SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the plan year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition Period from ______ to ______
Commission file number 1-3916
ARTRA GROUP INCORPORATED
EMPLOYEE STOCK OWNERSHIP PLAN
(full title of plan)
ARTRA GROUP INCORPORATED
500 Central Avenue
Northfield Illinois 60093
(Name of issuer of the securities held pursuant to the plan
and address of its principal executlve office)
<PAGE>
ARTRA GROUP INCORPORATED
EMPLOYEE STOCK OWNERSHIP PLAN
Table of Contents
Page
Number
------
Report of Independent Accountants 2
Financial Statements
Statements of Net Assets Available for Plan Benefits
at December 31, 1995 and 1994 3
Statements of Changes in Net Assets Available
for Plan Benefits for the years ended
December 31, 1995 and 1994 4
Notes to the Financial Statements 5 - 8
Signatures 9
Supplemental Schedules
Item 27a - Schedule of Assets Held for
Investment Purposes at December 31, 1995 10
Item 27d - Schedule of Reportable Transactions
for the year ended December 31, 1995 11
Schedules I, II and III have been omitted because the required
information is shown in the Financial Statements or is not
applicable.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees
ARTRA GROUP INCORPORATED EMPLOYEE STOCK OWNERSHIP PLAN
Northfield, Illinois
We have audited the financial statements of the ARTRA GROUP INCORPORATED
EMPLOYEE STOCK OWNERSHIP PLAN (the "Plan") as listed in the index on page 1 of
this Form 11-K. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described in Note 2 to the financial statements, the Board of Directors of
ARTRA GROUP Incorporated approved a plan of termination effective August 1,
1995, and the Company commenced liquidation shortly thereafter.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 1995 and 1994 and the changes in net assets available for plan
benefits for the years ended December 31, 1995 and 1994 in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule is presented
for the purposes of complying with the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974 and are not a required part of the basic financial
statements. The supplemental schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
COOPERS & LYBRAND
Chicago, Illinois
June 21, 1996
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ARTRA GROUP INCORPORATED
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1995 and 1994
(in thousands, except share data)
1995 1994
------ ------
Assets:
Interest bearing cash and cash equivalents $ 11 $ 3
ARTRA GROUP Incorporated common stock
(271,775 shares in 1995 and 277,590 shares
in 1994; cost $1,480 in 1995 and $1,530 in 1994) 1,665 1,596
Employer contribution receivable
(ARTRA GROUP Incorporated
common stock, 15,000 shares) -- 86
------ ------
Net assets available for Plan benefits
$1,676 $1,685
====== ======
The accompanying notes are an integral part of the financial statements.
<PAGE>
ARTRA GROUP INCORPORATED
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
For the years ended December 31, 1995 and 1994
(in thousands)
1995 1994
------- -------
Additions:
Employer contributions $ 27 $ (36)
Net appreciation in fair value of investment 86 --
------- -------
Total additions 113 (36)
------- -------
Deductions:
Net depreciation in fair value of investment -- 229
Withdrawals and distributions to participants 122 125
------- -------
Total deductions 122 354
------- -------
Net deductions (9) (390)
Net assets available for plan benefits,
beginning of year 1,685 2,075
------- -------
Net assets available for plan benefits,
end of year $ 1,676 $ 1,685
======= =======
The accompanying notes are an integral part of the financial statements.
<PAGE>
ARTRA GROUP INCORPORATED
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the ARTRA GROUP Incorporated Employee Stock
Ownership Plan ("ESOP" or the "Plan") are prepared using the accrual basis of
accounting. The investment in ARTRA GROUP Incorporated ("ARTRA" or the
"Company") common stock is stated at quoted market value.
Sales of investments are reflected on a settlement date basis. Gains or losses
on sales of securities are based on average cost. In accordance with the policy
of stating investments at fair value, the net appreciation (depreciation) in the
fair value of investments reflects both realized gains and losses and the change
in the unrealized appreciation (depreciation) of investments held at year-end.
Expenses of the Plan and its administration are paid by the Company and its
affiliates, except that brokerage commissions and transfer taxes on cash
distributions are paid by the participant receiving the distribution. The
Company and its affiliates have elected to pay these expenses; however, the
Company and its affiliates may cease to pay all or some of these expenses, in
which event they will be paid by the Trustee out of the assets of the Plan.
2. PLAN DESCRIPTION AND STATUS
The Plan, which became effective June 1, 1990, was designed to enable
participants to acquire stock ownership interests in ARTRA and to share in the
growth and prosperity of ARTRA and its affiliated companies. The Plan sponsor
has the right under the Plan to terminate the Plan at any time, subject to the
provisions of the Employee Retirement Income Security Act of 1974. In the event
of a Plan termination, participants become fully vested in their Employer
contribution accounts and are entitled to a distribution.
Effective August 1, 1995, the Company terminated the ESOP and commenced the
process of distributing the related fully vested Employee accounts to the ESOP's
participants. Since the termination of the ESOP occurred prior to the end of the
Plan year, the Plan is required, under generally accepted accounting principles,
to present its financial statements on a liquidation basis of accounting. This
basis requires that all assets and liabilities be recorded at their fair value.
The Plan assets consist entirely of ARTRA common stock and cash, and the Plan
has been reporting the fair market value of these assets historically in its
financial statements. Since this method of accounting is in accordance with the
liquidation basis of accounting, no adjustment to the Plan's financial
statements is required at December 31, 1995.
Plan assets are invested principally in ARTRA common stock. The Plan is
administered by ARTRA and its duly authorized agent, an employee of the Company.
Eligible employees became participants in the Plan after completing one year of
service. The provisions of the Plan are detailed in the official Plan document,
which governs the operations of the Plan. The following is an overview of the
major Plan provisions. The official Plan document should be reviewed for a
complete description of Plan provisions. There were 898 and 920 employees
participating in the Plan as of December 31, 1995 and 1994 respectively.
<PAGE>
ARTRA GROUP INCORPORATED
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS - (continued)
Contributions to the Plan were made by ARTRA and its affiliated companies who
participate in the Plan, subject to the authorization and discretion of ARTRA's
Board of Directors. Contributions may be paid to the Trust in cash or shares of
ARTRA common stock. Cash contributions to the Plan, except for nominal amounts
used for Plan expenses or the purchase of fractional shares from withdrawing
participants, must be invested in ARTRA common stock. The Plan did not allow for
participant contributions. All Employer contributions made on behalf of a
participant for a particular Plan year were allocated to the participant's
Employer contribution account as of the last day of the Plan year (December 31)
based on certain eligibility requirements, as defined. Contributions and
forfeitures were allocated in the same proportion that the percentage of the
participant's compensation for the Plan year bears to the compensation of all
participants for the Plan year.
Upon termination of employment by reason of retirement, disability or death, the
balance of a participant's Employer contribution account became fully vested.
Due to the August 1, 1995 Plan termination, all active participants became fully
vested in their Employer contribution accounts. Prior to August 1, 1995, upon
termination of employment for reason other than retirement, disability or death,
the vested value of a participant's Employer contribution account was based upon
years of service as follows:
Years of Vesting Service Vested Percentage
------------------------ -----------------
Less than 3 0%
3 but less than 4 20%
4 but less than 5 40%
5 but less than 6 60%
6 but less than 7 80%
7 or more 100%
Participants who reached normal retirement age were automatically fully vested
in their Employer contribution accounts.
3. CONTRIBUTIONS
During 1995, ARTRA's Board of Directors authorized a contribution of 8,750 ARTRA
common shares for the period January 1, 1995 through July 31, 1995. The Plan
valued these shares at their fair market value on the date of receipt of $42,000
($4.75 per share).
Effective December 1994, ARTRA's Board of Directors authorized a contribution of
15,000 ARTRA common shares for the plan year ending December 31, 1994 and the
Plan accrued the contribution in its financial statements at its fair value of
$86,000 ($5.75 per share). The 15,000 shares were subsequently transferred to
the Plan during 1995. The Plan valued these shares at their fair market value on
the date of receipt of $71,000 ($4.75 per share) and reversed the excess of
their fair market value accrued at December 31, 1994 over their fair market
value on the date of receipt.
Effective December 1993, ARTRA's Board of Directors authorized a contribution of
65,000 ARTRA common shares for the plan year ending December 31, 1993 and the
Plan accrued the contribution in its financial statements at its fair value of
$447,000 ($6.875 per share). The 65,000 shares were subsequently transferred to
the Plan during 1994. The Plan valued these shares at their fair market value on
the date of receipt of $325,000 ($5.00 per share) and reversed the excess of
their fair market value accrued at December 31, 1993 over their fair market
value on the date of receipt.
<PAGE>
ARTRA GROUP INCORPORATED
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS - (continued)
Contributions to the Plan by ARTRA and its wholly owned subsidiary Bagcraft
Corporation of America ("Bagcraft") for the years ended December 31, 1995 and
1994 (in thousands) were:
1995 1994
------ ------
Bagcraft Corporation of America $ 24 $ (33)
ARTRA GROUP Incorporated 3 (3)
------ ------
$ 27 $ (36)
====== ======
4. INVESTMENTS
At December 31, 1995 the aggregate market value and cost of the investment in
the 271,775 shares of ARTRA common stock were $1,665,000 and $1,480,000,
respectively. At December 31, 1994, the aggregate market value and cost of the
investment in the 277,590 shares of ARTRA common stock were $1,596,000 and
$1,530,000, respectively. ARTRA's financial statements as of and for the year
ended December 28, 1995 have been separately audited and reported on by
independent accountants whose audit report dated April 9, 1996, expressed an
unqualified opinion modified to include an explanatory paragraph indicating
substantial doubt about the ability of ARTRA to continue as a going concern.
5. NET APPRECIATION (DEPRECIATION) OF FAIR VALUE OF INVESTMENTS
The realized loss on disposal and changes in unrealized appreciation
(depreciation) of ARTRA common stock for the years ended December 31, 1995 and
1994 (in thousands) were as follows:
1995 1994
------ ------
Proceeds from sale $ 130 $ 122
Less cost 163 132
------ ------
Realized loss $ (33) $ (10)
====== ======
Unrealized appreciation (depreciation)
at end of year $ 185 $ 66
Unrealized appreciation (depreciation)
at beginning of year 66 285
------ ------
Unrealized appreciation (depreciation)
during the year 119 (219)
------ ------
Net appreciation (depreciation) of investments $ 86 $ (229)
====== ======
<PAGE>
ARTRA GROUP INCORPORATED
EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS - (continued)
6. FEDERAL INCOME TAXES
The Plan is intended to be a stock bonus plan qualified under Section 401(a) of
the Internal Revenue Code ("Code") and the Trust under the Plan is intended to
be exempt from tax under Section 501(a) of the Code. The Plan is also intended
to be an Employee Stock Ownership Plan as defined in Section 4975(e)(7) of the
Code. The Plan has applied to the Internal Revenue Service ("IRS") for a
determination letter which the Plan sponsor believes would confirm the Plan, as
designed, is in compliance with the requirements of Section 401(a) of the Code.
The Plan sponsor believes the Plan and all amendments to the Plan satisfy the
requirements of Section 401 (a) of the Code, both in form and operation, and
that the Plan is therefore exempt from Federal income taxes. The Plan will,
however, be amended retroactively to June 1, 1990, if required by the IRS, in
order to obtain this determination.
7. RECONCILIATION TO FORM 5500
The financial statements are presented on the accrual basis of accounting. The
following reconciles the differences (in thousands) between Internal Revenue
Service Form 5500 reporting and the accrual basis financial statements for the
years ended December 31, 1995 and 1994.
1995 1994
------- -------
Statement of Net Assets Available for Plan Benefits
Net assets as reported on Form 5500 $ 1,676 $ 1,618
Add distributions payable to terminated participants -- 67
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Net assets as reported in the financial statements $ 1,676 $ 1,685
======= =======
Statement of Changes in Assets Available for Plan Benefits
Net decrease as reported on Form 5500 $ 58 $ (457)
Add distributions payable to terminated participants (67) 67
------- -------
Net decrease as reported in the financial statements $ (9) $ (390)
======= =======
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Trustees (or other persons who administer the Plan) have duly caused this annual
report to be signed on behalf of the undersigned there unto duly authorized.
ARTRA GROUP INCORPORATED
EMPLOYEE STOCK OWNERSHIP PLAN
-------------------------------------------
(Name of Plan)
June 21, 1996 By: JAMES D. DOERING
-------------------------------------------
JAMES D. DOERING
VICE PRESIDENT / TREASURER
ARTRA GROUP INCORPORATED
June 21, 1996 By: JOHN P. CONROY
--------------------------------------------
JOHN P. CONROY
VICE PRESIDENT - CORPORATE ADMINISTRATION
ARTRA GROUP INCORPORATED
<PAGE>
SUPPLEMENTAL SCHEDULES
<PAGE>
ARTRA GROUP INCORPORATED
EMPLOYEE STOCK OWNERSHIP PLAN
FORM 5500, ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
at December 31, 1995
<TABLE>
<CAPTION>
Number of
Description of Investment shares Cost Current Value
- ----------------------------------------------------- ---------------- ---------------- ----------------
<S> <C> <C> <C>
ARTRA GROUP Incorporated Common Stock, no par value 271,775 $ 1,480,000 $ 1,665,000
</TABLE>
<PAGE>
ARTRA GROUP INCORPORATED
EMPLOYEE STOCK OWNERSHIP PLAN
FORM 5500, ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
for the year ended December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
Number of Number of Current Gain
Description transactions shares Cost Value (Loss)
----------- ------------ ------ ---- ----- ------
<S> <C> <C> <C> <C> <C>
Employer contribution for
1995 and 1994, received
in 1995:
ARTRA GROUP Incorporated
Common Stock 2 23,750 $ 113,000 $ 113,000
Sale of investment:
ARTRA GROUP Incorporated
Common Stock 12 29,565 $ 163,000 $130,000 $ (33,000)
</TABLE>
Notes: The schedule lists all series of transactions which aggregate in excess
of 5% of the Plan's assets at the beginning of the current year, as
required by the Department of Labor.
