Annual Report (Form 10-K), fiscal year 1994

ITEM 1. DESCRIPTION OF BUSINESS
(a) General Development of Business. . . . . . . . . . . . . . . . . . . A83-86, A94-96 (b) Financial Information About Industry Segments . . . . . . . . . . . . . A81-86, A109-110 (c) Narrative Description of Business. . . . . . . . . . . . . . . . . . . . . . . A83-86 (d) Financial Information About Foreign and Domestic Operations and Export Sales . . . . . . . . . . . . . . . . . . . . .A85, A109-110
ITEM 2.



ITEM 2. DESCRIPTION OF PROPERTY . . . . . . . . . . . . . . . A85-86
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS . . . . . . . . . . .A79-80, A86, A101-102
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. . . . . . . . . . . . . . . . . . . . . **
PART II
ITEM 5.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS
(a) Market Information. . . . . . . . . . . . . . .A86, A114-115 (b) Holders . . . . . . . . . . . . . . . . . . . . . .A86, A115 (c) Dividends . . . . . . . . . . . . . . . . . . . . . . . A115
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA . . . . . . . . . . A81-82, A109-110 ____________________
* All page references preceded by the letter "A" are to the page numbers of the 1994 Annual Report to Stockholders incorporated herein by reference at Exhibit 13-A, page references preceded by the letter "P" refer to pages in the 1995 Proxy Statement, and other page references refer to the sequential numbers on the original copy of the Form 10-K filed with the Securities and Exchange Commission.
** Not applicable.
Location of Information* ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(a) Full Fiscal Years . . . . . . . . . . . . . . . . . . A76-80 (b) Interim Periods . . . . . . . . . . . . . . . . . . . . . **
ITEM 8.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(a) Report of Independent Public Accountants. . . . . . . . A113 (b) Consolidated Balance Sheets-- December 31, 1994 and 1993. . . . . . . . . . . . . . A88-89 (c) Consolidated Statements of Income-- Years ended December 31, 1994, 1993 and 1992. . . . . . .A90 (d) Consolidated Statements of Stockholders' Equity--Years ended December 31, 1994, 1993 and 1992. . . . . . . . . . . . . . . . . . . . . . . . .A91 (e) Consolidated Statements of Cash Flows-- Years ended December 31, 1994, 1993 and 1992. . . . . . .A92 (f) Notes to Consolidated Financial Statements-- December 31, 1994 . . . . . . . . . . . . . . . . . .A93-111
ITEM 9.

ITEM 9. CHANGES IN CERTIFYING ACCOUNTANTS
During 1993, the corporation's management and Audit Committee obtained competitive proposals for audit services from a number of prominent accounting firms, including the corporation's former principal accountants. On August 12, 1993, the Board of Directors approved the appointment of Arthur Andersen LLP as the corporation's principal independent accountants for the fiscal year ending December 31, 1993, replacing Ernst & Young LLP, who previously served in this role. The decisions to invite proposals and to select the proposal of Arthur Andersen LLP were recommended by the Audit Committee.
____________________
* All page references preceded by the letter "A" are to the page numbers of the 1994 Annual Report to Stockholders incorporated herein by reference at Exhibit 13-A, page references preceded by the letter "P" refer to pages in the 1995 Proxy Statement, and other page references refer to the sequential numbers on the original copy of the Form 10-K filed with the Securities and Exchange Commission.
** Not applicable.
The report of Ernst & Young LLP on the corporation's financial statements for fiscal year 1992 did not contain an adverse opinion or a disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles.
In connection with the audit of the corporation's financial statements for fiscal year 1992 and in any subsequent interim period, there were no disagreements with Ernst & Young LLP on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to the satisfaction of Ernst & Young LLP, would have caused them to make reference to the matter in their report.
The above information was included in a Form 8-K current report filed by the registrant with the Securities and Exchange Commission on August 19, 1993. The corporation delivered a copy of the Form 8-K to Ernst & Young LLP. A letter to the Securities and Exchange Commission from Ernst & Young LLP stating that Ernst & Young LLP agrees with the above statements is filed as an exhibit to the Form 8-K.
Location of Information* PART III
ITEM 10.



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Identification of Directors . . . . . . . . . . A116, P19-23 (b) Identification of Executive Officers. . . . . . . . . . . . . . . . A86-87, A117, P19-24 (c) Identification of Certain Significant Employees . . . . . . . . . . . . . . . . . . ** (d) Family Relationships. . . . . . . . . . . . . . . . . . . ** (e) Business Experience . . . . . . . . . . . . . . . . . P21-24 (f) Involvement in Certain Legal Proceedings . . . . . . . . . . . . . .A79-80, A86, A101-102 (g) Promoters and Control Persons . . . . . . . . . . . . . . **
____________________
* All page references preceded by the letter "A" are to the page numbers of the 1994 Annual Report to Stockholders incorporated herein by reference at Exhibit 13-A, page references preceded by the letter "P" refer to pages in the 1995 Proxy Statement, and other page references refer to the sequential numbers on the original copy of the Form 10-K filed with the Securities and Exchange Commission.
** Not applicable.
Location of Information* ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
(a) Summary Compensation Table. . . . . . . . . . . . . . P28-29 (b) Option Grants Table . . . . . . . . . . . . . . . . . . .P30 (c) Aggregated Option Exercises and Fiscal Year-end Option Value Table. . . . . . . . . . . .P31 (d) Long-term Incentive Plan Awards Table . . . . . . . . . .P31 (e) Defined Benefit Plan Disclosure . . . . . . . . . . . P32-34 (f) Compensation of Directors . . . . . . . . . . . .P27-28, P44 (g) Employment Contracts. . . . . . . . . . . . . . . . . . .P29 (h) Additional Information with Respect to Compensation Committee Interlocks and Insider Participation in Compensation Decisions . . . . . . . . . . . . . . . . . . . . . . . .P44 (i) Organization/Compensation Committee Report on Executive Compensation. . . . . . . . . . . P34-39 (j) Performance Graphs. . . . . . . . . . . . . . . . . . P43-44
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners . . . . . . . . . . . . . . . . . . P18-19 (b) Security Ownership of Management. . . . . . . . . . . P19-20 (c) Changes in Control. . . . . . . . . . . . . . . . . . . . **
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Transactions With Management and Others . . . . . . . . . ** (b) Certain Business Relationships. . . . . . . P18-20, P25, P28 (c) Indebtedness of Management. . . . . . . . . . . . . . P29-30 (d) Transactions With Promoters . . . . . . . . . . . . . . . **
____________________
* All page references preceded by the letter "A" are to the page numbers of the 1994 Annual Report to Stockholders incorporated herein by reference at Exhibit 13-A, page references preceded by the letter "P" refer to pages in the 1995 Proxy Statement, and other page references refer to the stamped sequential numbers on the original copy of the Form 10-K filed with the Securities and Exchange Commission.
** Not applicable.
Location of Information* PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(a) The following consolidated financial statements, financial statement schedules and exhibits are filed as part of this report:
1. Financial Statements. The consolidated financial statements of Guardsman Products, Inc., and the report of independent public accountants covering these financial statements, included in the Company's 1994 Annual Report to Stockholders are incorporated herein by reference and are listed in Item 8 of this Cross Reference Sheet.
2. Financial Statement Schedule.** The following consolidated financial statement schedule is included in Item 14(d) and should be read in conjunction with the consolidated financial statements of Guardsman Products, Inc.:
Report of Independent Public Accountants on Financial Statement Schedule. . . . . . . . .Page 13
Schedule II - Valuation and Qualifying Accounts. . . . . . . . . . . . . . Page 14
_________________________
* All page references preceded by the letter "A" are to the page numbers of the 1994 Annual Report to Stockholders incorporated herein by reference at Exhibit 13-A, page references preceded by the letter "P" refer to pages in the 1995 Proxy Statement, and other page references refer to the sequential numbers on the original copy of the Form 10-K filed with the Securities and Exchange Commission.
** All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are either not required under the related instructions, are inapplicable or equivalent disclosure has been made in the consolidated financial statements and notes thereto, which are included in the Registrant's 1994 Annual Report to Stockholders, and are incorporated herein. Therefore, these schedules have been omitted.
Location of Information*
3. Exhibits. The exhibits included in Item 14(c) are listed on the accompanying Exhibit Index on pages 16 to 19.
EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
The following is a listing of executive compensation plans and arrangements (also included in the accompanying Exhibit Index), noting where a copy of each plan or arrangement can be found:
10-A Employment Agreement between the Registrant and Charles E. Bennett - Form 10-Q for the quarter ended June 30, 1990, Exhibit 10a. 10-B Employment Agreement between the Registrant and Edward D. Corlett - Form 10-Q for the quarter ended June 30, 1990, Exhibit 10b. 10-C Employment Agreement between the Registrant and Keith C. Vander Hyde, Jr. - Form 10-Q for the quarter ended September 30, 1991, Exhibit 10b. 10-D Employment Agreement between the Registrant and Everette L. Martin - Form 10-K for the year ended December 31, 1992, Exhibit 10-E. 10-E Employment Agreement between the Registrant and Henry H. Graham, Jr., Pages 20 to 30. 10-F Form of Guardsman Products, Inc., Supplemental Executive Retirement Plan - Form 10-K for the year ended December 31, 1989, Exhibit 10-D. 10-G Amendments to Guardsman Products, Inc., Supplemental Executive Retirement Plan - Form 10-K for the year ended December 31, 1989, Exhibit 10-E. 10-H Guardsman Products, Inc., Retirement Plan for Directors, with attached amendments - Form 10-K for the year ended December 31, 1992, Exhibit 10-H. 10-I Guardsman Products, Inc. Pension Restoration Plan, Pages 31 to 39. 10-K Guardsman Products, Inc. 1980 Performance Award Plan - Form 10-K for the year ended December 31, 1983, Exhibit 10-B. 10-L Guardsman Products, Inc., 1984 Incentive Stock Option Plan, with attached amendments - Form 10-K for the year ended December 31, 1992, Exhibit 10-K.
Location of Information*
10-M Guardsman Products, Inc., 1988 Stock Option Plan, with attached amendments - Form 10-K for the year ended December 31, 1992, Exhibit 10-L. 10-N Guardsman Products, Inc., 1991 Stock Option Plan -Definitive Proxy Statement filed April 3, 1991, Exhibit A.
(b) The Company has not filed any reports with the Securities and Exchange Commission on Form 8-K during the last quarter of the period covered by this report.
(c) Exhibits required to be filed in response to this portion of Item 14 are submitted as a separate section of this report.
(d) Financial statement schedule required to be filed in response to this portion of Item 14 is submitted as a separate section of this report.
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . .Pages 10-11
_________________________
* All page references preceded by the letter "A" are to the page numbers of the 1994 Annual Report to Stockholders incorporated herein by reference at Exhibit 13-A, page references preceded by the letter "P" refer to pages in the 1995 Proxy Statement, and other page references refer to the sequential numbers on the original copy of the Form 10-K filed with the Securities and Exchange Commission.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
GUARDSMAN PRODUCTS, INC. (registrant)
Dated: March 29, 1995 By /s/ Henry H. Graham, Jr. Henry H. Graham, Jr. Vice President of Finance, Chief Financial Officer and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report on Form 10-K has been signed below on March 29, 1995 by the following persons on behalf of the registrant and in the capacities indicated:
/s/ Paul K. Gaston /s/ Charles E. Bennett Paul K. Gaston* Charles E. Bennett Chairman President, Chief Executive Officer and Director (Principal Executive Officer)
/s/ Henry H. Graham, Jr. /s/ J. Russell Fowler Henry H. Graham, Jr. J. Russell Fowler* Vice President of Finance Director Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)
/s/ K. Kevin Hepp /s/ George R. Kempton K. Kevin Hepp* George R. Kempton* Director Director
/s/ Winthrop C. Neilson /s/ Robert D. Tuttle Winthrop C. Neilson* Robert D. Tuttle* Director Director
/s/ James L. Sadler /s/ Robert W. Schult James L. Sadler* Robert W. Schult* Director Director
/s/ Grant C. Gentry *By/s/ Henry H. Graham, Jr. Grant C. Gentry* Henry H. Graham, Jr. Advisory Member Attorney-in-fact
ANNUAL REPORT ON FORM 10-K
ITEM 14(c) and (d)
FINANCIAL STATEMENT SCHEDULE
AND
CERTAIN EXHIBITS
YEAR ENDED DECEMBER 31, 1994
GUARDSMAN PRODUCTS, INC.
GRAND RAPIDS, MICHIGAN
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE
To the Stockholders and Board of Directors of Guardsman Products, Inc.:
We have audited, in accordance with generally accepted auditing standards, the consolidated financial statements as of December 31, 1994 and 1993, and for the years then ended included in Guardsman Products, Inc.'s annual report to stockholders incorporated by reference in this Form 10-K, and have issued our report thereon dated January 26, 1995. Our report on the consolidated financial statements includes an explanatory paragraph with respect to the change in the method of accounting for income taxes in 1993 as explained in note 6 to the consolidated financial statements. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed at Item 14(a)2 as of December 31, 1994 and 1993, and for the years then ended are the responsibility of the company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic financial statements. The schedule has been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP ARTHUR ANDERSEN LLP Grand Rapids, Michigan January 26, 1995
EXHIBIT INDEX
3-A Guardsman Products, Inc., Restated Certificate of Incorporation, which was filed as an exhibit to the Registrant's Form 8-K Current Report filed with the Securities and Exchange Commission on December 20, 1988, is hereby incorporated by reference.
3-B Guardsman Products, Inc., Bylaws, which was filed as an exhibit to the Registrant's Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on August 10, 1994, are hereby incorporated by reference.
4-A An amendment to the existing Credit Agreement (and related Revolving Credit Note), dated July 21, 1994, between Guardsman Products, Inc. and Comerica Bank to increase the amount the Company can borrow from $15,000,000 to $20,000,000, which was filed as an exhibit to the Registrant's Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on August 10, 1994, is hereby incorporated by reference.
4-B An amendment to the existing Credit Agreement (and related Revolving Credit Note), dated November 9, 1993, between Guardsman Products, Inc. and Comerica Bank to increase the amount the Company can borrow from $10,000,000 to $15,000,000, which was filed as an exhibit to the Registrant's Form 10-K Annual Report filed with the Securities and Exchange Commission on March 22, 1994, is hereby incorporated by reference.
4-C $10,000,000 Credit Agreement (and Related Revolving Credit Note) between Guardsman Products, Inc. and Comerica Bank, dated June 5, 1992, which was filed as an exhibit to the Registrant's Form 10-K Annual Report filed with the Securities and Exchange Commission on March 23, 1993, is hereby incorporated by reference.
4-D $20,000,000 Credit Agreement (and related Note) between Guardsman Products, Inc. and The First National Bank of Chicago, dated July 15, 1994, which as filed as an exhibit to the Registrant's Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on August 10, 1994, is hereby incorporated by reference.
4-E The Registrant also has other classes of long-term debt instruments outstanding. The amount of debt outstanding on these other long-term debt instruments at the date of this Form 10-K Annual Report does not exceed 10% of the Registrant's total consolidated assets. The Registrant agrees to furnish copies of agreements pertaining to such long-term indebtedness to the Securities and Exchange Commission upon request.
10-A Employment Agreement between the Registrant and Charles E. Bennett, which was filed as an exhibit to the Registrant's Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on August 13, 1990, is hereby incorporated by reference.
10-B Employment Agreement between the Registrant and Edward D. Corlett, which was filed as an exhibit to the Registrant's Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on August 13, 1990, is hereby incorporated by reference.
10-C Employment Agreement between the Registrant and Keith C. Vander Hyde, Jr., which was filed as an exhibit to the Registrant's Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on November 13, 1991, is hereby incorporated by reference.
10-D Employment Agreement between the Registrant and Everette C. Martin, which was filed as an exhibit to the Registrant's Form 10-K Annual Report filed with the Securities and Exchange Commission on March 23, 1993, is hereby incorporated by reference.
10-E Employment Agreement between the Registrant and Henry H. Graham, Jr. dated January 15, 1995, Pages 20 to 30.
10-F Form of Guardsman Products, Inc. Supplemental Executive Retirement Plan between the Registrant and Charles E. Bennett, Edward D. Corlett, Henry H. Graham, Jr., Everette L. Martin, Keith C. Vander Hyde, Jr. and nine other current and former employees, which was filed as an exhibit to the Registrant's Form 10-K Annual Report for the year ended December 31, 1989, is hereby incorporated by reference.
10-G Amendments to Guardsman Products, Inc. Supplemental Executive Retirement Plan approved by Board of Directors on February 9, 1989, and November 14, 1989, which were filed as an exhibit to the Registrant's Form 10-K Annual Report for the year ended December 31, 1989, are hereby incorporated by reference.
10-H Guardsman Products, Inc. Retirement Plan for Directors, with attached amendments, which was filed as an exhibit to the Registrant's Form 10-K Annual Report filed with the Securities and Exchange Commission on March 23, 1993, is hereby incorporated by reference.
10-I Guardsman Products, Inc. Pension Restoration Plan, Pages 31 to 39.
10-J Form of Indemnity Agreement entered into by the Registrant with the directors and executive officers of the Corporation, which was filed as an exhibit to the Registrant's Form 10-K Annual Report for the year ended December 31, 1986, is hereby incorporated by reference.
10-K Guardsman Products, Inc. 1980 Performance Award Plan, which was filed as an exhibit to the Registrant's Form 10-K Annual Report for the year ended December 31, 1983, is hereby incorporated by reference.
10-L Guardsman Products, Inc. 1984 Incentive Stock Option Plan, with attached amendments, which was filed as an exhibit to the Registrant's Form 10-K Annual Report filed with the Securities and Exchange Commission on March 23, 1993, is hereby incorporated by reference.
10-M Guardsman Products, Inc. 1988 Stock Option Plan, with attached amendments, which was filed as an exhibit to the Registrant's Form 10-K Annual Report filed with the Securities and Exchange Commission on March 23, 1993, is hereby incorporated by reference.
10-N Guardsman Products, Inc. 1991 Stock Option Plan, which was filed as an exhibit to the Registrant's Definitive Proxy Statement filed with the Securities and Exchange Commission on April 3, 1991, is hereby incorporated by reference.
10-O Guardsman Products, Inc. 1988 Dividend Reinvestment and Stock Purchase Plan, which was filed as an exhibit to the Registrant's Form 10-K Annual Report for the year ended December 31, 1988, is hereby incorporated by reference.
10-P Consulting Agreement between the Registrant and Paul K. Gaston dated January 1, 1994, Pages 40 to 47.
10-Q Non-Qualified Stock Option Agreement between the Registrant and Paul K. Gaston dated November 10, 1994, Pages 48 to 51.
10-R Stockholder Agreement between the Registrant and James L. and John H. Sadler dated August 31, 1994, Pages 52 to 66.
10-S Noncompetition Agreement between the Registrant and James L. Sadler dated August 31, 1994, Pages 67 to 74.
11 Statement Re: Computation of Per Share Income, Page 75.
13-A Excerpts from 1994 Annual Report to Stockholders, Pages 76 to 119.
13-B Report of Prior Independent Auditors, Page 120.
16 Letter on change in certifying accountants, which was filed as an exhibit to the Registrant's Form 8-K current report filed with the Securities and Exchange Commission on August 19, 1993, is hereby incorporated by reference.
21 List of Subsidiaries, Page 121.
23-A Consent of Independent Public Accountants, Page 122.
23-B Consent of Prior Independent Auditors, Page 123.
24 Powers of Attorney, Pages 124 to 139.
27 Financial Data Schedule, Page 140.