SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 September 30, 1994
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 2-5061
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AMPAL-AMERICAN ISRAEL CORPORATION
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(Exact name of registrant as specified in its charter)
New York 13-0435685
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1177 Avenue of the Americas, New York, New York 10036
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 782-2100
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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 - 20,788,261 (as of
October 31, 1994).
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AMPAL-AMERICAN ISRAEL CORPORATION
---------------------------------
Index to Form 10-Q
Page
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Part I Financial Information
Consolidated Statements of Income
Nine Months Ended September 30........................ 1
Three Months Ended September 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......... 10
Part II Other Information.............................. 13
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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1994 1993
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(Dollars in thousands, except per share data) (Unaudited) (Unaudited)
REVENUES
Interest:
Related parties............................ $ 10,961 $ 11,801
Others..................................... 1,556 1,091
Food processing.............................. 24,662 24,221
Manufacturing and distribution............... 7,158 2,314
Equity in earnings of affiliates and others.. 6,381 7,599
Other income:
Related parties............................ 2,381 2,701
Others..................................... 1,414 1,792
Gains on issuance of shares by subsidiary and
affiliate (Note 4).......................... 2,692 -
Gains on sale of investments (Note 5)........ 1,825 1,626
Unrealized gains, net, on marketable
securities (Note 2)......................... 2,699 -
-------- --------
Total revenues........................... 61,729 53,145
-------- --------
EXPENSES
Interest:
Related parties............................ 2,732 3,476
Others..................................... 10,352 13,739
Food processing.............................. 20,114 20,049
Manufacturing and distribution............... 4,532 1,442
Other expenses............................... 11,295 8,486
-------- --------
Total expenses........................... 49,025 47,192
-------- --------
Income before income taxes................... 12,704 5,953
Income taxes................................. 5,665 2,603
-------- --------
Income before cumulative effect of change
in accounting principle..................... 7,039 3,350
Cumulative effect on prior years of change in
accounting principle........................ - (4,982)
-------- --------
NET INCOME (LOSS)....................... $ 7,039 $ (1,632)
======== ========
Earnings (loss) per Class A share:
Earnings before cumulative effect of change
in accounting principle.................... $ .26 $ .14
Cumulative effect on prior years of change
in accounting principle.................... - (.21)
----- -----
Earnings (loss) per Class A share........... $ .26 $(.07)
===== =====
Weighted average number of Class A and
equivalent shares outstanding (in thousands) 24,318 20,717
The accompanying notes are an integral part of the consolidated financial
statements.
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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED SEPTEMBER 30, 1994 1993
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(Dollars in thousands, except per share data) (Unaudited) (Unaudited)
REVENUES
Interest:
Related parties............................ $ 3,747 $ 2,812
Others..................................... 735 273
Food processing.............................. 8,486 6,512
Manufacturing and distribution............... 2,347 2,314
Equity in earnings of affiliates and others.. 2,934 3,081
Other income:
Related parties............................ 807 902
Others..................................... 603 561
Gains on sale of investments (Note 5)........ 1,825 476
Unrealized gains, net, on marketable
securities (Note 2)......................... 2,699 -
-------- --------
Total revenues........................... 24,183 16,931
-------- --------
EXPENSES
Interest:
Related parties............................ 912 935
Others..................................... 3,566 4,232
Food processing.............................. 6,043 4,601
Manufacturing and distribution............... 1,555 1,442
Other expenses............................... 4,585 3,583
-------- --------
Total expenses........................... 16,661 14,793
-------- --------
Income before income taxes................... 7,522 2,138
Income taxes................................. 3,658 1,403
-------- --------
NET INCOME.............................. $ 3,864 $ 735
======== ========
Earnings per Class A share................... $.14 $.03
==== ====
Weighted average number of Class A and
equivalent shares outstanding (in thousands) 25,218 20,717
The accompanying notes are an integral part of the consolidated financial
statements.
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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31,
ASSETS AS AT 1994 1993
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(Dollars in thousands) (Unaudited) (Note 2)
Cash and cash equivalents...................... $ 42,161 $ 3,178
Deposits:
Related parties.............................. 77,547 99,481
Notes and loans receivable:
Related parties.............................. 16,757 11,948
Others....................................... 2,136 4,964
Investments (Note 2):
Related parties.............................. 106,580 103,319
Others....................................... 25,079 8,322
Property and equipment, less accumulated
depreciation of $11,065 and $10,554........... 30,431 30,496
Other assets................................... 45,221 42,352
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TOTAL ASSETS................................... $ 345,912 $ 304,060
========== ==========
The accompanying notes are an integral part of the consolidated financial
statements.
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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SEPTEMBER 30, DECEMBER 31,
SHAREHOLDERS' EQUITY AS AT 1994 1993
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(Dollars in thousands) (Unaudited) (Note 2)
LIABILITIES
Deposits and notes and loans payable:
Related parties............................... $ 25,679 $ 42,752
Others........................................ 16,601 18,091
Debentures outstanding.......................... 86,433 91,270
Accounts and income taxes payable and accrued
expenses....................................... 40,759 34,790
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Total liabilities....................... 169,472 186,903
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MINORITY INTERESTS.............................. 3,800 340
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SHAREHOLDERS' EQUITY (Note 3)
4% Cumulative, Participating, Convertible
Preferred Stock, $5 par value; authorized
650,000 shares; issued and outstanding
209,199 and 213,720 shares..................... 1,046 1,068
6-1/2% Cumulative, Convertible Preferred Stock,
$5 par value; authorized 4,282,850 shares;
issued and outstanding 1,130,987 and 1,202,342
shares......................................... 5,655 6,011
Class A Stock, $1 par value; authorized
30,000,000 shares; issued 20,779,383 and
16,224,779 shares; outstanding 20,779,383
and 16,042,713 shares.......................... 20,779 16,225
Common Stock, $1 par value; authorized, issued
and outstanding 3,000,000 shares............... 3,000 3,000
Additional paid-in capital...................... 56,989 10,605
Retained earnings............................... 88,708 82,079
Cumulative translation adjustments.............. (3,143) (2,171)
Unrealized loss on marketable securities
(Note 2)....................................... (394) -
---------- ----------
Total shareholders' equity.............. 172,640 116,817
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY..... $ 345,912 $ 304,060
========== ==========
The accompanying notes are an integral part of the consolidated financial
statements.
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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1994 1993
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(Dollars in thousands) (Unaudited) (Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
Cash flows from operating activities:
Net income (loss).......................... $ 7,039 $ (1,632)
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in earnings of affiliates and
others................................... (6,381) (7,599)
Gains on issuance of shares by subsidiary
and affiliate............................ (2,692) -
Gains on sale of investments.............. (1,825) (1,626)
Unrealized gains, net, on marketable
securities............................... (2,699) -
Cumulative effect on prior years of change
in accounting principle.................. - 4,982
Translation loss (gain)................... 102 (126)
Depreciation expense...................... 1,628 1,771
Amortization expense...................... 3,748 3,710
Minority interests........................ (115) (300)
(Increase) in other assets................. (4,867) (7,784)
Increase (decrease) in accounts and income
taxes payable and accrued expenses........ 6,361 (374)
Dividend received from affiliate........... 4,277 1,409
-------- --------
Net cash provided by (used in) operating
activities............................... 4,576 (7,569)
-------- --------
Cash flows from investing activities:
Deposits receivable collected:
Related parties........................... 25,664 19,614
Others.................................... - 350
Notes and loans receivable granted:
Related parties........................... (5,899) (728)
Notes and loans receivable collected:
Related parties........................... 2,196 3,309
Others.................................... 2,845 1,155
Investments made:
Related parties........................... (1,786) (51,817)
Others.................................... (17,894) (5,612)
Proceeds from sale of investments.......... 5,513 7,224
Purchase of property and equipment......... (1,939) (4,286)
-------- --------
Net cash provided by (used in) investing
activities............................... 8,700 (30,791)
-------- --------
The accompanying notes are an integral part of the consolidated financial
statements.
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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1994 1993
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(Dollars in thousands) (Unaudited) (Unaudited)
Cash flows from financing activities:
Deposits and notes and loans payable received:
Related parties........................... $ 1,077 $ 22,656
Others.................................... 2,225 49,290
Deposits and notes and loans payable repaid:
Related parties........................... (18,789) (26,355)
Others.................................... (3,824) (5,163)
Debentures outstanding issued.............. 4,622 -
Debentures outstanding repaid.............. (15,927) (9,377)
Proceeds from issuance of shares........... 57,296 -
Investment in subsidiary by minority
shareholder............................... - 686
-------- --------
Net cash provided by financing activities. 26,680 31,737
Effect of exchange rate changes on cash
and cash equivalents....................... (973) (1,039)
-------- --------
Net increase (decrease) in cash and cash
equivalents................................ 38,983 (7,662)
Cash and cash equivalents at beginning
of period.................................. 3,178 9,698
-------- --------
Cash and cash equivalents at end of
period..................................... $ 42,161 $ 2,036
======== ========
Supplemental Disclosure of Cash Flow Information
Cash paid during the period:
Interest:
Related parties........................... $ 1,310 $ 2,060
Others.................................... 5,062 6,487
-------- --------
Total interest paid..................... $ 6,372 $ 8,547
======== ========
Income taxes paid......................... $ 1,528 $ 2,928
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1994 1993
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(Dollars in thousands) (Unaudited) (Unaudited)
4% PREFERRED STOCK
Balance, beginning of year................... $ 1,068 $ 1,202
Conversion of 4,521 and 16,659 shares into
Class A Stock............................... (22) (83)
-------- --------
Balance, end of period....................... $ 1,046 $ 1,119
======== ========
6-1/2% PREFERRED STOCK
Balance, beginning of year................... $ 6,011 $ 7,554
Conversion of 71,355 and 239,964 shares into
Class A Stock............................... (356) (1,199)
-------- --------
Balance, end of period....................... $ 5,655 $ 6,355
======== ========
CLASS A STOCK
Balance, beginning of year................... $ 16,225 $ 15,164
Issuance of shares upon conversion of
Preferred Stock............................. 236 803
Issuance of shares in a public offering*..... 4,318 -
-------- --------
Balance, end of period....................... $ 20,779 $ 15,967
======== ========
ADDITIONAL PAID-IN CAPITAL
Balance, beginning of year................... $ 10,605 $ 9,989
Conversion of Preferred Stock................ 142 479
Proceeds from issuance of shares in a public
offering.................................... 46,242 -
-------- --------
Balance, end of period....................... $ 56,989 $ 10,468
======== ========
RETAINED EARNINGS
Balance, beginning of year................... $ 82,079 $ 82,293
Net income (loss)............................ 7,039 (1,632)
Dividends declared:
4% Preferred Stock - $.20 per share........ (42) (45)
6-1/2% Preferred Stock - $.325 per share... (368) (435)
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Balance, end of period....................... $ 88,708 $ 80,181
======== ========
CUMULATIVE TRANSLATION ADJUSTMENTS
Balance, beginning of year................... $ (2,171) $ -
Foreign currency translation adjustment...... (972) (1,764)
-------- --------
Balance, end of period....................... $ (3,143) $ (1,764)
======== ========
UNREALIZED LOSS ON MARKETABLE SECURITIES
Balance, beginning of year................... $ - $ -
Unrealized loss, net......................... (394) -
-------- --------
Balance, end of period....................... $ (394) $ -
======== ========
* Issuance of 4,500,000 shares, including 182,066 shares held in treasury.
The accompanying notes are an integral part of the consolidated financial
statements.
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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, 1993 consolidated balance sheet presented herein
was derived from the audited December 31, 1993 consolidated
financial statements of the Company.
Reference should be made to the Company's consolidated financial
statements for the year ended December 31, 1993 for a description of
the accounting policies which have been continued except for the
following:
Effective January 1, 1994, the Company adopted Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" which requires that
marketable equity securities, other than equity securities accounted
for by the equity method, be reported at fair value. For those
securities which are classified as trading securities, unrealized
gains and losses are reported in the statement of income.
Unrealized gains and losses from those securities which are
classified as available-for-sale are reported as a separate
component of shareholders' equity. The cumulative effect of
adopting this accounting principle as of January 1, 1994 was an
increase in investments of $7.4 million, an increase in deferred
income taxes payable of $3.1 million and an increase in
shareholders' equity of $4.3 million. From January 1 to September
30, 1994, the net effect of market fluctuations resulted in a
decrease of $.4 million in shareholders' equity. At September 30,
1994 the aggregate fair value of available-for-sale securities was
$2.4 million, ($8.1 million at June 30, 1994) and gross unrealized
losses were $.6 million ($.4 million, after taxes).
In the quarter ended September 30, 1994, $2.7 million of unrealized
gains on marketable securities in the statement of income includes
gross gains of $1.7 million, which resulted from the transfer of
securities from the available-for-sale category to the trading
securities category, and also includes gross losses of $2.4 million
on available-for-sale securities which have been determined to be
permanently impaired in value.
Also, reference should be made to the notes to the Company's
December 31, 1993 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.
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. On January 25, 1994, Ampal sold 4.5 million units, each consisting
of one share of Class A stock and one redeemable warrant to purchase
one share of Ampal's Class A stock, for $12.125 per unit in a public
offering. The warrants are exercisable at $16 per share at any time
until January 31, 1999, and are callable by Ampal, in whole or in
part, from and after February 1, 1996, without payment to the
holder. The net proceeds which Ampal received from this offering
amounted to approximately $51 million.
On November 5, 1993, Ampal's Board of Directors approved a stock
option plan which provides for grants of options to purchase up to
200,000 shares of Class A stock in the aggregate to employees,
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<PAGE>
officers and directors of Ampal and certain subsidiaries of Ampal.
On January 25, 1994, the Stock Option Committee of the Board of
Directors approved the issuance of 134,900 options in the aggregate
at an exercise price of $10.91 per share (a 10% discount from market
price on the date of grant). The Stock Option Plan was approved by
Ampal's shareholders on September 22, 1994.
4. In February 1994, the other shareholder of Pri Ha'emek (Canned and
Frozen Food) 88 Ltd. ("Pri Ha'emek"), the Company's then 74.9%-owned
subsidiary, purchased additional shares in Pri Ha'emek at the same
price the Company paid for its shares in 1991, diluting the
Company's ownership to 66.7%. In March 1994, Pri Ha'emek conducted
an initial public offering in Israel onthe Tel Aviv Stock Exchange.
In connection with this offering, the Company realized a gain on
issuance of shares of $2.3 million ($1.5 million, after taxes). The
Company's interest in Pri Ha'emek was initially diluted to 51.25%.
Subsequent to the public offering, the Company has purchased
additional shares and convertible debentures and at September 30,
1994 its interest was 54.4%. If all warrants and convertible
debentures are exercised, the Company's interest would be diluted to
37.6%.
During the first quarter of 1994, Granite Hacarmel Investments Ltd.
("Granite") issued additional shares upon conversions of its
debentures. The Company's interest in Granite was diluted from
21.6% to 21.2% and the Company recorded a gain on issuance of shares
of $.3 million ($.2 million, after taxes).
5. In the third quarter of 1994, the Company received gross proceeds in
the amount of $2.6 million from sales of 120,000 shares of DSP
Group, Inc. ("DSP Group") and realized gains of $2 million ($1.3
million, after taxes). The Company continues to hold approximately
172,000 shares (approximately 2% of DSP Group's outstanding shares),
including its share of Ophir Holdings Ltd.'s holdings of DSP Group.
In the nine months ended September 30, 1993, the Company sold shares
of Teledata Communication Ltd. and realized gains of $1.5 million
($.9 million, after taxes).
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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
- -------------------------------
As of September 30, 1994, cash and cash equivalents were $42.2 million; an
increase of $39 million from December 31, 1993. This increase is mainly
attributable to the proceeds received by Ampal in a public offering (see below),
of which $30.1 million was invested in cash and cash equivalents at September
30, 1994. The Company's food processing subsidiary, Pri Ha'emek (Canned and
Frozen Food) 88 Ltd. ("Pri Ha'emek") raised $11.4 million ($7 million of equity
and $4.4 of convertible debentures) in a public offering in Israel (see Results
of Operations). The Company received a dividend from Granite Hacarmel
Investments Ltd. ("Granite") of $4.3 million in March 1994.
On January 25, 1994, Ampal sold 4.5 million units, each consisting of one share
of Class A stock and one redeemable warrant to purchase one share of Ampal's
Class A stock in a public offering. This offering resulted in net proceeds to
Ampal of approximately $51 million which Ampal has used and intends to use for
the financing of acquisitions, additions to existing holdings and other working
capital and general corporate purposes, including early redemption of Ampal's
outstanding debentures. In 1994, the Company's investments increased by
approximately $20 million. This increase is primarily related to the investment
of the proceeds of the public offering in short-term interest-bearing
securities, new investments and the recording of the Company's equity in
earnings of affiliates.
Deposits receivable, and deposits and notes and loans payable declined as a
result of scheduled repayments. Outstanding debentures declined primarily as a
result of the early redemption of $10.9 million of high interest-bearing
debentures and the scheduled repayment of approximately $5 million of other
debentures. On November 1, 1994, Ampal called the remaining $4.6 million of its
8%-10% interest-bearing debentures which were scheduled to mature in 2000. All
remaining outstanding Ampal debentures are not subject to call provisions and
are expected to remain outstanding until they mature in accordance with their
terms. In addition, Pri Ha'emek issued convertible debentures in the amount of
$4.4 million.
Results of Operations
- ---------------------
Nine months ended September 30, 1994 compared to nine months ended September 30,
- --------------------------------------------------------------------------------
1993:
- ----
Consolidated net income increased to $7 million for the nine months ended
September 30, 1994, as compared with a net loss of $1.6 million for the nine
months ended September 30, 1993. In 1993, the Company was required to record a
nonrecurring charge to net income of approximately $5 million with respect to
its adoption of Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes." Net income in 1994 increased as a result of increased gains
on sales of investments, unrealized gains on marketable securities, gains on
issuances of shares and a reduction in net interest expense. These increases
were partially offset by reductions in equity in earnings of affiliates and
other income.
The decreases in interest revenue, interest expense and net interest expense for
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<PAGE>
the nine months ended September 30, 1994 as compared to the same period in 1993
resulted from the repayment of deposits, notes and loans receivable as well as
deposits, notes and loans payable and outstanding debentures. Also, Ophir
Holdings Ltd.'s ("Ophir") results, which were consolidated in the first nine
months of 1993, are reflected by the equity method in 1994 because the Company's
interest in Ophir was diluted to 42.5% in November 1993. In the second and
third quarters of 1993, Ophir incurred significant interest expense on bank
borrowings used to finance its March 1993 investment in Industrial Buildings
Corporation Ltd. ("Industrial Buildings") and as a result recorded a loss in the
first nine months.
Equity in earnings of affiliates decreased for the nine months ended September
30, 1994 as compared to the same period in 1993 because Ophir's 1993 loss was
not reported by the equity method in 1993 because its financial statements were
consolidated with the Company's (see above). In 1994, Ophir reported further
losses due to significant financing expense associated with its acquisition of
Industrial Buildings. Were it not for the change in accounting for Ophir's
losses, equity in earnings of affiliates would have shown an increase, primarily
because the Moriah Hotel group reported increased earnings.
In February 1994, the other shareholder of Pri Ha'emek, the Company's then
74.9%-owned subsidiary, purchased additional shares in Pri Ha'emek at the same
price the Company paid for its shares in 1991, diluting the Company's ownership
to 66.7%. In March 1994, Pri Ha'emek conducted an initial public offering in
Israel on the Tel Aviv Stock Exchange. In connection with this offering, the
Company realized a gain on issuance of shares of $2.3 million ($1.5 million,
after taxes). The Company's interest in Pri Ha'emek was initially diluted to
51.25%. Subsequent to the public offering, the Company has purchased additional
shares and convertible debentures and at September 30, 1994 its interest was
54.4%. If all warrants and convertible debentures are exercised, the Company's
interest would be diluted to 37.6%. The increase in minority interests in the
balance sheet is attributable to the minority interests' share of proceeds from
this offering.
In February and June 1993, the Company invested an aggregate of approximately
$4.3 million in Paradise Mattresses (1992) Ltd. ("Paradise") for approximately
85.1% of the shares of Paradise. Paradise's assets and liabilities were
consolidated commencing June 30, 1993; its manufacturing and distribution
operations were included in equity in earnings of affiliates for the six months
ended June 30, 1993 and consolidated thereafter. Paradise is a company which
manufactures and markets mattresses and fold-out beds in Israel and is a
licensee of the Sealy Posturepedic Mattress name and manufacturing process.
In the third quarter of 1994, the Company received gross proceeds in the amount
of $2.6 million from sales of 120,000 shares of DSP Group, Inc. ("DSP Group")
and realized gains of $2 million ($1.3 million, after taxes). The Company
continues to hold approximately 2% of DSP Group's outstanding shares (including
its share of Ophir's holdings of DSP Group).
In the nine months ended September 30, 1993, the Company sold shares of Teledata
Communication Ltd. and realized gains of $1.5 million ($.9 million, after
taxes).
In the quarter ended September 30, 1994, $2.7 million of unrealized gains on
marketable securities in the statement of income includes gross gains of $1.7
million, which resulted from the transfer of securities from the available-for-
sale category to the trading securities category, and also includes gross losses
of $2.4 million on available-for-sale securities which have been determined to
be permanently impaired in value.
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<PAGE>
Other income, and specifically rental income which is included in this category,
decreased because Ophir's financial statements, which were consolidated with the
Company's financial statements in the first nine months of 1993, are reflected
by the equity method thereafter.
During the first quarter of 1994, Granite issued additional shares upon
conversions of its debentures. The Company's interest in Granite was diluted
from 21.6% to 21.2% and the Company recorded a gain on issuance of shares of $.3
million ($.2 million, after taxes).
The increase in other expenses of approximately $2.8 million is attributable to
the consolidation of Paradise's financial statements commencing July 1, 1993,
additional expenses associated with Pri Ha'emek's operations and increases in
administrative expenses.
Three months ended September 30, 1994 compared to three months ended September
- ------------------------------------------------------------------------------
30, 1993:
- --------
Consolidated net income increased to $3.9 million for the three months ended
September 30, 1994 as compared with $.7 million for the three months ended
September 30, 1993. Net income increased as a result of gains on sales of
investments in excess of 1993 gains, unrealized gains on marketable securities,
a reduction of net interest expense, improved earnings of the Company's food
processing subsidiary and a reduction in the effective income tax rate.
Net interest expense declined in the three months ended September 30, 1994 as
compared to the same period in 1993 for the reasons discussed in Results of
Operations - Nine months ended September 30, 1994 compared to nine months ended
September 30, 1993.
In the third quarter of 1994, the Company received gross proceeds in the amount
of $2.6 million from sales of 120,000 shares of DSP Group and realized gains of
$2 million ($1.3 million, after taxes). The Company continues to hold
approximately 2% of DSP Group's outstanding shares (including its share of
Ophir's holdings of DSP Group).
In the third quarter of 1993, the Company sold shares in Teledata Communication
Ltd. and realized a gain of $.4 million ($.3 million, after taxes).
In the quarter ended September 30, 1994, $2.7 million of unrealized gains on
marketable securities in the statement of income includes gross gains of $1.7
million, which resulted from the transfer of securities from the available-for-
sale category to the trading securities category, and also includes gross losses
of $2.4 million on available-for-sale securities which have been determined to
be permanently impaired in value.
The decline in the effective income tax rate in the three months ended September
30, 1994 as compared to the same period in 1993 is attributable to changes in
the components of taxable income.
- 12 -
<PAGE>
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
---------------------------------------------------
On September 22, 1994, at the Annual Meeting of Shareholders
of Ampal-American Israel Corporation,
(a) the following persons were elected as directors by the
following vote:
i) CLASS A FOR AUTHORITY WITHHELD
------- --- ------------------
H. Henshel 19,258,658 24,667
H. Kronish 19,258,958 24,367
L. Riebman 19,188,458 94,867
E. Sommer 19,189,358 93,967
ii) COMMON/CLASS A FOR AUTHORITY WITHHELD
-------------- --- ------------------
A. Abend 49,258,758 24,567
M. Arnon 49,258,958 24,367
S. Batkin 49,257,858 25,467
Y. Elinav 49,258,758 24,567
I. Hochberg 49,258,958 24,367
L. Lefkowitz 49,258,658 24,667
E. Raff 49,189,058 94,267
S. Ravid 49,188,758 94,567
S. Recht 49,258,958 24,367
(b) the 1993 Stock Option Plan was approved by the following vote:
FOR AGAINST ABSTAIN
--- ------- -------
49,074,052 170,984 38,289
Item 5. Other Information
-----------------
The Company's Proxy Statement dated August 11, 1994 stated that
Shareholders' Proposals for the next Annual Meeting of Shareholders
must be received by the Company no later than April 11, 1995. The
next Annual Meeting of Shareholders is now proposed to take place on
June 28, 1995. Accordingly, any holder of Class A Stock or Common
Stock who wishes to submit a proposal to be presented at the next
Annual Meeting of Shareholders must forward such proposal to the
Secretary of the Company so that it is received by the Company no
later than January 17, 1995, and comply with such rules as may be
prescribed from time to time by the Securities and Exchange Commission
regarding proposals of security holders.
- 13 -
<PAGE>
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.
Exhibit 27 - Financial Data Schedule.
(b) No Reports on Form 8-K were filed during the quarter covered by this
Report.
- 14 -
<PAGE>
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
--------------------------------------------------
SIGNATURES
----------
Pursuant to the requirements 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.
AMPAL-AMERICAN ISRAEL CORPORATION
By:/s/ Lawrence Lefkowitz
---------------------------------
Lawrence Lefkowitz
President
(Principal Executive Officer)
By:/s/ Alan L. Schaffer
---------------------------------
Alan L. Schaffer
Vice President - Finance
and Treasurer
(Principal Financial Officer)
By:/s/ Alla Kanter
---------------------------------
Alla Kanter
Controller
(Principal Accounting Officer)
Dated: November 14, 1994
- 15 -
Exhibit 11
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
--------------------------------------------------
SCHEDULE SETTING FORTH COMPUTATION OF EARNINGS PER CLASS A SHARE
----------------------------------------------------------------
<TABLE><CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1994 1993
- -------------------------------------------------------------------------------------------
(Amounts in thousands, except per share data) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Weighted average number of shares
outstanding:
4% Preferred...................... 212 227
6-1/2% Preferred.................. 1,150 1,410
Class A........................... 19,808 15,352
Common............................ 3,000 3,000
======= =======
Weighted average number of shares out-
standing assuming conversion of pre-
ferred stock into Class A shares:
Class A........................... 24,318 89.02% 20,717 87.35%
Common............................ 3,000 10.98 3,000 12.65
------- ------- ------- -------
27,318 100.00% 23,717 100.00%
======= ======= ======= =======
Income before cumulative effect of
change in accounting principle....... $ 7,039 $ 3,350
Cumulative effect on prior years of
change in accounting principle....... - (4,982)
------- -------
NET INCOME (LOSS)................ $ 7,039 $(1,632)
======= =======
Allocation of net income (loss) on the
basis of the respective dividend
rights of the above classes of
stock, pro rata:
Class A........................... $ 6,266 89.02% $(1,426) 87.35%
Common............................ 773 10.98 (206) 12.65
------- ------- ------- -------
$ 7,039 100.00% $(1,632) 100.00%
======= ======= ======= =======
Earnings (loss) per Class A share:
Earnings before cumulative effect
of change in accounting principle... $ .26 $ .14
Cumulative effect on prior years of
change in accounting principle...... - (.21)
----- -----
Earnings (loss) per Class A share.... $ .26 $(.07)
===== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from
Registrant's Form 10-Q for the Quarterly Period Ended September 30, 1994
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 42,161
<SECURITIES> 131,659
<RECEIVABLES> 96,440
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 45,221
<PP&E> 41,496
<DEPRECIATION> 11,065
<TOTAL-ASSETS> 345,912
<CURRENT-LIABILITIES> 44,559
<BONDS> 128,713
<COMMON> 23,779
0
6,701
<OTHER-SE> 142,160
<TOTAL-LIABILITY-AND-EQUITY> 345,912
<SALES> 31,820
<TOTAL-REVENUES> 61,729
<CGS> 0
<TOTAL-COSTS> 24,646
<OTHER-EXPENSES> 11,295
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,084
<INCOME-PRETAX> 12,704
<INCOME-TAX> 5,665
<INCOME-CONTINUING> 7,039
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,039
<EPS-PRIMARY> $0.26
<EPS-DILUTED> $0.26
</TABLE>
