SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
-----------------------
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 2-5061
--------
AMPAL-AMERICAN ISRAEL CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 13-0435685
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1177 Avenue of the Americas, New York, New York 10036
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 782-2100
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
The number of shares outstanding of each of the issuer's classes of common
stock is Common - 3,000,000; Class A - 20,556,659 (as of July 31, 1996).
AMPAL-AMERICAN ISRAEL CORPORATION
---------------------------------
Index to Form 10-Q
Page
----
Part I Financial Information
Consolidated Statements of Income
Six Months Ended June 30.............................. 1
Three Months Ended June 30............................ 2
Consolidated Balance Sheets............................ 3
Consolidated Statements of Cash Flows.................. 5
Consolidated Statements of Changes in Shareholders'
Equity................................................ 7
Notes to the Consolidated Financial Statements......... 8
Management's Discussion and Analysis of
Financial Condition and Results of Operations......... 9
Part II Other Information...................................... 12
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
- --------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 30, 1996 1995
- --------------------------------------------------------------------------------
(Dollars in thousands, except per share data) (Unaudited) (Unaudited)
(Note 2)
REVENUES
Equity in earnings of affiliates (Note 3)......... $ 1,220 $ 5,620
Food processing and manufacturing................. 19,046 22,815
Interest:
Related parties.................................. 6,118 4,636
Others........................................... 1,138 1,934
Rental income..................................... 5,955 1,787
Realized and unrealized gains on investments...... 2,131 1,717
Other............................................. 947 969
-------- --------
Total revenues............................... 36,555 39,478
-------- --------
EXPENSES
Food processing and manufacturing................. 23,777 22,093
Interest:
Related parties.................................. 2,758 1,603
Others........................................... 6,978 6,137
Rental property operating expenses................ 3,016 244
Minority interests................................ (2,782) (838)
Other............................................. 3,915 3,756
-------- --------
Total expenses............................... 37,662 32,995
-------- --------
(Loss) income before income taxes................. (1,107) 6,483
Income tax (benefit) provision.................... (84) 3,896
-------- --------
NET (LOSS) INCOME............................ $ (1,023) $ 2,587
======== ========
(Loss) earnings per Class A share................. $(.04) $ .09
===== =====
Weighted average number of Class A and
equivalent shares outstanding (in thousands)..... 24,613 25,184
The accompanying notes are an integral part of the consolidated financial
statements.
- 1 -
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
- --------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED JUNE 30, 1996 1995
- ------------------------------------------------------------------------------
(Dollars in thousands, except per share data) (Unaudited) (Unaudited)
(Note 2)
REVENUES
Equity in earnings of affiliates.................. $ 2,300 $ 2,897
Food processing and manufacturing................. 9,331 11,533
Interest:
Related parties.................................. 3,180 2,425
Others........................................... 583 675
Rental income..................................... 2,902 818
Realized and unrealized gains on investments...... 2,445 995
Other............................................. 470 526
-------- --------
Total revenues............................... 21,211 19,869
-------- --------
EXPENSES
Food processing and manufacturing................. 12,260 11,557
Interest:
Related parties.................................. 1,428 817
Others........................................... 3,700 3,200
Rental property operating expenses................ 1,489 134
Minority interests................................ (1,617) (671)
Other............................................. 2,015 1,955
-------- --------
Total expenses............................... 19,275 16,992
-------- --------
Income before income taxes........................ 1,936 2,877
Income tax provision.............................. 57 1,876
-------- --------
NET INCOME................................... $ 1,879 $ 1,001
======== ========
Earnings per Class A share........................ $ .07 $ .03
===== =====
Weighted average number of Class A and
equivalent shares outstanding (in thousands)..... 24,613 25,158
The accompanying notes are an integral part of the consolidated financial
statements.
- 2 -
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
- --------------------------------------------------
CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31,
ASSETS AS AT 1996 1995
- ------------------------------------------------------------------------------
(Dollars in thousands) (Unaudited) (Note 2)
Cash and cash equivalents........................ $ 10,818 $ 16,694
Deposits, notes and loans receivable:
Related parties................................ 63,409 71,484
Others......................................... 1,113 1,489
Investments (Note 3)............................. 145,879 142,291
Real estate rental property, less accumulated
depreciation of $5,585 and $4,994............... 56,986 57,289
Property and equipment, less accumulated
depreciation of $9,736 and $8,876............... 18,416 17,920
Other assets..................................... 37,040 42,158
-------- --------
TOTAL ASSETS...................................... $333,661 $349,325
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
- 3 -
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
- --------------------------------------------------
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND JUNE 30, DECEMBER 31,
SHAREHOLDERS' EQUITY AS AT 1996 1995
- -----------------------------------------------------------------------------
(Dollars in thousands) (Unaudited) (Note 2)
LIABILITIES
Notes and loans payable:
Related parties.............................. $ 47,574 $ 51,041
Others....................................... 19,510 17,086
Debentures..................................... 69,471 78,889
Accounts and income taxes payable, accrued
expenses and minority interests............... 34,595 37,894
-------- --------
Total liabilities...................... 171,150 184,910
-------- --------
SHAREHOLDERS' EQUITY (Note 4)
4% Cumulative, Participating, Convertible
Preferred Stock, $5 par value; authorized
650,000 shares; issued and outstanding
196,358 and 199,030 shares.................... 982 995
6-1/2% Cumulative, Convertible Preferred
Stock, $5 par value; authorized
4,282,850 shares; issued and
outstanding 1,026,709 and 1,052,599
shares........................................ 5,134 5,263
Class A Stock, $1 par value; authorized
60,000,000 shares; issued 21,156,632 and
21,065,392 shares; outstanding 20,551,232
and 20,459,992 shares......................... 21,157 21,066
Common Stock, $1 par value; authorized, issued
and outstanding 3,000,000 shares.............. 3,000 3,000
Additional paid-in capital..................... 57,361 57,310
Retained earnings.............................. 84,536 85,559
Treasury Stock, 605,400 shares of Class A Stock
at cost....................................... (3,829) (3,829)
Cumulative translation adjustments............. (5,556) (4,354)
Unrealized loss on marketable securities....... (274) (595)
-------- --------
Total shareholders' equity............. 162,511 164,415
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY..... $333,661 $349,325
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
- 4 -
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
- --------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 1995
- -----------------------------------------------------------------------------
(Dollars in thousands) (Unaudited) (Unaudited)
Cash flows from operating activities:
Net (loss) income............................... $ (1,023) $ 2,587
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in earnings of affiliates............... (1,220) (5,620)
Realized and unrealized gains on investments... (2,131) (1,717)
Translation (gain) loss........................ (388) 22
Depreciation expense........................... 1,605 1,185
Amortization expense........................... 1,979 2,382
Minority interests............................. (2,782) (838)
Decrease (increase) in other assets............. 3,438 (3,020)
Increase in accounts and income taxes payable,
accrued expenses and minority interests........ 677 3,914
Investments made in trading securities.......... (858) (3,444)
Proceeds from sale of trading securities........ 1,331 7,659
Dividends received from affiliates.............. - 3,029
-------- --------
Net cash provided by operating activities...... 628 6,139
-------- --------
Cash flows from investing activities:
Deposits, notes and loans receivable collected:
Related parties................................ 12,606 17,042
Others......................................... 335 2,125
Deposits, notes and loans receivable granted:
Related parties................................ (1,747) (581)
Others......................................... (21) (40)
Investments made in:
Available-for-sale securities.................. (265) (1,128)
Affiliates and others.......................... (4,317) (10,308)
Proceeds from sale of investments:
Others......................................... 3,057 12,815
Proceeds from sale of available-for-sale
securities..................................... 639 -
Purchase of property and equipment.............. (663) (1,358)
Purchase of real estate rental property......... (414) (44,920)
-------- --------
Net cash provided by (used in) investing
activities.................................... 9,210 (26,353)
-------- --------
The accompanying notes are an integral part of the consolidated financial
statements.
- 5 -
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
- --------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 1995
- ----------------------------------------------------------------------------
(Dollars in thousands) (Unaudited) (Unaudited)
Cash flows from financing activities:
Notes and loans payable received:
Related parties............................. $ 540 $ 30,705
Others...................................... 5,841 5,497
Notes and loans payable repaid:
Related parties............................. (4,130) (4,487)
Others...................................... (3,442) (7,072)
Debentures repaid............................ (13,386) (8,155)
Purchase of treasury shares.................. - (1,203)
-------- --------
Net cash (used in) provided by financing
activities................................. (14,577) 15,285
Effect of exchange rate changes on cash and
cash equivalents............................. (1,137) (47)
-------- --------
Net (decrease) in cash and cash equivalents... (5,876) (4,976)
Cash and cash equivalents at beginning of
period....................................... 16,694 42,104
-------- --------
Cash and cash equivalents at end of period.... $ 10,818 $ 37,128
======== ========
Supplemental Disclosure of Cash Flow
Information
Cash paid during the period:
Interest:
Related parties............................. $ 1,206 $ 927
Others...................................... 14,937 2,838
-------- --------
Total interest paid....................... $ 16,143 $ 3,765
======== ========
Income taxes paid............................ $ 2,174 $ 1,751
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
- 6 -
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
- --------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 1996 1995
- ------------------------------------------------------------------------------
(Dollars in thousands) (Unaudited) (Unaudited)
4% PREFERRED STOCK
Balance, beginning of year........................ $ 995 $ 1,033
Conversion of 2,672 and 893 shares into
Class A Stock.................................... (13) (4)
-------- --------
Balance, end of period............................ $ 982 $ 1,029
======== ========
6-1/2% PREFERRED STOCK
Balance, beginning of year........................ $ 5,263 $ 5,575
Conversion of 25,890 and 11,962 shares into
Class A Stock.................................... (129) (60)
-------- --------
Balance, end of period............................ $ 5,134 $ 5,515
======== ========
CLASS A STOCK
Balance, beginning of year........................ $ 21,066 $ 20,841
Issuance of shares upon conversion of
Preferred Stock.................................. 91 40
-------- --------
Balance, end of period............................ $ 21,157 $ 20,881
======== ========
ADDITIONAL PAID-IN CAPITAL
Balance, beginning of year........................ $ 57,310 $ 57,185
Conversion of Preferred Stock..................... 51 24
-------- --------
Balance, end of period............................ $ 57,361 $ 57,209
======== ========
RETAINED EARNINGS
Balance, beginning of year........................ $ 85,559 $ 89,007
Net (loss) income................................. (1,023) 2,587
-------- --------
Balance, end of period............................ $ 84,536 $ 91,594
======== ========
TREASURY STOCK
Balance, beginning of year........................ $ (3,829) $ -
Purchase of 192,000 shares of Class A Stock,
at cost.......................................... - (1,203)
-------- --------
Balance, end of period............................ $ (3,829) $ (1,203)
======== ========
CUMULATIVE TRANSLATION ADJUSTMENTS
Balance, beginning of year........................ $ (4,354) $ (2,636)
Foreign currency translation adjustment........... (1,202) 919
-------- --------
Balance, end of period............................ $ (5,556) $ (1,717)
======== ========
UNREALIZED (LOSS) ON MARKETABLE SECURITIES
Balance, beginning of year........................ $ (595) $ (511)
Unrealized gain, net.............................. 321 301
-------- --------
Balance, end of period............................ $ (274) $ (210)
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
- 7 -
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
--------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. As used in these financial statements, the term the "Company" refers to
Ampal-American Israel Corporation ("Ampal") and its consolidated
subsidiaries.
2. The December 31, 1995 consolidated balance sheet presented herein was
derived from the audited December 31, 1995 consolidated financial
statements of the Company.
Reference should be made to the Company's consolidated financial
statements for the year ended December 31, 1995 for a description of the
accounting policies which have been continued without change. Also,
reference should be made to the notes to the Company's December 31, 1995
consolidated financial statements for additional details of the Company's
consolidated financial condition, results of operations and cash flows.
The details in those notes have not changed except as a result of normal
transactions in the interim. Certain amounts in the 1995 statement of
income have been reclassified to conform with the current period's
presentation. All adjustments (of a normal recurring nature) which are, in
the opinion of management, necessary to a fair presentation of the results
of the interim period have been included.
3. In May 1996, a wholly-owned subsidiary of Coral World International
Limited ("CWI"), the Company's 50%-owned affiliate, entered into a
contract to sell its marine park in Nassau (Bahamas) to an unrelated party
for $3.75 million and CWI recorded a loss on sale of approximately $4
million (the Company's share is $2 million, $1.3 million net of taxes). In
addition, in May 1996, CWI's management made a decision to sell its marine
park in St. Thomas (U.S. Virgin Islands), and CWI recorded a loss of
approximately $2 million (the Company's share is $1 million, $.7 million
net of taxes) to adjust the carrying value of its investment to net
realizable value. In recognition of these events the Company reflected
these losses as of March 31, 1996.
4. On June 6, 1996 Bank Hapoalim B.M. ("Hapoalim") completed the sale of
5,742,351 shares of Ampal Class A Stock (equal to 27.9% of the outstanding
Class A Stock as of June 30, 1996, not assuming conversion of Hapoalim's
Preferred Stock) at a price of $7.87 per share to Rebar Financial Corp.
("Rebar"), a company controlled by the Steinmetz family. This sale of
shares was made within the framework of the reduction of the non-banking
holdings of Hapoalim according to the Banking (Licensing) Law in effect in
Israel, which requires Hapoalim to sell non-banking holdings in excess of
25% by the end of 1996. Hapoalim continues to beneficially hold 4,758,640
shares, assuming conversion of its Preferred Stock (equal to 22.7% of the
outstanding Class A Stock as of June 30, 1996, assuming conversion of
Hapoalim's Preferred Stock) and 100% of the Common Stock, which has
superior voting rights. Hapoalim also agreed to sell to Rebar either an
additional 1,500,001 shares of Class A Stock or 1,500,001 shares of Common
Stock. Upon completion of the sale, Hapoalim will hold the percentage
required by Israeli law.
Ampal previously announced that Hapoalim has advised Ampal of its desire
to enter into a transaction with Ampal to equalize the rights of Ampal's
Common Stock to those of its Class A Stock.
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
--------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
Six months ended June 30, 1996 compared to six months ended June 30, 1995:
- --------------------------------------------------------------------------
Consolidated net income decreased from $2.6 million for the six-month period
ended June 30, 1995 to a loss of $1 million for the same period in 1996. The
decrease in net income in 1996 resulted primarily from decreases in equity in
earnings of affiliates, losses incurred by the Company's 58.5%-owned food
processing subsidiary, Pri Ha'emek (Canned and Frozen Food) 88 Ltd. ("Pri
Ha'emek"), and higher net interest expense. These decreases were partially
offset by the greater unrealized and realized gains on investments recorded in
1996, and an increase in net rental income.
Equity in earnings of affiliates decreased from $5.6 million for the six months
ended June 30, 1995 to $1.2 million for the same period in 1996. The decrease is
primarily attributable to losses recorded by the Company's 50%-owned affiliate,
Coral World International Limited ("CWI"), which owns and operates marine parks
in Eilat (Israel), Perth and Manly (Australia), St. Thomas (U.S. Virgin Islands)
and Nassau (Bahamas). In May 1996, CWI's wholly-owned subsidiary in Nassau
(Bahamas) entered into a contract to sell its marine park to an unrelated party
for $3.75 million and CWI recorded a loss on sale of approximately $4 million
(the Company's share is $2 million, $1.3 million net of taxes). CWI's management
also made a decision to sell its marine park in St. Thomas, and CWI recorded a
loss of approximately $2 million (the Company's share is $1 million, $.7 million
net of taxes) to adjust the carrying value of its investment to net realizable
value. In recognition of these events the Company reflected these losses as of
March 31, 1996. Moriah Hotels Ltd. ("Moriah"), the Company's 46%-owned
affiliate, which is one of the largest hotel chains in Israel, recorded lower
earnings in 1996 primarily because its Tel Aviv hotel has been closed for
renovations since November 1995. The Tel Aviv hotel, which is undergoing a $13
million renovation, partially reopened in May 1996, and the renovations are
expected to be completed by the end of September. The Company's 42.5%-owned
affiliate, Ophir Holdings Ltd. ("Ophir"), incurred losses in 1996 because of the
decrease in realized and unrealized gains recorded on its investments as well as
increased interest expense on its CPI-linked bank borrowings due to the higher
rate of increase in the Consumer Price Index ("CPI") in Israel in 1996. These
decreases were partially offset by the increased earnings recorded by the
Company's 50%-owned affiliate, Trinet Venture Capital Ltd. ("Trinet"), a venture
capital fund, which recorded unrealized gains on its investments in Logal
Software and Educational Systems Ltd. ("Logal") and Imagenet Ltd. ("Imagenet").
Logal, which markets computerized educational systems for learning sciences in
high schools and colleges, completed a $13 million public offering in March 1996
in the United States. Imagenet, which develops and markets computer aided
network engineering software products, completed a $2 million private placement
for 20% of the company in June 1996. In addition, the earnings of the Company's
affiliate, Teledata Communication Ltd. ("Teledata"), improved as a result of
increased sales, which almost doubled for the six months ended June 30, 1996 as
compared to the same period in 1995, mainly because of its more successful
marketing efforts.
Pri Ha'emek, which initiated a recovery plan at the end of 1995, recorded
further losses for the six months ended June 30, 1996 and losses may continue
for the remainder of the year. Its food processing revenues decreased in 1996 as
a result of decreased sales volume in the domestic market. Food processing
expenses increased in 1996 due to the increases in labor costs and costs of raw
materials, which are linked to the increases in the CPI, decreased labor
productivity and a reduction of discounts from suppliers.
- 9 -
Net interest expense increased in 1996 mainly because of the interest expense
incurred in connection with the purchase of an office building ("800 Second
Avenue") located at 800 Second Avenue, New York, New York, in June 1995.
The Company recorded $1 million and $.9 million of unrealized gains on
marketable securities and $1.1 million and $.8 million of gains on sale of
investments in the six-month periods ended June 30, 1996 and 1995, respectively.
The gains recorded in 1996 were mainly attributable to the Company's investments
in M-Systems Flash Disk Pioneers Ltd. and Teledata, whereas the gains recorded
in 1995 were mainly attributed to the Company's investment in Mercury
Interactive Corporation.
The increases in rental income and rental property operating expenses are
attributable to the operations of 800 Second Avenue.
The increase in the credit for minority interests in 1996 is mainly attributable
to the minority interests' share of losses of Pri Ha'emek.
The low effective income tax benefit rate in 1996 and the high effective income
tax rate in 1995 are mainly attributable to the losses of certain Israeli
subsidiaries from which no tax benefits are available.
Three months ended June 30, 1996 compared to three months ended June 30, 1995:
- ------------------------------------------------------------------------------
Consolidated net income increased to $1.9 million for the three-month period
ended June 30, 1996 from $1 million for the same period in 1995. The increase in
net income in 1996 resulted primarily from increases in realized and unrealized
gains on investments in 1996 and an increase in net rental income which were
partially offset by greater losses incurred by Pri Ha'emek, decreases in equity
in earnings of affiliates and higher net interest expense.
Equity in earnings of affiliates decreased in the three months ended June 30,
1996 as compared to the same period in 1995. The decrease is primarily
attributable to the losses recorded by Ophir and decreased earnings of Moriah.
These decreases were partially offset by increased earnings of Trinet and
Teledata. See discussion on Results of Operations - Six months ended June 30,
1996 compared to six months ended June 30, 1995.
Pri Ha'emek recorded higher losses in the second quarter of 1996 as compared to
the same period in 1995 for the same reasons as discussed in Results of
Operations - Six months ended June 30, 1996 compared to six months ended June
30, 1995.
The Company recorded $1.4 million and $.4 million of unrealized gains on
investments and $1 million and $.6 million of gains on sale of investments in
the three-month periods ended June 30, 1996 and 1995, respectively. See
discussion on Results of Operations - Six months ended June 30, 1996 compared to
six months ended June 30, 1995.
Net interest expense, rental income, rental property operating expenses and
credit for minority interests increased in the three-month period ended June 30,
1996 as compared to the same period in 1995 for the same reasons discussed in
Results of Operations - Six months ended June 30, 1996 compared to six months
ended June 30, 1995.
The decrease in the effective income tax rate in the quarter ended June 30, 1996
as compared to the same period ended June 30, 1995 is attributable to the
available tax benefits recorded by the Company from losses incurred in its
investment in Pri Ha'emek.
- 10 -
Liquidity and Capital Resources
- -------------------------------
At June 30, 1996, cash and cash equivalents were $10.8 million as compared with
$16.7 million at December 31, 1995. In addition, Ampal had approximately $34
million of highly liquid interest-bearing securities included in the investments
caption at June 30, 1996 and December 31, 1995. The decrease in cash and cash
equivalents is primarily related to additional investments, including $1.5
million invested in Geotek Communications, Inc., an international wireless
telecommunications company, and loans advanced to Pri Ha'emek in the amount of
$1.6 million.
Deposits, notes and loans receivable, and debentures decreased as a result of
scheduled repayments.
Other Events
- ------------
On June 6, 1996 Bank Hapoalim B.M. ("Hapoalim") completed the sale of 5,742,351
shares of Ampal Class A Stock (equal to 27.9% of the outstanding Class A Stock
as of June 30, 1996, not assuming conversion of Hapoalim's Preferred Stock) at a
price of $7.87 per share to Rebar Financial Corp. ("Rebar"), a company
controlled by the Steinmetz family. This sale of shares was made within the
framework of the reduction of the non-banking holdings of Hapoalim according to
the Banking (Licensing) Law in effect in Israel, which requires Hapoalim to sell
non-banking holdings in excess of 25% by the end of 1996. Hapoalim continues to
beneficially hold 4,758,640 shares, assuming conversion of its Preferred Stock
(equal to 22.7% of the outstanding Class A Stock as of June 30, 1996, assuming
conversion of Hapoalim's Preferred Stock) and 100% of the Common Stock, which
has superior voting rights. Hapoalim also agreed to sell to Rebar either an
additional 1,500,001 shares of Class A Stock or 1,500,001 shares of Common
Stock. Upon completion of the sale, Hapoalim will hold the percentage required
by Israeli law.
Ampal previously announced that Hapoalim has advised Ampal of its desire to
enter into a transaction with Ampal to equalize the rights of Ampal's Common
Stock to those of its Class A Stock.
- 11 -
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
--------------------------------------------------
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - None.
-----------------
Item 2. Changes in Securities - None.
---------------------
Item 3. Defaults upon Senior Securities - None.
-------------------------------
Item 4. Submission of Matters to a Vote of Security Holders - None.
---------------------------------------------------
Item 5. Other Information - None.
-----------------
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Index to Exhibits:
Exhibit 11 - Schedule Setting Forth Computation
of Earnings Per Class A Share................................. Page 13
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K - A Report on Form 8-K, dated May 28, 1996 was
filed, reporting that on May 12, 1996, Bank Hapoalim B.M., and one
of its wholly-owned subsidiaries, Atad Hevra Lehashkaot Limited
(collectively, the "Seller") had entered into a Stock Purchase
Agreement with Rebar Financial Corp. ("Rebar"), pursuant to which,
among other things, Rebar had agreed to purchase from Seller either
7,242,352 shares of Class A Stock or 1,500,001 shares of Common
Stock and 5,742,351 shares of Class A Stock.
- 12 -