10-K/A

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K/A

(AMENDMENT NO. 2)

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

For The Fiscal Year Ended June 30, 2003
or

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

TRANSITION PERIOD FROM           TO

Commission File Number 0-5888

WAXMAN INDUSTRIES, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	34-0899894
(State of Incorporation)	(I.R.S. Employer Identification Number)

24460 Aurora Road,
Bedford Heights, Ohio	44146
(Address of Principal Executive Offices)	(Zip Code)

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

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

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety (90) days.

Yes [X] No [  ]

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

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).

Yes [  ] No [X]

     State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. $4,603,000

     Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. [X]

Number of shares of Common Stock outstanding as of August 20, 2003:

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

EXPLANATORY NOTE

     This Form 10-K/A (Amendment No. 2) amends the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2003, which was originally filed on September 3, 2003 and was subsequently amended on October 22, 2003, in order to remove the foreign audit reports appearing therein and to provide a revised audit report from the Registrant’s principal accountants. This Form 10-K/A (Amendment No. 2) contains the complete text of Item 8 (Consolidated Financial Statements and Supplementary Data) and Item 15 (Exhibits, Financial Statements, Schedules and Reports on Form 8-K) as amended.

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TABLE OF CONTENTS

PART II
	ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED STATEMENTS OF OPERATIONS
CONSOLIDATED STATEMENTS OF OPERATIONS
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUPPLEMENTARY FINANCIAL INFORMATION
PART IV
	ITEM 15. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
SIGNATURES
Exhibit Index
EX-23.1 Consent of Meaden & Moore, Ltd.
EX-31.1 Section 302 Certification of CO-CEO
EX-31.2 Section 302 Certification of CO-CEO
EX-31.3 Section 302 Certification of CFO
EX-32.1 Section 906 Certification

PART II

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

MANAGEMENT’S REPORT

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

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

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

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

     Armond Waxman, Co-Chief Executive Officer and President

     Mark Wester, Senior Vice President and Chief Financial Officer

AUDIT COMMITTEE REPORT

     The Audit Committee of the Board of Directors is composed of directors who are not employees of the Company and are independent, meets with management no less than quarterly and the independent auditors to ensure that each is carrying out its responsibilities. The Audit Committee consists of Irving Friedman (chairman) and Mark Reichenbaum. The Audit Committee has reviewed the integrity of the Company’s financial reporting process and systems of internal controls regarding finance, accounting and legal compliance; and monitored the independence of the Company’s independent auditors. The independent auditors have full and free access to the Audit Committee.

     The Audit Committee has also reviewed and discussed the audited and consolidated financial statements presented in this Annual Report on Form 10-K for the fiscal year ended June 30, 2003 with the Company’s management. The Audit Committee has discussed with the independent auditors the matters required to be discussed by the Statement on Auditing Standards 61. The Audit Committee received written disclosures and a letter from the independent accountants required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committee) and the Audit Committee has discussed the Independence of Meaden & Moore Ltd. with that firm.

     Based on the Audit Committee’s review and discussions noted above, the Audit Committee recommended to the Board of Directors that the Company’s audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2003 for filing with the Securities and Exchange Commission.

     MEMBERS OF THE COMMITTEE:

     Irving Friedman, Director and Chairman of the Audit Committee

     Mark Reichenbaum, Director

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

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

We have audited the accompanying consolidated balance sheets of Waxman Industries, Inc. (a Delaware corporation) and Subsidiaries (the Company) as of June 30, 2003 and 2002 and the related consolidated statements of operations, stockholders’ equity and cash flows for the years ended June 30, 2003, 2002 and 2001. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Waxman Industries, Inc. and Subsidiaries as of June 30, 2003 and 2002 and the results of their operations and their cash flows for the years ended June 30, 2003, 2002 and 2001, in conformity with accounting principles generally accepted in the United States.

Meaden & Moore, Ltd.
Cleveland, Ohio,
August 6, 2003

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WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
June 30, 2003 and 2002
(in thousands)

ASSETS

			2003			2002
Current Assets:
	Cash and cash equivalents		$	1,507		$	1,420
	Trade receivables, net			12,129			11,529
	Other receivables			1,236			1,979
	Inventories			10,119			10,497
	Prepaid expenses			1,299			1,902
		Total current assets		26,290			27,327
Property and Equipment:
	Land			542			554
	Buildings			4,645			4,662
	Equipment			12,043			11,427
				17,230			16,643
Less accumulated depreciation and amortization				(9,080	)		(8,302	)
Property and equipment, net				8,150			8,341
Receivables from Premiums Paid on Officers Life Insurance Policies				3,405			3,265
Unamortized Debt Issuance Costs, Net				209			315
Notes Receivable from Related Parties				476			574
Other Assets				639			474
			$	39,169		$	40,296

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

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WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 2003 and 2002
(in thousands, except per share data)

LIABILITIES AND STOCKHOLDERS’ EQUITY

				2003			2002
Current Liabilities:
	Short-term borrowings			$	7,529		$	7,596
	Current portion of long term debt				195			235
	Accounts payable				5,904			6,754
	Accrued liabilities				3,605			3,975
			Total current liabilities		17,233			18,560
Term Debt – Long-Term Portion					770			935
Other Long-Term Debt, Net of Current Portion					126			15
Commitments and Contingencies
Stockholders’ Equity:
Preferred stock, $0.01 par value per share: 200 and 2,000 shares authorized at June 30, 2003 and 2002, respectively and none issued					—			—
Common stock, $0.01 par value per share: 8,000 and 22,000 shares authorized at June 30, 2003 and 2002, respectively; 1,003 shares issued and outstanding in each year					99			99
Class B common stock, $.01 par value per share: 1,500 and 6,000 shares authorized at June 30, 2003 and 2002, respectively; 214 issued and outstanding in each year					21			21
Paid-in capital					21,760			21,760
Retained equity (deficit)					298			(123	)
					22,178			21,757
		Accumulated other comprehensive loss			(1,138	)		(971	)
			Total stockholders’ equity		21,040			20,786
				$	39,169		$	40,296

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

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WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

	Fiscal Year Ended June 30,
	2003			2002			2001
Net sales	$	67,142		$	70,425		$	71,370
Cost of sales		44,689			47,253			49,890
Gross profit		22,453			23,172			21,480
Selling, general and administrative expenses		21,958			21,629			21,877
Restructuring and impairment charges (Note 4)		—			—			350
Operating income (loss)		495			1,543			(747	)
Gain on sale of Barnett, net (Note 2)		—			—			47,473
Loss on sale of Medal, net (Note 5)		—			—			(1,105	)
Equity earnings of Barnett		—			—			1,370
Amortization of deferred U.S. Lock gain		—			—			7,815
Other Income (Note 1, O)		210			94			114
Interest expense		531			723			5,414
Income before extraordinary item and income taxes and extraordinary gain		174			914			49,506
(Benefit) provision for income taxes		(247	)		(671	)		1,680
Income before extraordinary gain		421			1,585			47,826
Extraordinary gain		—			—			52,222
Net income	$	421		$	1,585		$	100,048
Other comprehensive income (loss):
Foreign currency translation adjustment		(167	)		161			(473	)
Comprehensive income	$	254		$	1,746		$	99,575

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

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WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

	Fiscal Year Ended June 30,
	2003		2002		2001
Basic income per share:
Income before extraordinary gain	$	0.35	$	1.30	$	39.46
Extraordinary gain		—		—		43.09
Net income	$	0.35	$	1.30	$	82.55
Diluted income per share:
Income before extraordinary gain	$	0.35	$	1.30	$	39.46
Extraordinary gain		—		—		43.09
Net income	$	0.35	$	1.30	$	82.55
Weighted average number of common shares outstanding		1,218		1,215		1,212

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

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WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Fiscal Years Ending June 30, 2003, 2002 and 2001
(in thousands)

											Accumulated			Total
				Class B				Retained			Other			Stockholders’
		Common		Common		Paid-in		Equity			Comprehensive			(Deficit)
		Stock		Stock		Capital		(Deficit)			Income (Loss)			Equity
Balance June 30, 2000		$	99	$	21	$	21,752	$	(101,756	)	$	(659	)	$	(80,543	)
	Net income		—		—		—		100,048			—			100,048
	Currency translation adjustment		—		—		—		—			(473	)		(473	)
Balance June 30, 2001			99		21		21,752		(1,708	)		(1,132	)		19,032
	Net income		—		—		—		1,585			—			1,585
	Employee Stock Purchase Plan purchases		—		—		8		—			—			8
	Currency translation adjustment		—		—		—		—			161			161
Balance June 30, 2002			99		21		21,760		(123	)		(971	)		20,786
	Net income		—		—		—		421			—			421
	Currency translation adjustment		—		—		—		—			(167	)		(167	)
Balance June 30, 2003		$	99	$	21	$	21,760	$	298		$	(1,138	)	$	21,040

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

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WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

					Fiscal Year Ended June 30,
					2003			2002			2001
Cash Provided By (Used For):
Operations:
	Net income				$	421		$	1,585		$	100,048
	Adjustments to reconcile net income to net cash provided by (used for) operations:
	Extraordinary item – debt defeasance					—			—			(52,222	)
	Non-cash restructuring and impairment charges					—			—			1,050
	Gain on sale of Barnett stock, net					—			—			(47,473	)
	Loss on sale of Medal					—			—			1,105
	Loss on retirement of fixed assets					134			—			—
	Amortization of financing costs					130			182			83
	Amortization of deferred U.S. Lock gain					—			—			(7,815	)
	Equity earnings of Barnett					—			—			(1,370	)
	Depreciation and amortization					1,539			1,346			2,314
	Deferred income taxes					—			—			367
	Bad debt provision					90			371			215
	Changes in assets and liabilities:
				Trade and other receivables		53			113			1,307
				Inventories		378			1,398			1,860
				Prepaid expenses and other		396			(52	)		(1,922	)
				Accounts payable		(850	)		(178	)		749
				Accrued liabilities		(370	)		(316	)		(8,484	)
				Other, net		(116	)		161			(473	)
			Net cash provided by (used for) operations			1,805			4,610			(10,661	)
Investments:
		Capital expenditures, net				(1,533	)		(1,399	)		(1,229	)
		Change in other assets				—			(388	)		2,764
		Net proceeds from sales of businesses				—			—			94,503
			Net cash (used for) provided by investments			(1,533	)		(1,787	)		96,038

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

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			2003			2002			2001
Financing:
	Net change in short-term borrowings			(67	)		(2,274	)		(10,016	)
	Proceeds from long-term debt			141			1,155			—
	Repayment of long-term debt			(235	)		(677	)		(248	)
	Debt issuance costs			(24	)		(355	)		—
	Retirement of 11 1/8% Senior Secured Notes			—			—			(35,855	)
	Retirement of 12 ¾% Deferred Coupon Notes			—			—			(39,329	)
	Issuance of common stock			—			8			—
		Net cash used for financing		(185	)		(2,143	)		(85,448	)
Net increase (decrease) in cash and cash equivalents				87			680			(71	)
Balance, beginning of year				1,420			740			811
Balance, end of year			$	1,507		$	1,420		$	740

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

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WAXMAN INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2003, 2002 AND 2001

1. Summary of Significant Accounting Policies

A. Basis of Consolidation and Description of the Company

     The accompanying consolidated financial statements include the accounts of Waxman Industries, Inc. (“Waxman Industries”) and its wholly-owned subsidiaries (collectively, the “Company”). All significant intercompany transactions and balances are eliminated in consolidation. Certain reclassifications have been made to the prior year statements in order to conform to the current year presentation. Until September 29, 2000, the Company owned 44.2% of the common stock of Barnett Inc. (“Barnett Common Stock”), a direct marketer and distributor of plumbing, electrical and hardware products, and accounted for Barnett Inc. (“Barnett”) under the equity method of accounting. See Management’s Discussion and Analysis “Significant Developments - Comprehensive Financial Restructuring” section and Note 2 in these Notes to Consolidated Financial Statements in this Form 10-K for information regarding the sale of the Company’s interest in Barnett.

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

B. Accounting Estimates

     The consolidated financial statements of the Company are prepared in conformity with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period presented. Actual amounts could differ from these estimates and different amounts could be reported using different assumptions and estimates.

C. Cash and Cash Equivalents

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

D. Trade Receivables

     Trade receivables are presented net of allowances for doubtful accounts of $0.4 million and $0.6 million at June 30, 2003 and 2002, respectively. Net bad debt expense totaled $0.1 million in fiscal 2003, $0.4 million in fiscal 2002 and $0.2 million in fiscal 2001.

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     The Company sells specialty plumbing, floor and surface protection and other hardware products throughout the United States to do-it-yourself (“D-I-Y”) retailers, mass merchandisers, smaller independent retailers and wholesalers. The Company performs ongoing credit evaluations of its customers’ financial conditions. The Company’s largest customers are retailers. As a percentage of the Company’s net sales, the largest customers accounted for the following percentages in fiscal 2003, 2002 and 2001, respectively: Wal-Mart, accounted for 18.4%, 16.3% and 12.8%, Lowe’s accounted for 18.4%, 15.7% and 9.6% and Barnett accounted for 15.7%, 18.6% and 23.2%. During the same periods, the Company’s ten largest customers accounted for approximately 69.2%, 75.3% and 73.0% of net sales and approximately 66.6% and 53.3% of accounts receivable at June 30, 2003 and 2002, respectively.

E. Inventories

     At June 30, 2003 and 2002, inventories, consisting primarily of finished goods, are carried at the lower of first-in, first-out (FIFO) cost or market. The Company regularly evaluates its inventory carrying value, with appropriate consideration given to any excess, slow-moving and/or nonsalable inventories. In fiscal 2003, 2002 and 2001, the Company recorded charges of $0.2 million, $0.1 million and $0.6 million, respectively, in connection with its evaluation of its inventory carrying value.

F. Property and Equipment

     Property and equipment are stated at cost. For financial reporting purposes, buildings and equipment are depreciated on a straight-line basis over the estimated useful lives of the related assets. Depreciable lives are 15 to 40 years for buildings and 3 to 15 years for equipment. Leasehold improvements are amortized on a straight-line basis over the term of the lease or the useful life of the asset, whichever is shorter. For income tax purposes, accelerated methods of depreciation are used. Depreciation expense in each of the last three fiscal years ended June 30, 2003, 2002 and 2001 totaled $1.5 million, $1.3 million and $1.4 million, respectively. Repairs and maintenance are expensed as incurred.

G. Unamortized Debt Issuance Costs

     Unamortized debt issuance costs relate to the Company’s long-term and short-term debt (See Note 7) and are amortized over the life of the related debt. Amortization expense totaled $0.1 million in fiscal 2003, $0.3 million in fiscal 2002 and $0.4 million in fiscal 2001, and is included in interest expense in the accompanying consolidated statements of operations. The Company incurred an extraordinary charge in fiscal 2001 related to the accelerated amortization of unamortized debt issuance costs (See Note 6).

H. Split Dollar Life Insurance Policies

     Split-dollar life insurance policies are maintained for the following officers and directors: (1) Three policies for Melvin Waxman providing for total death benefits of $8,535,000, (2) two policies for Armond Waxman providing for total death benefits of $12,000,000, (3) one policy for Laurence Waxman providing for death benefits of $1,274,000 and (4) one policy for John Peters providing for death benefits of $1,250,000. In the event of the death of any of the above-referenced insureds, the Company will be repaid for the aggregate premiums paid by the Company for such policies from the insurance proceeds paid to the split-dollar life insurance trusts which own such policies. During fiscal 2003, the Company made payments of $140,871, but suspended payments for the split dollar policies in March 2003, pending further information regarding the impact the Sarbanes-Oxley Act of 2002 will have on split dollar policies for executive officers.

I. Procurement Charges

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

     Prior to the adoption of this standard, the Company reported and expensed these costs in the period paid or incurred. The Company reported certain types of business procurement costs as a separate category in its operating costs. These business procurement costs included costs incurred in connection with a customer’s agreement to purchase products from the Company for a specific period, including the consideration paid to the new or existing customer (i) for the right to supply such customer for a specified period and (ii) to assist such customer in reorganizing its store aisles and displays in

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order to accommodate the Company’s products. The Company classified a third type of business procurement cost as a contra sale in prior years. This type was associated with the purchase of a competitor’s merchandise that the customer has on hand when it changes suppliers, less the salvage value received by the Company. Beginning in fiscal 2002, the Company began recording all of these business procurement costs as a reduction in sales.

     J.     Foreign Currency Translation and Transactions

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

K. Revenue Recognition

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

L. Shipping and Handling Fees

     In May 2000, the Emerging Issues Task Force (“EITF”) of the FASB reached a consensus with respect to EITF Issue 00-10, “Accounting for Shipping and Handling Fees and Costs.” EITF 00-10 recognizes the inconsistencies in practice of the recording of shipping and handling costs incurred by most companies that sell goods. The Company has historically recorded freight and any directly related associated cost of transporting finished product to customers as a component of its selling, general and administrative expenses. Included in SG&A expenses are $2.6 million, $2.2 million and $2.9 million in shipping and handling costs for fiscal 2003, 2002 and 2001, respectively.

M. Earnings per Share

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

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

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

	2003		2002		2001
Basic		1,218		1,215		1,212
Diluted		1,218		1,215		1,212

N. Stock-Based Compensation

     The Company utilizes the intrinsic value-based method of accounting prescribed by APB Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”) to measure compensation costs for its stock-based compensation plan and had adopted the disclosure-only provisions of Statement of Financial Standards No. 123 – “Accounting for Stock-Based Compensation” (“FAS 123”). FAS 123 was amended in December 2002, with enhanced annual and interim disclosure requirements that were issued in Financial Accounting Standard No. 148 – “Accounting

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for Stock-Based Compensation – Transition and Disclosure” (“FAS 148”). Compensation costs for fixed price awards are measured by the excess, if any, of the fair market price of the underlying stock over the amount the individual is required to pay, which is established on the grant date. See Note 13 for a further description of the assumptions used for preparing the pro forma disclosures as prescribed by FAS 148.

O. Joint Venture Investments

     The Company, through TWI, has invested in four joint venture operations in Asia. TWI includes this investment in other assets on the balance sheet and is accounting for these joint ventures using the cost method of accounting because it does not exercise significant influence over the operating and financial policy decisions of these entities. Accordingly, the Company has recognized the distributions received from those entities as dividend income, which amounted to $0.2 million, $0.1 million and $0.1 million in fiscal 2003, 2002 and 2001, respectively. In fiscal 2003, dividend distributions, which had been netted against SG&A expenses in prior periods, were reclassified to other income. The investment in those entities at June 30, 2003 and 2002 was as follows:

Company	% Owned			2003		2002
Dynaflow Industries Corporation		38.5	%	$	73,000		75,000
Tsang Roug Industrial (Shenzhen) Ltd.		28.0	%		156,000		161,000
Quan Ri Chang (Shenzhen) Ltd.		28.1	%		260,000		89,000
Everbrite Technology Inc.		7.5	%		64,000		66,000

2. Barnett

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

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

3. Comprehensive Financial Restructuring Plan / Confirmation of Chapter 11 Filing

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

• On December 13, 1999, the Company and an ad hoc committee (the “Committee”), representing the holders of approximately 87.6% of the $92.8 million outstanding principal amount of Waxman Industries’ 12 ¾% Senior Secured Deferred Coupon Notes due 2004 (the “Deferred Coupon Notes”) and approximately 65% of the 11 1/8% Senior Notes due 2001 (the “Senior Notes”) of Waxman USA Inc., a direct wholly-owned subsidiary of the Company, entered into an agreement (the “Debt Reduction Agreement”) that provided, subject to certain conditions (including Bankruptcy Court approval), for the process that would lead to the full

15

	satisfaction of the Deferred Coupon Notes and the Senior Notes as part of a comprehensive financial restructuring of the Company.
•	On July 10, 2000, the Company announced that it had reached agreements with the Committee, among others, for the monetization of its Barnett Common Stock and the financial restructuring of Waxman Industries. These agreements included the Company’s agreement to vote its 7,186,530 shares of Barnett Common Stock owned by Waxman USA Inc. in favor of the acquisition of Barnett by Wilmar Industries, Inc. for $13.15 per share.
•	On August 28, 2000, the Company and the Committee commenced the solicitation for the approval of the Deferred Coupon Note holders for the jointly sponsored, prepackaged plan of reorganization in advance of its filing with the United States Bankruptcy Court (the “Joint Plan”). Under the Joint Plan, the holders of the Deferred Coupon Notes were the only impaired class of creditors; none of the Company’s operating subsidiaries or divisions were included in the filing and they paid their trade creditors, employees and other liabilities under normal conditions.
•	On September 1, 2000, the Company sold to Barnett 160,723 shares of Barnett Common Stock to fund the interest due on the Company’s Senior Notes.
•	On September 27, 2000, the Barnett shareholders approved the Barnett Merger.
•	On September 28, 2000, the holders of approximately 97% of the Deferred Coupon Notes voted in favor of accepting the Joint Plan, with the remaining holders not voting.
•	On September 29, 2000, the Company received gross proceeds from the sale of the remaining Barnett Common Stock, which together with the shares sold to Barnett on September 1, 2000, amounted to $94.5 million. The Company utilized the proceeds from the sale of the Barnett Common Stock in the following order:

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

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

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

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

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

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

• On November 14, 2000, the Company’s Joint Plan was approved by the Court

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

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

     Included in accrued liabilities at June 30, 2003 and 2002 are accrued restructuring charges in the amount of $1.0 million.

4. Management’s Review of Operations – Restructuring and Impairment Charges

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

5. Disposal of Businesses

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

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

	Fiscal 2001
Net sales	$	3,407
Net loss	$	(151	)
Basic and diluted loss per share	$	(0.12	)

6. Extraordinary Items

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

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

7. Debt

A. Long-Term Debt

     Total long-term debt consists of the following at June 30, 2003 and 2002 (in thousands of dollars):

	2003			2002
Bank Agreement	$	7,529		$	7,298
Term Loan maturing in 2005, bearing interest at prime plus 1%, secured by the Company’s corporate land and building		935			1,100
Capital leases maturing in 2003 to 2008, bearing interest at 6.13% to 17.3%, secured by leased equipment		156			85
Other debt, maturing in 2002, bearing interest at 5.7%, secured by TWI’s land and building		—			298
		8,620			8,781
Less: current portion		(7,724	)		(7,831	)
Long-term debt, net of current portion	$	896		$	950

     The PNC Revolving Credit, Term Loan and Security Agreement (“PNC Bank Facility”), which began in February 2002, is between Waxman Industries, Inc., Consumer Products, WAMI Sales and Waxman USA as borrowers (the “Borrowers”). The PNC Bank Facility provides, among other things, for revolving credit advances of up to $15.0 million. The Term Loan facility provided an initial loan on the Company’s corporate office building of $1,155,000, with payments being amortized over 7 years, although the facility would be subject to a balloon payment if the PNC Bank Facility terminates and is not extended. At June 30, 2003, the balance due under the Term Loan facility was $935,000 and the Company had $7.5 million in borrowings under the revolving credit line of the facility and approximately $3.2 million available under such facility.

     The PNC Bank Facility provides for revolving credit advances of (a) up to 85.0% of the amount of eligible accounts receivable and (b) up to the lesser of (i) $7.5 million or (ii) 60% of the amount of eligible raw and finished goods inventory. Revolving credit advances bear interest at a rate equal to the higher of (a) the PNC Bank, NA base prime rate plus 0.5% or (b) Federal Funds Rate plus 1.0%. The Term Loan advance bears interest at a rate equal to the higher of (a) the PNC Bank, NA base prime rate plus 1.0% or (b) Federal Funds Rate plus 1.5%. The PNC Bank Facility includes a letter of credit subfacility of $1.0 million, with none outstanding at June 30, 2003. Borrowings under the PNC Revolving Credit Loan are secured by the accounts receivable, inventories, certain general intangibles, and

17

unencumbered fixed assets of Waxman Industries, Inc., Consumer Products, WAMI Sales, and a pledge of 65% of the stock of various foreign subsidiaries. The PNC Bank Facility requires the Borrowers to maintain cash collateral accounts into which all available funds are deposited and applied to service the facility on a daily basis. The PNC Bank Facility prevents dividends and distributions by the Borrowers, including the repurchase of stock, except in certain limited instances.

     The financial covenants contain customary negative, affirmative and financial covenants and conditions that require the Company to maintain a certain fixed charge coverage ratio and tangible net worth and not exceed a certain amount of capital expenditures in any given period. The ratios and dollar amounts of such financial covenants vary during the term of the PNC Bank Facility and are contained in the agreement governing the PNC Bank Facility, which appears as Exhibit 10.1 to the Current Report on Form 8-K filed by the Company on February 27, 2002 and is incorporated herein by reference as Exhibit 4.10 to this Form 10-K. The customary negative covenants contained in the PNC Bank Facility include restrictions, subject to important enumerated exceptions, on the Company’s ability to effect a merger, consolidation, acquisition or sale of its assets, create liens, enter into guarantees, acquire interests in other entities, make loans to other entities, incur indebtedness, and engage in transactions with affiliates. The Company was in compliance with all loan covenants at June 30, 2003. In August 2003, PNC and the Company retroactively amended the fixed charge covenant to utilize financial results for measuring its fixed charge coverage ratio beginning April 1, 2003. The PNC Bank Facility also contains a material adverse condition clause, which allows PNC Bank, NA to terminate the agreement under certain circumstances. The PNC Bank Facility replaced a Loan and Security Agreement with Congress Financial Corporation, which was scheduled to expire on June 18, 2002.

B. Senior Secured Deferred Coupon Notes

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

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

C. Senior Notes

     On September 29, 2001, the Company redeemed its remaining $35.9 million of Senior Notes as part of its Debt Reduction Agreement and comprehensive financial restructuring, paying the principal and interest in full.

D. Capital Leases

     The Company has certain obligations under capital leases which are included in the debt balances in the Long-Term Debt table provided in Note 7A. The obligations under capital leases have fixed interest rates of 6.13% to 6.93% and are collateralized by property, plant and equipment. Property under capitalized leases consists of the following:

	2003		2002
Machinery and equipment	$	176	$	447
Less: Accumulated depreciation		9		281
	$	167	$	166

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

2004	$	39
2005		38
2006		38
2007		33
2008		33
Total minimum lease obligation		181
Less interest		25
Present value of total minimum lease obligation	$	156

E. Term Debt

     The PNC Bank Facility provides for a Term Loan facility on the Company’s corporate office building. The initial loan amount was $1,155,000. The Term Loan facility provided an initial loan on the Company’s corporate office building of $1,155,000, with payments being amortized over 7 years, although the facility would be subject to a balloon payment if the PNC Bank Facility is terminated and not extended. The Term Loan bears an interest rate of prime plus 1.0%. Monthly principal payments of $13,750 plus interest are made. The Company made $55,000 in principal payments in fiscal 2002, and principal payments of $165,000 will be made in each fiscal year beginning with fiscal 2003 through fiscal 2008, with $110,000 being made in fiscal 2009.

F. Miscellaneous

     The Company made cash interest payments of $0.4 million, $0.6 million and $9.3 million in fiscal 2003, 2002 and 2001, respectively. The Company reported interest income of $0.1 million in fiscal 2003 and $0.3 million in fiscal 2001, but did not have interest income in fiscal 2002.

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

8. Income Taxes

     The Company accounts for income taxes in accordance with the provisions of SFAS No. 109, “Accounting for Income Taxes.” SFAS No. 109 utilizes the asset and liability method, where deferred tax assets and liabilities are recognized for the future tax consequences attributable to net operating loss carryforwards and to differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled.

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

	Fiscal Year Ended June 30,
	2003			2002			2001
Domestic	$	(1,617	)	$	(80	)	$	47,895
Foreign		1,791			994			1,611
Total	$	174		$	914		$	49,506

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

		Fiscal Year Ended June 30,
		2003			2002			2001
Currently (recoverable) payable:
Federal		$	(166	)	$	(773	)	$	740
Foreign			451			229			256
State			(532	)		(127	)		317
	Total current		(247	)		(671	)		1,313
Deferred: State			—			—			367
	Total (benefit) provision	$	(247	)	$	(671	)	$	1,680

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

		2003			2002			2001
U.S. statutory rate			35.0	%		35.0	%		35.0	%
Domestic losses not benefited			192.3			—			—
State taxes, net			(198.4	)		1.8			0.8
Foreign tax items			(101.1	)		(13.0	)		(0.6	)
Change in valuation allowance			—			—			(32.0	)
Change in tax law			(78.3	)		(84.6	)		—
Other, net			8.8			(12.6	)		0.2
	Effective tax rate		(141.7	)%		(73.4	)%		3.4	%

     The deferred tax assets and liabilities as of June 30, 2003 and 2002 are as follows (in thousands of dollars):

		2003			2002
Net operating loss carryforwards		$	6,458		$	6,082
Accrued expenses			76			97
Inventories			337			409
Accounts receivable			153			188
Procurement costs			961			910
Alternative minimum tax credit			591			718
Other			463			472
	Deferred tax asset		9,039			8,876
Property			(803	)		(941	)
	Deferred tax liabilities		(803	)		(941	)
	Net deferred tax asset		8,236			7,935
	Valuation allowance		(8,236	)		(7,935	)
		$	—		$	—

     SFAS No. 109 requires the Company to assess the realizability of its deferred tax assets based on whether it is more likely than not that the Company will realize the benefit from these deferred tax assets in the future. If the Company determines the more likely than not criteria is not met, SFAS No. 109 requires the deferred tax assets be reduced by a valuation allowance. In assessing the realizability of its net deferred tax asset, the Company considered its historic performance and the uncertainty of it being able to generate enough domestic taxable income to utilize these

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assets. At June 30, 2003 and 2002, the Company’s net deferred tax assets were fully offset by a valuation allowance, and the Company continues to believe that the Company’s net deferred tax assets should continue to be offset by a valuation allowance. The Company will continue to analyze the trends in the operating results of its domestic operations to assess the realizability of its deferred tax asset in fiscal 2004. At June 30, 2003, the Company had $18.5 million of available domestic net operating loss carryforwards for income tax purposes, which will expire in 2010 through 2023.

     In fiscal 2003, the Company recorded a net tax benefit of $0.2 million, which represents the reversal of a $0.6 million tax reserve for a state tax assessment that was favorably resolved during the year, $0.1 million for a change in tax law related to the carryback of alternative net operating losses to prior years, partially offset by a provision for various state and foreign taxes. In fiscal 2002, the Company recorded a net tax benefit of $0.7 million, which represents a tax benefit of $0.8 million for a change in tax law related to the carryforward of an alternative minimum tax net operating loss to fiscal 2001, a benefit of $0.1 million for the reversal of tax reserves related to the 2001 financial restructuring and a provision for various state and foreign taxes.

     Undistributed earnings of the Company’s foreign operations were approximately $5.1 million as of June 30, 2003. These earnings are considered to be indefinitely reinvested and accordingly, no U.S. federal or state taxes have been provided.

     The Company made no federal income tax payments in fiscal 2003 and 2002, but made payments of $0.8 for fiscal 2001. The Company’s foreign operations made payments of $0.4 million in fiscal 2003, as compared to $0.1 million in both fiscal 2002 and fiscal 2001. The Company paid approximately $48,000, $114,000 and $330,000 in state taxes for fiscal 2003, 2002 and 2001, respectively. Refunds received totaled $891,000 in fiscal 2003, $28,000 in fiscal 2002 and $6,000 in fiscal 2001.

9. Lease Commitments

     The Company leases certain warehouse and office facilities and equipment under operating lease agreements, which expire at various dates through 2009. The future minimum rental payments are as follows (in thousands of dollars):

2004	$	935
2005		878
2006		742
2007		677
2008		454
Thereafter		152
	$	3,838

     Total rent expense charged to operations was $1.0 million, $0.9 million and $0.8 million in fiscal 2003, 2002 and 2001, respectively. Consumer Products leases certain warehouse space from related parties. Related parties’ rent expense totaled $0.2 million in fiscal 2003 and $0.3 million in each of fiscal 2002 and fiscal 2001. Those related party relationships consist of the following:

• Aurora Investment Co., a partnership owned by Melvin Waxman, Chairman of the Board and Co-Chief Executive Officer of the Company, and Armond Waxman, President and Co-Chief Executive Officer of the Company, together with certain other members of their families, is the owner and lessor of the building used by Consumer Products for its executive offices, administrative functions and, until the move of the warehouse to Groveport, Ohio, one of its distribution facilities. Rent expense and related occupancy expenses under this lease was $167,157 in fiscal 2003 and $326,712 in fiscal 2002 and 2001. In fiscal 2002 and 2001, 97,000 square feet of the warehouse portion of this facility was subleased to Handl-it Inc. (see Note 10 for information regarding related party ownership of Handl-it). On July 1, 2002, Consumer Products renewed the lease for the 9,000 square feet of office space and 20,000 square feet of warehouse space that it uses, and began subleasing an additional 17,000 square feet of space from Handl-it, for which it paid $61,200 in fiscal 2003. Handl-it began leasing the portion of the warehouse it used directly from Aurora Investments Co.

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• Handl-it Inc., a corporation owned by John S. Peters, a director and consultant to the Company, together with another member of his family, Melvin Waxman and Armond Waxman, sublet warehouse space from Consumer Products through June 30, 2002. The Company reported rental income from Handl-it Inc. of $191,079 and $290,496 in fiscal 2002 and 2000, respectively, for subleasing the warehouse in Bedford Hts., Ohio. In fiscal 2003, Consumer Products paid $61,200 to Handl-it for subleasing a portion of the warehouse space leased by Handl-it and used by Consumer Products. See Note 10 for additional information regarding this related party transaction.

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

10. Related-Party Transactions

     The Company purchases certain products, which it can not manufacture with its existing operations, from WDI International, Inc., a company owned in part by certain members of the Waxman family and other non-affiliated individuals. In fiscal 2003, 2002 and 2001, purchases from WDI International amounted to $1.1 million, $1.6 million and $1.7 million, respectively. The Company believes that the prices it receives are on terms comparable to those that would be available from unaffiliated third parties.

     The Company leases certain facilities from Aurora Investment Co., a partnership owned by members of the Waxman family (see Note 9 for additional information regarding this arrangement). Aurora Investments Co. originally developed the Bedford Heights, Ohio facility, with 9,000 square feet of office space and 114,000 square feet of warehouse space, entirely for Consumer Products. The lease of the entire facility expired on June 30, 2002, and Consumer Products entered into a new 5 year lease with Aurora Investments for 9,000 square feet of office space and 20,000 square feet of warehouse. Rent expense under this lease was $167,157 in fiscal 2003, as compared to $326,712 in each of fiscal 2002 and 2001, when Consumer Products leased the entire facility. Consumer Products also subleases 17,000 square feet of space at this Bedford Heights facility from Handl-it for $61,200 per year. In fiscal 2002 and 2001, when Consumer Products was leasing the entire facility, it sublet 97,000 square feet of the warehouse to Handl-it Inc. (see below for information regarding affiliated ownership of Handl-it Inc.).

     At June 30, 2003 and 2002, the Company had the following receivables from related parties (in thousands):

Related Party		2003		2002
Melvin Waxman, Co-CEO		$	50	$	60
Armond Waxman, Co-CEO			125		135
Waxman Development			84		84
Aurora Investments Co.			85		97
Handl-it Inc.			78		134
All other related parties			54		64
	Total	$	476	$	574

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

     Handl-it Inc., a corporation owned by John S. Peters, a director and consultant to the Company, together with another member of his family, and Melvin Waxman and Armond Waxman, sublet warehouse space in Bedford Hts., Ohio from Consumer Products through June 30, 2002. In order to facilitate Consumer Products move to a more efficient warehouse that was also logistically beneficial in serving their customer base, Handl-it agreed to sublease 97,000 square feet of office space, which it would attempt to utilize for the warehousing needs of its customers. Due to the prolonged economic downturn in this area, Handl-it was unable to fully utilize the warehouse, and negotiated an adjustment with Consumer Products to offset its revenue shortfall for this warehouse. Accordingly, in fiscal 2002, Consumer Products

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reduced its rental charge to Handl-it by approximately $99,000, and received concessions of $26,000 over the next 26 months from Aurora Investments. The Company charged Handl-it Inc. $191,079 in fiscal 2002 (after the rent adjustment) and $290,496 in fiscal 2001 for subleasing the warehouse space. At June 30, 2003 and 2002, Handl-it owed Consumer Products $78,000 and $134,000 in unpaid rent, respectively, which is evidenced by a promissory note, which bears interest at a rate of 5.25% per annum. Effective July 1, 2002, Consumer Products entered into a lease with Aurora Investments for the 9,000 square feet of office space it utilizes and 20,000 square feet of warehouse space, and also entered into an agreement to sublease 17,000 square feet of space from Handl-it at a monthly charge of $5,100. Consumer Products offset the receivable from Handl-it by the future monthly rental payments that would otherwise be paid to Handl-it, and will continue to do so until the receivable has been fully repaid. Consumer Products also utilizes Con-Pak Inc., a third party packaging operation acquired by Handl-it in 1999, in certain instances where the packaging can not be performed by the Company’s operations in Asia. Con-Pak, Inc. received $227,807, $377,599 and $234,368 for these services in fiscal 2003, 2002 and 2001, respectively. Consumer Products also paid Handl-it Inc. approximately $27,000 for the cost of transportation of products in fiscal 2001. Handl-it is also compensated for the consulting services provided to the Company by Mr. Peters, which amounted to approximately $43,000, $123,000 and $81,000 in fiscal 2003, 2002 and 2001, respectively.

     Melvin Waxman and Armond Waxman are directors and co-owners of Handl-it, and each received director fees of $6,000 and $8,000 and consulting income of $18,000 and $20,000 from Handl-it in the twelve months ended June 30, 2003 and 2002, respectively.

11. Retirement Plans

     The eligible employees of the Company’s corporate office and certain domestic subsidiaries of the Company participate in a trusteed, profit sharing and 401(k) retirement plan. Contributions are discretionary and are determined by the Company’s Board of Directors. There were no profit sharing contributions in fiscal 2003, 2002 or 2001. Beginning July 1, 2002 the Company modified its 401(k) retirement plan to meet the Department of Labor’s Safe Harbor Match provisions. Accordingly, the Company increased its match to 100% of the first 3% and 50% for the next 2% of deferral by employees, which amounted to $173,000 in fiscal 2003. Under the new provisions, all contributions are 100% vested. In fiscal 2002 and 2001 the Company contributed a 50% match of up to the first 4% of salary deferral by employees, which amounted to $0.1 million in each year. The Company’s domestic operations currently offer no other retirement, post-retirement or post-employment benefits.

     The Company’s operation in Taiwan has a retirement plan covering all regular employees, which provides for payment of benefits based on length of service and basic pay at the time of retirement, making a monthly contribution of 2% of salary and wages to the retirement fund. In fiscal 2003, this operation adopted its method for employee benefit plan based on the Statement of Financial Accounting Standards No. 87 (“SFAS 87”), and recognized net periodic pension cost, related assets and liabilities based on actuarial assumptions as required by SFAS 87. Contributions approximated $50,000 in fiscal 2003 and $20,000 in fiscal 2002 and 2001. In fiscal 2002 and 2001, the Company expensed the contributions made. An employees’ retirement committee administrates the retirement fund and amounts contributed are deposited in the name of this committee in the Central Trust of China.

     The funded status of the plan and accrued pension cost reconciliation follows (in thousands):

		2003			2002
Benefit obligations:
	- Non-vested accumulated benefit obligation	$	436		$	456
	- Additional benefit based on future salaries		49			200
	Projected benefit obligation		485			656
Fair value of plan assets			(215	)		(335	)
Funded status			(270	)		(321	)
Unrecognized net transition obligation			305			323
Unrecognized pension cost			(90	)		—
Additional pension liability			(166	)		(123	)
Accrued pension cost		$	(221	)	$	(121	)
Less: Intangible asset			166			123
Net pension asset (liability)		$	(55	)		2
Vested benefit		$	—		$	—

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		2003			2002
Actuarial assumptions:
	- Discount rate used in determining present values		3.5	%		4.0	%
	- Future salary increase rate		2.0	%		2.5	%
	- Expected rate of return on pension assets		3.5	%		4.0	%
Net Periodic Pension Cost:
Service cost		$	73
Interest cost			24
Expected return on plan assets			(8	)
Amortization of net unrecognized transition obligation			17
Net periodic pension cost		$	106
Summary of changes in pension fund
	- Contribution	$	49		$	19
	- Payment of benefits	$	178		$	0

12. Capital Stock and Reverse Stock Split

     Each share of the Company’s common stock (the “Common Stock”) entitles its holder to one vote, while each share of Class B common stock entitles its holder to ten votes. Cash dividends on the Class B common stock may not exceed those on the Common Stock. Due to restricted transferability, there is no trading market for the Class B common stock. However, the Class B common stock may be converted, at the stockholder’s option, into Common Stock on a share-for-share basis at any time, without cost to the stockholder. No preferred shares have been issued as of June 30, 2003.

     The Company’s Certificate Of Incorporation originally authorized the issuance of 22,000,000 shares of Common Stock, 6,000,000 shares of Class B Common Stock and 2,000,000 shares of Preferred Stock. The Company determined that it was not likely to need more than 8,000,000 authorized shares of Common Stock, 1,500,000 shares of Class B Common Stock and 200,000 shares of Preferred Stock for issuance in the future, and the Company’s Board of Directors approved an amendment to the Certificate of Incorporation of the Corporation to reduce the number of the Company’s authorized shares in August 2001. The reduction in authorized shares was approved by stockholders at the December 3, 2002 Annual Meeting of Stockholders.

     In February 2001, the stockholders of the Company approved a 1-for-10 reverse stock split, thereby reducing the outstanding number of shares of the Company (the “Reverse Stock Split”). As a result of the Reverse Stock Split, every ten shares of the Company’s common stock and class B common stock were converted into one share of common stock and class B common stock, respectively. Each stockholder’s percentage share of total voting rights in the Company was the same as it was prior to the Reverse Stock Split, except for the de minimus effect of certain stockholders receiving an additional share of Common Stock or Class B Common Stock in lieu of fractional shares. The number of additional shares issued in lieu of fractional shares increased the number of post-split shares by 154 for the Common Stock and 49 for the Class B Common Stock. There was no change in the number of stockholders as a result of the Stock Split. In addition, the number of shares purchasable upon exercise of the warrants issued to the holders of the Company’s former Deferred Coupon Notes (the “Warrants”) were adjusted. The pre-split Warrants representing the rights of the holders to purchase an aggregate of 2,950,000 Warrant Shares at $2.45 per share became, on a post-split basis, the right to purchase an aggregate of 295,000 Warrant Shares at $24.50 per share.

     The Company’s Common Stock is quoted on the Over-The-Counter Bulletin Board (“OTCBB”). The Nasdaq, which originally planned to terminate the OTCBB exchange, has instead ceased its effort to establish a new Bulletin Board Exchange with improved order processing and automatic trading features. Accordingly, the Company intends to maintain its listing on the OTCBB at this time.

13. Stock Based Compensation Plans

     In December 2002, the FASB released FAS 148 to encourage more companies to adopt the fair value method of accounting for stock based compensation plans and amends the disclosure requirements of FAS 123 to require more prominent disclosure in both annual and interim financial statements. Although FAS 148 does not require companies to

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adopt the fair value method, the new rules are effective beginning in the first quarter of 2003 for those companies that follow the “disclosure only” provisions of FAS 123.

     The Company has adopted the disclosure only provisions of FAS 123, and has elected to follow APB 25 and related interpretations in accounting for its stock options. Compensation cost for stock based awards is measured by the excess, if any, of the fair market value price at the grant date of the underlying stock over the amount the individual is required to pay for exercising the stock based award. Compensation cost for fixed based awards is measured at the grant date, and the Company uses the Black-Scholes option pricing model to determine the fair value estimates for disclosure purposes. The Black-Scholes option pricing model requires the use of subjective assumptions which can materially affect the value estimates. Therefore, the model does not necessarily provide a reliable single measure of the fair value of the Company’s stock options.

     At the December 2002 Annual Meeting of Stockholders, stockholders approved a new stock incentive plan (the “2002 Stock Incentive Plan”) that reserves 250,000 shares of Common Stock to replace various stock based awards that were voluntarily terminated in January 2002. In July 2002, 176,655 stock options were granted at an exercise price of $5.91, all of which were outstanding at June 30, 2003. The stock options are fully vested, and none have been exercised or cancelled. In performing the computation of the fair value of each option grant, which is estimated on the date of grant using the Black-Scholes option pricing model, the following assumptions were used for these grants: no dividends; expected volatility of 87.7%; average risk-free interest rate of 6.0%; and expected life of 10 years.

     No option based employee compensation has been recognized in reported net income and all of the options granted had an exercise price equal to the market price of the underlying common stock on the date of grant. As the options granted were fully vested, for pro forma purposes, the estimated fair value of the options was expensed in the fiscal 2003 first quarter, when the options were granted. The Company’s pro forma information follows (in thousands except for earnings per share and per share data).

Pro forma net income and earnings per share	Fiscal 2003
Net income (loss) as reported	$	421
Deduct: Total stock-based compensation expense determined under fair value based method for all awards granted since January 1, 1995, net of related tax effects		(475	)
Pro forma net (loss) income	$	(54	)
Basic and diluted income per share as reported	$	0.35
Pro forma basic and diluted (loss) income per share	$	(0.04	)

     Pro forma net income and earnings per share for fiscal 2002 and 2001 are not presented as all stock based compensation plans previously adopted by the Company were terminated in January 2002 and the current options outstanding were not granted until fiscal 2003. At the time the options were voluntarily terminated, the Company cancelled 130,155 options held by 33 persons at an average price of $21.75. Also terminated were 5,000 options held by 3 directors of the Company at an average price of $22.50 and stock appreciation rights for 3 executives for 50,000 shares, granted at a base price of $33.75.

     Until its expiration on December 31, 2001, the Company also allowed employees to defer a portion of their salary to participate in an Employee Stock Purchase Plan (the “ESPP”). The ESPP allowed employees to make an election to purchase shares at the lower of 85 percent of the closing market price of the Company’s stock on the first or last day of the calendar year. In fiscal 2002, 6,129 shares were purchased by employees, while there were no purchases in fiscal 2003 or fiscal 2001.

14. Contingencies

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

     The Company and two of its indirect subsidiaries were threatened with litigation by two separate California public interest groups alleging unlawful discharge of chemicals under California’s Safe Drinking Water & Toxic Enforcement Act

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of 1986 (“Proposition 65”). Both public interest groups ultimately sued the Company and two of its indirect subsidiaries in different lawsuits. The Company successfully settled one action for an immaterial amount in late June 2003. The Company continues to evaluate the merits of the allegations in the second action and is contesting and vigorously defending itself in that matter. Any potential liability related to this litigation cannot be assessed at this time, as the Company is in the early stages of the proceedings.

15. Segment Information

     The Company’s businesses distribute specialty plumbing products, floor and surface protection products, galvanized, black, brass and chrome pipe nipples, imported malleable fittings and other products. Products are sold to primarily to two customer categories, including (i) retail operations, which includes national and regional retailers, D-I-Y home centers and smaller independent retailers primarily located in the United States, and (ii) industrial operations, including wholesale and industrial supply distributors which are primarily located in the United States. There were no retail sales outside of the United States, and sales to foreign countries accounted for less than 5 percent of total sales. Set forth below is certain financial data relating to the Company’s business segments (in thousands of dollars).

					Corporate and
	Retail		Industrial		Other			Elimination			Total
Reported net sales:
Fiscal 2003	$	48,691	$	26,255		—		$	(7,804	)	$	67,142
Fiscal 2002		52,643		25,638		—			(7,856	)		70,425
Fiscal 2001		54,759		24,177		—			(7,566	)		71,370
Operating income (loss):
Fiscal 2003	$	2,617	$	608	$	(2,729	)		—		$	496
Fiscal 2002		4,039		494		(2,990	)		—			1,543
Fiscal 2001		1,459		514		(2,720	)		—			(747	)
Identifiable assets:
June 30, 2003	$	24,189	$	9,886	$	5,094			—		$	39,169
June 30, 2002		24,474		9,892		5,930			—			40,296

     The Company’s foreign operations manufacture, assemble, source and package products that are distributed by the Company’s wholly-owned operations, retailers and industrial customers. Net sales for those foreign operations amounted to $35.4 million, $35.3 million and $34.5 million for the fiscal years ended June 30, 2003, 2002 and 2001, respectively. Of these amounts, approximately $7.8 million, $7.9 million and $7.6 million were intercompany sales for the fiscal years ended June 30, 2003, 2002 and 2001, respectively. Identifiable assets for the foreign operations was $13.5 million and $13.5 million at June 30, 2003 and 2002, respectively.

16. Subsequent Event – Sale of Building

     On August 8, 2003, the Company executed an agreement to sell accepted an offer to sell the land and building in Taichung, Taiwan, used for the offices and warehouse of TWI, for approximately $2.0 million. The transaction is subject to bank financing and certain other conditions, and is expected to close within 90 days. At June 30, 2003, the net book value of this asset was approximately $1.0 million. TWI has agreed to lease approximately 33,000 square feet of the 55,000 square feet space for four years, and has signed a lease with the prospective purchaser which it believes reflects market rates, and will become effective upon a sale of the facility. The Company will sublease approximately 11,000 square foot of that space to one of its joint venture operations.

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SUPPLEMENTARY FINANCIAL INFORMATION

     Quarterly Results of Operations:

     Presented below is a summary of the unaudited quarterly results of operations for the fiscal years ended June 30, 2003 and 2002 (in thousands, except per share amounts).

Fiscal 2003		1st Qtr.		2nd Qtr.			3rd Qtr.			4th Qtr.
Net sales		$	18,208	$	16,016		$	15,217		$	17,701
Gross profit			5,925		5,385			5,143			6,000
Operating income (loss)			579		48			(425	)		293
Other income			3		—			178			29
Income before provision (benefit) for income taxes			109		160			(375	)		280
Net income (loss)		$	349	$	(254	)	$	101		$	225
Basic loss per share:
	Net income	$	0.29	$	(0.21	)	$	0.08		$	0.19
Diluted loss per share:
	Net income	$	0.29	$	(0.21	)	$	0.08		$	0.19

Fiscal 2002		1st Qtr.		2nd Qtr.		3rd Qtr.		4th Qtr.
Net sales		$	18,733	$	18,116	$	15,552	$	18,024
Gross profit			6,055		5,606		5,445		6,066
Operating income (loss)			896		656		72		(81	)
Other income			—		—		94		—
Income before provision (benefit) for income taxes			658		472		24		(240	)
Net income (loss)		$	584	$	384	$	673	$	(56	)
Basic loss per share:
	Net income	$	0.48	$	0.32	$	0.55	$	(0.05	)
Diluted loss per share:
	Net income	$	0.48	$	0.32	$	0.55	$	(0.05	)

     In fiscal 2003, the Company’s third quarter tax provision was favorably impacted by a ruling on a state tax matter for fiscal 1999, for which the Company reported a $0.55 million tax benefit. In the fiscal 2003 fourth quarter, the Company recorded a tax benefit for a favorable ruling on a state matter for fiscal 2000 and 2001 and for a change in tax law. In fiscal 2003, the Company reclassified dividend distributions it received from joint venture operations in Asia for all periods presented. Dividend distributions were previously netted in SG&A expenses. The effect of this reclassification did not change pre-tax earnings or net income, but did reduce operating income.

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

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K

(a)	(1	)	The following consolidated financial statements are included in Part II, Item 8:
			Report of Independent Public Accountants
			Balance Sheets—June 30, 2003 and 2002
			Statements of Operations—For the Years Ended June 30, 2003, 2002 and 2001
			Statements of Stockholders’ Equity—For the Years Ended June 30, 2003, 2002 and 2001
			Statements of Cash Flows—For the Years Ended June 30, 2003, 2002 and 2001
			Notes to Financial Statements For the Years Ended June 30, 2003, 2002 and 2001
			Supplementary Financial Information
(a)	(2	)	All schedules have been omitted because the required information is not present or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements including notes thereto.
(a)	(3	)	Exhibits
3.1.1*			Certificate of Incorporation of the Company dated October 27, 1989 (Exhibit 3(a) to the Company’s Form S-8 filed December 4, 1989, File No. 0-5888, incorporated herein by reference).
3.1.2*			Certificate of Amendment to Certificate of Incorporation of the Company dated November 30, 2000 (Exhibit 3.1.2 to Annual Report on Form 10-K for the year ended June 30, 2003, File No. 0-5888, incorporated herein by reference).
3.1.3*			Certificate of Amendment to Certificate of Incorporation of the Company dated February 6, 2001 (Exhibit 3.1.3 to Annual Report on Form 10-K for the year ended June 30, 2003, File No. 0-5888, incorporated herein by reference).
3.1.4*			Certificate of Amendment to Certificate of Incorporation of the Company dated December 3, 2002 (Exhibit 3.1.4 to Annual Report on Form 10-K for the year ended June 30, 2003, File No. 0-5888, incorporated herein by reference).
3.2*			By-laws of the Company (Exhibit 3.2 to Annual Report on Form 10-K for the year ended June 30, 1990, File No. 0-5888, incorporated herein by reference).
4.7*			Warrant Agreement, dated as of May 20, 1994, by and between Waxman Industries, Inc. and The Huntington National Bank, as Warrant Agent (Exhibit 4.2 to Waxman Industries, Inc.’s Form S-4 filed June 20, 1994, incorporated herein by reference).
4.8*			Warrant Certificate (Exhibit 4.3 to Waxman Industries, Inc.’s Form S-4 filed June 20, 1994, incorporated herein by reference).
4.9*			Securities Purchase Agreement for Notes and Warrants dated as of September 17, 1991, among the Company and each of the Purchasers referred to therein (Exhibit 4.4 to Annual Report on Form 10-K for the year ended June 30, 1991, File No. 0-5888, incorporated herein by reference).
4.10*			Revolving Credit, Term Loan and Security Agreement, dated as of February 13, 2002, by and among PNC Bank, National Association, as Lender and as Agent, and Waxman Industries, Inc., Waxman Consumer Products Group Inc., Waxman USA Inc. and WAMI Sales, Inc., as

28

	Borrowers (Exhibit 10.1 on Report 8-K filed February 27, 2002, incorporated herein by reference).
4.11*	Second Amendment Agreement dated August 20, 2003 to the Revolving Credit, Term Loan and Security Agreement by and among PNC Bank, National Association, as Lender and as Agent, and Waxman Industries, Inc., Waxman Consumer Products Group Inc., Waxman USA Inc. and WAMI Sales, Inc., as Borrowers (Exhibit 4.11 to Annual Report on Form 10-K for the year ended June 30, 2003, File No. 0-5888, incorporated herein by reference).
10.1*	Lease between the Company as Lessee and Aurora Investment Co. as Lessor dated June 30, 1992 (Exhibit 10.1 to Annual Report on Form 10-K for the year ended June 30, 1992, File No. 0-5888, incorporated herein by reference).
10.2*	Policy Statement (revised as of June 1, 1980) regarding the Company’s Profit Incentive Plan (Exhibit 10(c)-1 to Annual Report on Form 10-K for the year ended June 30, 1984, File No. 0-5888, incorporated herein by reference).
10.6*	Tax Sharing Agreement dated May 20, 1994 among Waxman Industries, Waxman USA, Waxman Consumer Products Group Inc., WOC Inc. and Western American Manufacturing, Inc. (Exhibit 10.6 to Waxman Industries, Inc.’s Form S-4 filed June 20, 1994, incorporated herein by reference).
10.7*	Waxman Industries, Inc. 2002 Stock Incentive Plan, adopted as of December 6, 2001 (Exhibit 8 to Schedule to Tender Offer Statement filed on December 7, 2001, incorporated herein by reference).
10.8*	Intercorporate Agreement dated May 20, 1994 among Waxman Industries, Waxman USA, Waxman Consumer Products Group Inc., WOC Inc. and Western American Manufacturing, Inc. (Exhibit 10.7 to Waxman Industries, Inc.’s Form S-4).
10.10*	Employment Agreement dated November 1, 1994 between Waxman Consumer Products Group Inc. and Laurence Waxman (Exhibit 10.5 to Waxman Industries, Inc.’s Amendment No. 4 to Registration Statement on Form S-2 filed October 10, 1995, Registration No. 33-54211, incorporated herein by reference).
10.11*	Intercorporate Agreement dated March 28, 1996 among Waxman Industries, Inc., Waxman USA Inc., Waxman Consumer Products Group Inc., WOC Inc. and TWI, International, Inc. (Exhibit 10.8 to Waxman Industries, Inc.’s Amendment No. 8 to Registration Statement on Form S-2 filed April 15, 1996, Registration No. 33-54211, incorporated herein by reference).
10.26*	Merger Agreement, dated as of July 10, 2000, by and among Wilmar Industries, Inc. (“Wilmar”), BW Acquisition, Inc. (“BW Acquisition”) and Barnett Inc. (“Barnett”) (Exhibit 10.1 to Current Report on Form 8-K filed July 17, 2000, File No. 0-5888, incorporated herein by reference).
10.27*	Stockholder Agreement, dated as of July 10, 2000, by and among the Company, Waxman USA, Wilmar and BW Acquisition (Exhibit 10.2 to Current Report on Form 8-K filed July 17, 2000, File No. 0-5888, incorporated herein by reference).
10.28*	Voting Trust Agreement, dated as of July 10, 2000, by and among Waxman USA, Wilmar, BW Acquisition, Barnett and American Stock Transfer & Trust Company. (Exhibit 10.3 to Current Report on Form 8-K filed July 17, 2000, File No. 0-5888, incorporated herein by reference).
10.29*	Agreement, dated as of July 7, 2000, by and between Waxman USA and Barnett (Exhibit 10.4 to Current Report on Form 8-K filed July 17, 2000, File No. 0-5888, incorporated herein by reference).
14.1*	Code of Business Conduct and Ethics (incorporated herein by reference to the Registrant’s web site located at http://www.waxmanind.com).

29

21.1*	Subsidiaries (Exhibit 21.1 to Waxman Industries, Inc.’s Form S-4 filed June 20, 1994, incorporated herein by reference).
23.1	Consent of Meaden & Moore, Ltd.
31.1	Certification of Co-Chief Executive Officer Pursuant to Rule 13a-14(a) Promulgated Under the Securities Exchange Act of 1934.
31.2	Certification of Co-Chief Executive Officer Pursuant to Rule 13a-14(a) Promulgated Under the Securities Exchange Act of 1934.
31.3	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) Promulgated Under the Securities Exchange Act of 1934
32.1	Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* Incorporated herein by reference as indicated.

(b) Reports on Form 8-K

The Registrant filed a report on Form 8-K on May 5, 2003, incorporating by reference the May 5, 2003 press release by the Company, announcing its fiscal 2003 third quarter and year to date earnings and condensed income statements for the periods ended March 31, 2003 and 2002 and condensed balance sheets for June 30, 2002 and March 31, 2003.

30

SIGNATURES

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

	WAXMAN INDUSTRIES, INC.
May 14, 2004	By:	/s/ Mark Wester
		Mark Wester
		Senior Vice President and
		Chief Financial Officer

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Exhibit Index

23.1	Consent of Meaden & Moore, Ltd.
31.1	Certification of Co-Chief Executive Officer Pursuant to Rule 13a-14(a) Promulgated Under the Securities Exchange Act of 1934.
31.2	Certification of Co-Chief Executive Officer Pursuant to Rule 13a-14(a) Promulgated Under the Securities Exchange Act of 1934.
31.3	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) Promulgated Under the Securities Exchange Act of 1934
32.1	Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in Registration Statement No. 333-92076 on Form S-8 of our report on the consolidated financial statements and report as to schedules included in the Annual Report on Form 10-K of Waxman Industries, Inc. and Subsidiaries for the years ended June 30, 2003, 2002 and 2001.

MEADEN & MOORE, LTD.
Certified Public Accountants

May 13, 2004
Cleveland, Ohio

33

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Melvin Waxman, certify that:

1.	I have reviewed this annual report on Form 10-K of Waxman Industries, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

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

(b) [Reserved];

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 14, 2004	By: /s/ Melvin Waxman
	Melvin Waxman
	Chairman of the Board and
	Co-Chief Executive Officer

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EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Armond Waxman, certify that:

1.	I have reviewed this annual report on Form 10-K of Waxman Industries, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

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

(b) [Reserved];

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 14, 2004	By: /s/ Armond Waxman
	Armond Waxman
	President and
	Co-Chief Executive Officer

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EX-31.3

Exhibit 31.3

CERTIFICATIONS

I, Mark Wester, certify that:

I have reviewed this annual report on Form 10-K of Waxman Industries, Inc.;

1.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
2.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
3.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

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

(b) [Reserved];

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

4. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 14, 2004	By: /s/ Mark W. Wester
	Mark W. Wester
	Senior Vice President and
	Chief Financial Officer
	(principal financial and
	accounting officer

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EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

               In connection with the Annual Report on Form 10-K of Waxman Industries, Inc. (the “Company”) for the fiscal year ended June 30, 2003, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

• the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

• the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 14, 2004

/s/ Melvin Waxman

Melvin Waxman

Chairman of the Board and Co-Chief Executive Officer

/s/ Armond Waxman

Armond Waxman

President, Co-Chief Executive Officer and Treasurer

/s/ Mark W. Wester

Mark W. Wester

Senior Vice President and Chief Financial Officer

37