 million pre-tax gain. In April 1997, the Company
completed the Barnett Secondary Offering, receiving net proceeds, after the
underwriters' discount, of $21.6 million, and recorded a $16.7 million pre-tax
gain. The Company converted the remaining convertible non-voting preferred stock
of Barnett it owned to Barnett Common Stock. In July 1997, the Company received
24,730 shares of Barnett as a result of the sale of the gas products business of
LeRan to Barnett (see Note 5). The market value of the Barnett Common Stock
owned by the Company at March 31, 1998 was $154.5 million, valued as of the
closing sales price on such date of $21.50, in comparison to the Company's
carrying value of $27.9 million.

         The following table presents unaudited summary financial data for
Barnett at March 31, 1998 and for the nine months then ended (in thousands of
dollars):

<TABLE>
<CAPTION>

Statement of income data:             Balance sheet data:

<S>                  <C>                                       <C>     
Net sales            $ 148,001        Working capital          $ 49,223
Operating income        17,022        Total assets               94,597
Net income              10,405        Stockholders' equity       71,822
</TABLE>




                                       8
<PAGE>   9




NOTE 5 - SALE OF  DIVISIONS
         ------------------

         Effective July 1, 1997, the Company sold the gas products business of
LeRan to Barnett for $3.2 million in cash and 24,730 shares of Barnett Common
Stock, with a value of $0.6 million at the time of the transaction. The
Company's loss on the sale, net of certain costs associated with disposing of
assets not included in the transaction and the closing of certain warehouses,
was approximately $0.1 million. The Company owned a 56,000 square foot facility
in Coldwater, Michigan that was previously utilized by LeRan. The Company
consummated the sale of this facility in the first quarter of fiscal 1998 and
received the proceeds in October 1997. Included in the quarter and nine months
ended March 31, 1997 are net sales for LeRan of $2.8 million and $11.1 million
and operating income of $25,000 and $0.6 million, respectively.

         In April 1997, the Company sold Madison Equipment Company ("Madison"),
a division of WOC, for $2.0 million in cash. The sale of Madison resulted in a
loss of $0.7 million, which was included as a non-recurring charge in the
quarter ended June 30, 1997. Included in the quarter and nine months ended March
31, 1997 are net sales for Madison of $1.7 million and $5.0 million and
operating income of $49,000 and $0.2 million, respectively.

NOTE 6 - SENIOR NOTE PURCHASE OFFER
         --------------------------

         In May 1997, the Company commenced an offer to purchase $12.0 million
principal amount of its 11 1/8% Senior Notes due 2001 (the "Senior Notes") at
par (the "Purchase Offer"). The offer expired on July 2, 1997 with $2.5 million
of the notes tendered. On July 3, 1997, the Company called for redemption of the
$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 quarter ended September 30, 1997, before tax benefit, related to
the write-off of unamortized deferred financing costs associated with the
purchase and redemption of these Senior Notes.


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

         Cash payments during the three months ended March 31, 1998 and 1997
included interest of $2.3 million and $2.9 million, respectively. Cash payments
during the nine months ended March 31, 1998 and 1997 included interest of $5.4
million and $6.1 million, respectively. The Company paid no federal income taxes
in the three months and nine months ended March 31, 1998 or in the three months
ended March 31, 1997. The Company paid $0.5 million in federal income tax in the
nine months ended March 31, 1997. Waxman USA's cash flow, within certain
restrictions, is upstreamed to Waxman Industries to service interest payments
and administrative costs.


NOTE 8 - CAPITAL STOCK AND EARNINGS PER SHARE
         ------------------------------------

         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 classifies its businesses into two business segments: (i)
distribution of plumbing, security hardware and other products, which includes
the operations of Consumer Products and WOC; and (ii) foreign sourcing
operations, which includes the Company's sourcing and packaging operations in
Taiwan and China, and Western American Manufacturing, Inc. ("WAMI"), an
operation in Mexico that provides galvanized and black pipe nipples and
malleable fittings. These products are sold primarily to D-I-Y home centers and
retailers in the United States. Sales outside of the United States are
insignificant. In addition, nearly all of the products from the 


                                       9
<PAGE>   10

foreign sourcing operations are sold to the Company's wholly-owned operations
and Barnett. Set forth below is certain financial data relating to the Company's
business segments (in thousands of dollars).


<TABLE>
<CAPTION>


Nine months and quarter ended                         
-----------------------------                        Foreign
March 31, 1998 and 1997         Distribution         Sourcing           Other          Elimination            Total
-----------------------         ------------         --------           -----          -----------            -----

<S>                               <C>               <C>               <C>                <C>                <C>
Reported net sales:
Fiscal 1998 nine months           $ 63,107          $ 30,064              --             $(13,762)          $ 79,409
Fiscal 1997 nine months             78,684            26,186              --              (11,871)            92,999

Fiscal 1998 quarter                 20,037             8,098              --               (3,691)            24,444
Fiscal 1997 quarter                 24,062            12,826              --               (8,466)            28,422


Operating income (loss):
Fiscal 1998 nine months           $  5,027          $  2,537          $ (2,524)              --             $  5,040
Fiscal 1997 nine months              5,952             1,627            (2,463)              --                5,116

Fiscal 1998 quarter                  1,325               697              (859)                                1,163
Fiscal 1997 quarter                  1,413               397              (813)                                  997


Identifiable assets:
March 31, 1998                    $ 49,912          $ 16,846          $ 28,560               --             $ 95,318
June 30, 1997                       48,836            16,449            32,659               --               97,944
</TABLE>




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

A.       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 may not be able to implement its 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.

FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
--------------------------------------------------


Net Sales
---------

         Net sales for the fiscal 1998 third quarter ended March 31, 1998
totaled $24.4 million, a decrease of $4.0 million from the $28.4 million for the
comparable quarter in fiscal 1997. Included in the prior year third fiscal
quarter were net sales of $4.4 million for LeRan and Madison, which were
recently sold by the Company. 


                                       10
<PAGE>   11

Excluding the sales from those operations, comparable net sales increased by
$0.4 million, or 1.8%. U.S. Lock recorded a net sales increase for the fiscal
1998 third quarter, in comparison to the same period last year, of 22.6%, while
the Company's foreign sourcing operations reported a slight increase during the
same period. Sales made by the foreign sourcing operations to Barnett account
for nearly all of their reported sales and have increased due to the growth of
Barnett. U.S. Lock's increase in net sales is attributable to an increase in the
number of monthly catalogs mailed and the expansion in the number of
professional telesales representatives. During the same comparable periods,
Consumer Products Group's net sales decreased by approximately $0.6 million, or
4.4%, primarily due to the closing of select stores by Builders Square and due
to lower purchases in certain product categories by certain retailers, which we
believe are attributable to their inventory management efforts.

Gross Profit
------------

         Gross profit margin increased to 34.9% from 32.6%, but gross profit
decreased to $8.5 million for the three months ended March 31, 1998 as compared
to $9.3 million for the corresponding quarter in the prior fiscal year. The
decrease in gross profit is attributable to the sale of LeRan Gas Products and
Madison Equipment which contributed $1.1 million in gross profit in the quarter
ended March 31, 1997, at an average gross profit margin of 25.1%. Gross profit
margins for the continuing businesses are higher than the margins of the
operations sold and improved for the fiscal 1998 third quarter as compared to
the same quarter last year. The improvement is also due to a combination of
product mix, price increases and lower costs on certain products manufactured in
China.


Selling, General and Administrative Expenses
--------------------------------------------

         Selling, general and administrative expenses ("SG&A expenses")
decreased from $7.5 million for the quarter ended March 31, 1997 to $6.5 million
for the current quarter ended March 31, 1998. As a percentage of sales, SG&A
expenses increased from 26.3% for the fiscal 1997 third quarter to 26.7% for the
fiscal 1998 third quarter. All of the expense reductions relate to LeRan and
Madison's results not being included in the fiscal 1998 third quarter. Excluding
the operations sold, SG&A expenses were $6.5 million for the quarter ended March
31, 1998, as compared to $6.4 million for the quarter ended March 31, 1997.
However, as a percentage of net sales, SG&A expenses decreased from 26.8% to
26.7%, principally due to the net sales increases at the continuing operations.



Equity Earnings of Barnett
--------------------------

The Company recorded equity earnings from its 44.6% ownership interest in
Barnett of $1.5 million for the quarter ended March 31, 1998. For the comparable
quarter in fiscal 1997, the Company recorded equity earnings from its 49.9%
ownership interest in Barnett of $1.5 million.


Interest Expense
----------------

         For the quarter ended March 31, 1998, interest expense totaled $1.4
million, a decrease of $0.5 million from the $1.9 million in the comparable
quarter last year. The decrease is primarily due to the repayment of debt with
proceeds from the Barnett Secondary Offering. Average borrowings for the current
year's quarter amounted to $49.5 million, with a weighted average interest rate
of 10.6%, as compared to $67.7 million in the same quarter last year with
weighted average interest rate of 10.5%.


Provision for Income Taxes
--------------------------

         The provision for income taxes amounted to $0.4 million and $0.2
million for the third quarter of fiscal 1998 and 1997, respectively. The
provision for the current quarter primarily represents Waxman USA's tax
provision on a stand-alone basis, including state and foreign taxes of the
Company's wholly-owned operations. The difference between the effective and
statutory tax rates is primarily due to goodwill amortization and state and
foreign taxes.



                                       11
<PAGE>   12


Net Income
----------

         The Company's net income for the quarter ended March 31, 1998 amounted
to $0.7 million as compared to $0.4 million in the fiscal 1997 third quarter.


FOR THE NINE MONTHS ENDED MARCH 31, 1998 AND 1997
-------------------------------------------------

Net Sales
---------

         Net sales for the nine months ended March 31, 1998 totaled $79.4
million, a decrease of $13.6 million from the $93.0 million for the comparable
period in fiscal 1997. Included in the prior year nine month period were net
sales of $16.1 million for LeRan and Madison, which were recently sold by the
Company. Excluding the sales from those operations, comparable net sales
increased by $2.5 million, or 3.2%. U.S. Lock and the Company's foreign sourcing
operations recorded net sales increases for the nine month period in fiscal
1998, in comparison to the same period last year, of 22.0% and 13.9%,
respectively. Sales made by the foreign sourcing operations to Barnett account
for nearly all of their reported sales and have increased due to the growth of
Barnett. U.S. Lock's increase in net sales is attributable to an increase in the
number of monthly catalogs mailed and the expansion in the number of
professional telesales representatives. During the same comparable periods,
Consumer Products Group's net sales decreased by approximately $2.0 million, or
4.4%, principally due to the loss of net sales of $1.1 million to Ernst, which
closed its operation in the first quarter of fiscal 1997 and lower sales to
Builders Square due to the closing of selected stores by the retailer.

Gross Profit
------------

         The gross profit margin for the nine months ended March 31, 1998
increased to 34.5% from 32.3% for the nine months ended March 31, 1997. However,
gross profit decreased to $27.4 million for the current nine month period as
compared to $30.1 million for the nine months ended March 31, 1997. The decrease
in gross profit is attributable to the sale of LeRan Gas Products and Madison
Equipment which contributed $3.9 million in gross profit in the nine months
ended March 31, 1997, at an average gross profit margin of 24.5%. Excluding
those operations, gross profit for the nine months ended March 31, 1998 improved
by $1.3 million and the gross profit margin improved from 34.0% to 34.5% in
comparison to the same period last year. Gross profit margins for the continuing
businesses are higher than the margins of the operations sold and improved for
the nine months ended March 31, 1998 as compared to the same period last year.
The improvement is also due to a combination of product mix, price increases and
lower costs on certain products manufactured in China.


Selling, General and Administrative Expenses
--------------------------------------------

         SG&A expenses decreased from $22.5 million for the nine months ended
March 31, 1997 to $19.7 million for the nine month period ended March 31, 1998.
All of the expense reductions relate to the elimination of LeRan and Madison's
results in the fiscal 1998 period. As a percentage of sales, SG&A expenses
increased from 24.2% for the nine month period in fiscal 1997 to 24.8% for the
nine month period in fiscal 1998. Excluding the operations sold, SG&A expenses
increased from $19.3 million to $19.7 million for the nine months ended March
31, 1997 and 1998, respectively. However, as a percentage of sales, the ratio
improved from 25.1% to 24.8% due to an increase in net sales at the continuing
businesses.



Restructuring and Non-recurring Charges
---------------------------------------

         In the nine months ended March 31, 1998, the Company recorded a
non-recurring charge of $133,000 associated with the sale of the principal
business of LeRan to Barnett and the costs of closing several facilities
utilized by the business and other closing costs.


                                       12
<PAGE>   13


Equity Earnings of Barnett
--------------------------

         The Company recorded equity earnings from its 44.6% ownership interest
in Barnett of $4.6 million for the nine months ended March 31, 1998. For the
comparable period in fiscal 1997, the Company recorded equity earnings from its
49.9% ownership interest in Barnett of $4.4 million.


Interest Expense
----------------

         For the nine months ended March 31, 1998, interest expense totaled $4.1
million, a decrease of $1.2 million from the $5.3 million in the comparable
period last year. The decrease is primarily due to the repayment of debt with
proceeds from the Barnett Secondary Offering. Average borrowings for the nine
months ended March 31, 1998 amounted to $48.0 million, with a weighted average
interest rate of 10.7%, as compared to $71.0 million in the same period last
year with weighted average interest rate of 10.3%.


Provision for Income Taxes
--------------------------

         The provision for income taxes amounted to $2.1 million and $0.7
million for the nine months ended March 31, 1998 and 1997, respectively. The
provision for the current period primarily represents Waxman USA's tax provision
on a stand alone basis, including state and foreign taxes of the Company's
wholly-owned operations. The difference between the effective and statutory tax
rates is primarily due to goodwill amortization and state and foreign taxes..


Extraordinary Loss
------------------

         In the nine months ended March 31, 1998, the Company incurred an
extraordinary charge of $0.2 million, before an income tax benefit of $0.1
million, associated with the write-off of deferred financing costs from the
repurchase of $12.0 million of Senior Notes in July and August 1997. (See Note
6)

Net Income
----------

         The Company's net income for the nine months ended March 31, 1998
amounted to $3.3 million as compared to $3.5 million for the same period last
year. Included in the fiscal 1998 results is an extraordinary charge of $0.1
million from the write-off of deferred financing costs and the non-recurring
charges of $133,000.


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

         At March 31, 1998, the Company had $11.8 million available under the
credit agreement with BankAmerica Business Credit, Inc. (the "Credit
Agreement"). The Credit Agreement contains certain covenants and restrictions,
including a material adverse effect clause and the requirement to maintain cash
collateral accounts. Accordingly, borrowings under the Credit Agreement and Term
Loans (herein defined) have been classified as a current liability. The Company
was in compliance with all loan covenants at March 31, 1998.

         The Company entered into the Credit Agreement in June 1996. The Credit
Agreement provides for, among other things, revolving credit advances of up to
$30.0 million and term loans (the "Term Loans") of up to $5.0 million. At March
31, 1998, there were $5.0 million of Term Loans and $8.1 million of borrowings
under the Credit Agreement outstanding. The Credit Agreement and Term Loans
expire May 31, 1999.

         In May 1997, the Company commenced the Purchase Offer for $12.0 million
of Senior Notes, at par. In July 1997, the Purchase Offer expired with $2.5
million principal amount of Senior Notes tendered. Upon the expiration of the
Purchase Offer, the Company called for redemption of the $9.5 million principal
amount of Senior Notes that had not been tendered in the Purchase Offer and
completed the redemption of these notes in August 1997. Pending the application
of these funds, the Company had reinvested the funds in its businesses, thereby
effectively reducing borrowings under its working capital line of credit and, at
June 30, 1997, had $8.9 


                                       13
<PAGE>   14

million invested in short-term liquid investments. The Company's business
strategy includes the reduction of its interest expense and its leverage by the
sale of selected assets and the refinancing of its remaining indebtedness
whenever possible.

         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 for cash flow. Consumer Products'
customers include D-I-Y warehouse home centers, home improvement centers, mass
merchandisers, hardware stores and lumberyards. 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, one of Consumer Products' largest customers, Kmart,
accounted for approximately 16.5% and 17.6% of net sales for Consumer Products
in fiscal 1997 and fiscal 1996, respectively, and Kmart's former subsidiary,
Builders Square, accounted for approximately 21.9% and 24.7% of Consumer
Products' net sales in fiscal 1997 and fiscal 1996, respectively. During fiscal
1997, the Company was advised by Kmart that, after it had completed a vendor
review, Consumer Products had successfully retained the supply arrangements for
plumbing and hardware products. 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 has combined
the two outfits into the nation's third largest home improvement chain.
Presently, the supply relationship between Consumer Products and Builders Square
has not changed. Although Consumer Products is a long term supplier to Kmart and
Builders Square, as well as a supplier to Hechingers, there can be no assurance
that any of the foregoing relationships will continue or as to the terms of any
of the relationships that do continue. In the event Consumer Products were to
lose either Kmart or Builders Square / Hechingers as a customer or Kmart or
Builders Square / Hechingers, were to significantly curtail its purchases from
Consumer Products, there would be material adverse effects.

         The Company does not have any commitments to make substantial capital
expenditures; however, during fiscal 1998, it has begun to modify its
information technology systems and software to be Year 2000 compatible. The most
significant expenditure will be at Consumer Products, which has budgeted
approximately $1.0 million in total capital expenditures. Of the capital
expenditures at Consumer Products, it is estimated that approximately $0.7
million will be spent on Year 2000 compliance, which was completed in April
1998. Other operations of the Company are also working toward being Year 2000
compliant and the Company anticipates that all of its operations will complete
the modifications before it impacts its operations.

         The Company believes that the funds generated from operations along
with the funds available under the Credit Agreement will be sufficient to
satisfy the Company's liquidity requirements until December 1, 1999 (the date
that cash interest becomes payable by Waxman Industries under Waxman Industries'
12 3/4% Senior Secured Deferred Coupon Notes due 2004 (the "Deferred Coupon
Notes")). The Company currently believes that there will not be sufficient cash
flow from operations to make the December 1999 interest payments on the Deferred
Coupon Notes. Accordingly, Waxman Industries intends to refinance all or a part
of the Deferred Coupon Notes at or prior to maturity and/or to pursue a sale of
assets or other capital raising transaction to satisfy such cash requirement.
However, there can be no assurance that any such refinancing or capital raising
transaction will be consummated.

         At March 31, 1998, the Company had working capital of $17.4 million and
a current ratio of 1.6 to 1.

DISCUSSION OF CASH FLOWS

         Net cash used for operations was $6.9 million in the nine months ended
March 31, 1998, principally due to an increase in trade receivables and
inventory and a decrease in accrued liabilities and accrued interest. Also
affecting net cash used for operations was $4.6 million in equity earnings of
Barnett. Cash flow provided by investments totaled $1.8 million, primarily
attributable to the proceeds from the sale of LeRan to Barnett for $3.2 million
in cash and $0.6 million in Barnett Common Stock, which was partially offset by
capital expenditures of $1.4 million. Cash flow used for financing activities
totaled $3.5 million, primarily due to the repurchase of $12.0 million of Senior
Notes in July and August 1997.







                                       14
<PAGE>   15


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, 1998 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 6, 1998          BY: /S/ MARK W. WESTER
                                  -------------------------------
                                       MARK W. WESTER
                                       CHIEF FINANCIAL OFFICER
                                       (PRINCIPAL FINANCIAL AND
                                       ACCOUNTING OFFICER)



                                       15
<PAGE>   16








                                  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)


                                       16