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, 1996
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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
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 - 20,595,938 (as of October 31, 1996).
<PAGE>
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...................................... 14
<PAGE>
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1996 1995
- --------------------------------------------------------------------------------
(Dollars in thousands, except per share data) (Unaudited) (Unaudited)
(Note 2)
REVENUES
Equity in earnings of affiliates (Note 3) .......... $ 174 $ 6,859
Manufacturing ...................................... 7,773 7,840
Interest:
Related parties ................................... 8,253 7,442
Others ............................................ 1,571 2,507
Rental income ...................................... 8,729 4,864
Realized and unrealized gains on investments ....... 1,820 3,030
Other .............................................. 1,540 1,507
-------- --------
Total revenues ................................ 29,860 34,049
-------- --------
EXPENSES
Manufacturing ...................................... 8,823 7,157
Interest:
Related parties ................................... 3,021 2,094
Others ............................................ 7,895 7,309
Rental property operating expenses ................. 4,291 1,599
Other .............................................. 5,335 5,430
-------- --------
Total expenses ................................ 29,365 23,589
-------- --------
Income from continuing operations before income
taxes ............................................. 495 10,460
Income taxes ....................................... 1,508 5,260
-------- --------
(Loss) income from continuing operations ........... (1,013) 5,200
-------- --------
Discontinued operations (Note 5):
Loss from operations .............................. (3,610) (2,128)
Loss on disposition of $3,121, net of
applicable tax benefit of $4,096 ................. 975 --
-------- --------
Loss from discontinued operations .................. (2,635) (2,128)
-------- --------
NET (LOSS) INCOME ............................. $ (3,648) $ 3,072
======== ========
(Loss) earnings per Class A share:
(Loss) earnings from continuing operations ........ $ (.04) $ .19
Loss from discontinued operations ................. (.09) (.08)
-------- --------
(Loss) earnings per Class A share .................. $ (.13) $ .11
======== ========
Weighted average number of Class A and
equivalent shares outstanding (in thousands) ...... 24,613 25,076
The accompanying notes are an integral part of the consolidated financial
statements.
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<PAGE>
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED SEPTEMBER 30, 1996 1995
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(Dollars in thousands, except per share data) (Unaudited) (Unaudited)
(Note 2)
REVENUES
Equity in (losses) earnings of affiliates (Note
3) ............................................... $ (1,046) $ 1,239
Manufacturing ...................................... 2,569 2,595
Interest:
Related parties ................................... 2,048 2,751
Others ............................................ 441 673
Rental income ...................................... 3,003 3,119
Realized and unrealized (losses) gains on
investments ....................................... (311) 1,313
Other .............................................. 596 538
-------- --------
Total revenues ................................ 7,300 12,228
-------- --------
EXPENSES
Manufacturing ...................................... 3,368 2,401
Interest:
Related parties ................................... 907 1,129
Others ............................................ 2,011 2,465
Rental property operating expenses ................. 1,408 1,355
Other .............................................. 2,021 1,846
-------- --------
Total expenses ................................ 9,715 9,196
-------- --------
(Loss) income from continuing operations before
income taxes ...................................... (2,415) 3,032
Income taxes ....................................... 150 1,364
-------- --------
(Loss) income from continuing operations ........... (2,565) 1,668
-------- --------
Discontinued operations (Note 5):
Loss from operations .............................. -- (1,183)
Loss on disposition of $2,714, net of
applicable tax benefit of $2,654 ................. (60) --
-------- --------
Loss from discontinued operations .................. (60) (1,183)
-------- --------
NET (LOSS) INCOME ............................. $ (2,625) $ 485
======== ========
(Loss) earnings per Class A share:
(Loss) earnings from continuing operations ........ $ (.09) $ .06
Loss from discontinued operations ................. -- (.04)
-------- --------
(Loss) earnings per Class A share .................. $ (.09) $ .02
======== ========
Weighted average number of Class A and
equivalent shares outstanding (in thousands) ...... 24,613 24,875
The accompanying notes are an integral part of the consolidated financial
statements.
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<PAGE>
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31,
ASSETS AS AT 1996 1995
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(Dollars in thousands) (Unaudited) (Note 2)
Cash and cash equivalents .......................... $ 10,285 $ 15,976
Deposits, notes and loans receivable ............... 62,795 73,935
Investments (Note 3) ............................... 140,493 142,583
Real estate rental property, less accumulated
depreciation of $5,904 and $4,994 (Note 6) ........ 58,587 57,289
Property and equipment, less accumulated
depreciation of $4,155 and $3,731 ................. 5,649 6,097
Other assets ....................................... 20,435 13,636
Net assets of discontinued operations (Note 5) ..... -- 2,578
-------- --------
TOTAL ASSETS........................................ $298,244 $312,094
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
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<PAGE>
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SEPTEMBER 30, DECEMBER 31,
SHAREHOLDERS' EQUITY AS AT 1996 1995
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(Dollars in thousands) (Unaudited) (Note 2)
LIABILITIES
Notes and loans payable:
Related parties .................................. $ 33,903 $ 37,326
Others ........................................... 8,160 4,177
Debentures ......................................... 62,883 74,378
Accounts and income taxes payable, accrued
expenses and minority interests ................... 33,759 31,798
-------- --------
Total liabilities .......................... 138,705 147,679
-------- --------
SHAREHOLDERS' EQUITY (Note 4)
4% Cumulative, Participating, Convertible
Preferred Stock, $5 par value; authorized
650,000 shares; issued and outstanding
195,523 and 199,030 shares ........................ 978 995
6-1/2% Cumulative, Convertible Preferred Stock,
$5 par value; authorized 4,282,850 shares;
issued and outstanding 1,017,441 and 1,052,599
shares ............................................ 5,087 5,263
Class A Stock, $1 par value; authorized
60,000,000 shares; issued 21,188,611 and
21,065,392 shares; outstanding 20,583,211
and 20,459,992 shares ............................. 21,189 21,066
Common Stock, $1 par value; authorized, issued
and outstanding 3,000,000 shares .................. 3,000 3,000
Additional paid-in capital ......................... 57,380 57,310
Retained earnings .................................. 81,911 85,559
Treasury Stock, 605,400 shares of Class A Stock,
at cost ........................................... (3,829) (3,829)
Cumulative translation adjustments ................. (6,103) (4,354)
Unrealized loss on marketable securities ........... (74) (595)
-------- --------
Total shareholders' equity ................. 159,539 164,415
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ......... $298,244 $312,094
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
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<PAGE>
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996 1995
- --------------------------------------------------------------------------------
(Dollars in thousands) (Unaudited) (Unaudited)
(Note 2)
Cash flows from operating activities:
Net(loss) income .................................. $ (3,648) $ 3,072
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in earnings of affiliates ................. (174) (6,859)
Loss from discontinued operations ................ 2,635 2,128
Realized and unrealized gains on investments ..... (1,820) (3,030)
Depreciation expense ............................. 1,526 1,146
Amortization expense ............................. 2,882 3,415
Minority interests ............................... (379) (195)
(Increase) in other assets ........................ (1,996) (887)
(Decrease) increase in accounts and income
taxes payable, accrued expenses and minority
interests ........................................ (1,284) 2,897
Investments made in trading securities ............ (1,610) (5,606)
Proceeds from sale of trading securities .......... 2,471 12,029
Dividends received from affiliates ................ -- 3,029
-------- --------
Net cash (used in) provided by operating
activities ...................................... (1,397) 11,139
-------- --------
Cash flows from investing activities:
Deposits, notes and loans receivable collected .... 15,527 22,063
Deposits, notes and loans receivable granted ...... (3,453) (3,082)
Investments made in:
Available-for-sale securities .................... (228) (1,339)
Affiliates and others ............................ (5,107) (32,405)
Proceeds from sale of investments:
Affiliates and others ............................ 7,965 50,969
Purchase of property and equipment ................ (494) (378)
Purchase of real estate rental property ........... (895) (45,270)
-------- --------
Net cash provided by (used in) investing
activities ...................................... 13,315 (9,442)
-------- --------
The accompanying notes are an integral part of the consolidated financial
statements.
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<PAGE>
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996 1995
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(Dollars in thousands) (Unaudited) (Unaudited)
(Note 2)
Cash flows from financing activities:
Notes and loans payable received:
Related parties .................................. $ 1,053 $ 30,167
Others ........................................... 5,535 1,056
Notes and loans payable repaid:
Related parties .................................. (4,606) (3,858)
Others ........................................... (1,573) (420)
Debentures repaid ................................. (16,237) (9,398)
Proceeds from issuance of shares to minority
interests ........................................ -- 50
Purchase of treasury shares ....................... -- (3,046)
-------- --------
Net cash (used in) provided by financing
activities ...................................... (15,828) 14,551
Effect of exchange rate changes on cash and
cash equivalents .................................. (1,781) (742)
-------- --------
Net (decrease) increase in cash and cash
equivalents ....................................... (5,691) 15,506
Cash and cash equivalents at beginning of
period ............................................ 15,976 38,568
-------- --------
Cash and cash equivalents at end of period ......... $ 10,285 $ 54,074
======== ========
Supplemental Disclosure of Cash Flow Information
Cash paid during the period:
Interest:
Related parties .................................. $ 1,800 $ 912
Others ........................................... 3,073 2,988
-------- --------
Total interest paid ............................ $ 4,873 $ 3,900
======== ========
Income taxes paid ................................. $ 2,844 $ 2,399
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
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<PAGE>
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1996 1995
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(Dollars in thousands) (Unaudited) (Unaudited)
4% PREFERRED STOCK
Balance, beginning of year ......................... $ 995 $ 1,033
Conversion of 3,507 and 5,542 shares into
Class A Stock ..................................... (17) (28)
-------- --------
Balance, end of period ............................. $ 978 $ 1,005
======== ========
6-1/2% PREFERRED STOCK
Balance, beginning of year ......................... $ 5,263 $ 5,575
Conversion of 35,228 and 36,498 shares into
Class A Stock ..................................... (176) (183)
-------- --------
Balance, end of period ............................. $ 5,087 $ 5,392
======== ========
CLASS A STOCK
Balance, beginning of year ......................... $ 21,066 $ 20,841
Issuance of shares upon conversion of
Preferred Stock ................................... 123 137
-------- --------
Balance, end of period ............................. $ 21,189 $ 20,978
======== ========
ADDITIONAL PAID-IN CAPITAL
Balance, beginning of year ......................... $ 57,310 $ 57,185
Conversion of Preferred Stock ...................... 70 74
-------- --------
Balance, end of period ............................. $ 57,380 $ 57,259
======== ========
RETAINED EARNINGS
Balance, beginning of year ......................... $ 85,559 $ 89,007
Net (loss) income .................................. (3,648) 3,072
Dividends declared:
4% Preferred Stock - $.20 per share .............. -- (40)
6-1/2% Preferred Stock - $.325 per share ......... -- (351)
-------- --------
Balance, end of period ............................. $ 81,911 $ 91,688
======== ========
TREASURY STOCK
Balance, beginning of year ......................... $ (3,829) $ --
Purchase of 465,900 shares of Class A Stock,
at cost ........................................... -- (3,046)
-------- --------
Balance, end of period ............................. $ (3,829) $ (3,046)
======== ========
CUMULATIVE TRANSLATION ADJUSTMENTS
Balance, beginning of year ......................... $ (4,354) $ (2,636)
Foreign currency translation adjustment ............ (1,749) 217
-------- --------
Balance, end of period ............................. $ (6,103) $ (2,419)
======== ========
UNREALIZED (LOSS) ON MARKETABLE SECURITIES
Balance, beginning of year ......................... $ (595) $ (511)
Unrealized gain, net ............................... 40 467
Transfer to trading securities ..................... 116 --
Write-off due to permanent impairment .............. 365 --
-------- --------
Balance, end of period ............................. $ (74) $ (44)
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
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<PAGE>
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 other than those that are discussed in Note 5. Certain amounts
in the 1995 financial statements 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. On
September 27, 1996, CWI closed the sale of the marine park in Nassau
(Bahamas) and recorded additional expenses in connection with the sale of
approximately $1 million (the Company's share is $.5 million, $.3 million
net of taxes) in the three-month period ended September 30, 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 that date, 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 September 30, 1996, assuming conversion of
Hapoalim's Preferred Stock) and 100% of the Common Stock, which has
superior voting rights. As of September 30, 1996, Rebar held 5,862,351
shares of Ampal Class A Stock (equal to 28.5% of the outstanding shares of
Class A Stock, not assuming conversion of Hapoalim's Preferred Stock).
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 no more than 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.
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<PAGE>
5. Discontinued Operations - On October 11, 1996 the Company agreed to sell
all of its equity interest in its food processing subsidiary, Pri Ha'emek
(Canned and Frozen Food) 88 Ltd. ("Pri Ha'emek") to Agrifarm International
Limited ("Agrifarm"), a British company. This agreement is subject to
receipt of regulatory approvals in Israel, approvals of the Boards of
Directors of the parties and a right of first refusal in favor of another
shareholder of Pri Ha'emek to complete the transaction on the same terms as
Agrifarm. Accordingly, the results of Pri Ha'emek, whose financial
statements were previously consolidated with the Company's financial
statements through June 30, 1996, have been presented as discontinued
operations for all periods presented in the consolidated financial
statements. In connection with the sale, the Company recorded $2,714,000 of
additional expenses and a tax benefit of $2,654,000 in the three-month
period ended September 30, 1996. For the nine-month period ended September
30, 1996, the Company recorded a tax benefit of approximately $4.1 million,
which was based on a total loss of its investment in Pri Ha'emek in the
amount of $9.7 million.
6. On September 25, 1996 the Company's 94%-owned real estate subsidiary, which
is the owner of an office building located at 800 Second Avenue, New York
City, entered into a nonbinding letter of intent with the Government of
Israel regarding the sale to the Government of the portion of the building
currently occupied by the Government for a price of approximately $31
million. The building was purchased by the Company's subsidiary in June
1995 for approximately $45 million. The Government currently occupies
slightly less than 50 percent of the building.
The transaction is subject to conditions, including approval of relevant
Israel Government bodies and execution of a binding agreement. The letter
of intent contemplates that the agreement will be signed in November 1996,
with a closing to take place in December 1996.
7. Subsequent Event - On October 17, 1996 the Company's indirect affiliate,
MEMCO Software Ltd. ("MEMCO"), a provider of enterprise security solutions,
conducted its initial public offering of 3,870,000 Ordinary Shares
(including 450,000 over-allotment shares) at $15.00 per share. MEMCO sold
3,450,000 of these shares and received net proceeds of approximately $46
million, and existing shareholders sold 420,000 shares. The Company will
record a fourth quarter gain of approximately $1.6 million, after taxes,
with respect to the offering.
Prior to the offering, the Company's 42.5%-owned affiliate, Ophir Holdings
Ltd. ("Ophir"), owned a 17.9% interest in MEMCO, which it purchased for
$2.5 million. Ophir sold Ordinary Shares in the offering, reducing its
ownership interest to 13.1%. Ophir continues to hold 2,026,388 shares of
MEMCO.
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<PAGE>
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
--------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations (See discussion on Discontinued Operations elsewhere in
Management's Discussion and Analysis)
Nine months ended September 30, 1996 compared to nine months ended September 30,
1995:
Consolidated income from continuing operations decreased from $5.2 million for
the nine-month period ended September 30, 1995 to a loss of $1 million for the
same period in 1996. The decrease in income in 1996 resulted primarily from
decreases in equity in earnings of affiliates, lower unrealized gains on
investments, losses incurred by the Company's manufacturing subsidiary and
higher interest expense. These decreases were partially offset by an increase in
net rental income.
Equity in earnings of affiliates decreased from $6.8 million for the nine months
ended September 30, 1995 to $.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"). 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. On September 27, 1996
CWI closed the sale of the marine park in Nassau (Bahamas) and recorded
additional expenses in connection with the sale of approximately $1 million (the
Company's share is $.5 million, $.3 million net of taxes) in the three-month
period ended September 30, 1996.
M.D.F. Industries Ltd. ("M.D.F."), the Company's 50%-owned affiliate, which has
established a plant in Israel for the production of medium density fiber boards,
and which completed its running-in period on June 30, 1996, incurred significant
losses in the quarter ended September 30, 1996. The losses are primarily
attributable to the excess of cost of sales per production unit over the selling
price. M.D.F.'s sales prices were affected by the decrease in the world prices
of all wood-connected products, and to the establishment of nearly 30 new plants
for the production of medium density fiber boards throughout the world.
Moriah Hotels Ltd. ("Moriah"), the Company's 46%-owned affiliate, which is one
of the largest hotel chains in Israel, recorded losses in 1996 primarily because
its Tel Aviv hotel was closed for renovations for part of the period. Moriah
also experienced decreases in occupancy rates and room rates which resulted from
the decrease in tourism to Israel in 1996. The Tel Aviv hotel, which has
undergone a $13 million renovation, partially reopened in May 1996, and its
renovations are expected to be completed in the fourth quarter of 1996.
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.
The decreases noted above 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
-10-
<PAGE>
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, mainly because of its more successful marketing efforts.
Manufacturing revenues and expenses reflect the operations of Paradise
Mattresses (1992) Ltd. ("Paradise"), the Company's 85.1%-owned subsidiary, which
is a leading manufacturer and distributor of mattresses and fold-out beds in
Israel. Paradise recorded losses in 1996, primarily in the third quarter,
because of increased advertising and promotional expenses in connection with a
new marketing program.
Interest expense increased in 1996 mainly because of debt 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 increases in rental income and rental property expenses are attributable to
the operations of 800 Second Avenue.
The Company recorded $.1 million and $1.3 million of unrealized gains on
marketable securities and $1.7 million of gains on sale of investments in the
nine-month periods ended September 30, 1996 and 1995, respectively. The gains
recorded in 1996 were mainly attributable to the Company's investments in
Teledata and M-Systems Flash Disk Pioneers Ltd. ("M-Systems"), whereas the gains
recorded in 1995 were mainly attributed to the Company's investment in Mercury
Interactive Corporation. Unrealized gains in 1996 were offset by the unrealized
loss recorded on the Company's investment in Idan Software Industries I.S.I.,
Ltd. ("Idan") in the quarter ended September 30, 1996.
The increase in the effective income tax rate in 1996 is mainly attributable to
the losses of certain Israeli subsidiaries and affiliates from which no tax
benefits are available.
Three months ended September 30, 1996 compared to three months ended September
30, 1995:
Consolidated income from continuing operations decreased from $1.7 million for
the three-month period ended September 30, 1995 to a loss of $2.6 million for
the same period in 1996. The decrease in 1996 resulted primarily from decreases
in equity in earnings of affiliates, losses incurred by Paradise and unrealized
losses on investments in 1996 as compared to unrealized gains in 1995.
Equity in earnings of affiliates decreased from $1.2 million for the three
months ended September 30, 1995 to equity in losses of $1 million for the same
period in 1996. The decrease is primarily attributable to the losses incurred by
M.D.F. and Moriah, and additional losses recorded by CWI in connection with the
sale of its marine park in Nassau (Bahamas). These decreases were partially
offset by increased earnings of Ophir, which recorded a gain on sale of part of
its investment in Teledata. See discussion on Results of Operations - Nine
months ended September 30, 1996 compared to nine months ended September 30,
1995.
Paradise recorded losses in the third quarter of 1996 for the same reasons as
discussed in Results of Operations - Nine months ended September 30, 1996
compared to nine months ended September 30, 1995.
The Company recorded $.9 million of unrealized losses and $.7 million of
unrealized gains on investments and $.6 million of gains on sale of investments
in the three-month periods ended September 30, 1996 and 1995, respectively. The
unrealized losses recorded in the three-month period ended September 30, 1996
were mainly attributable
-11-
<PAGE>
to the Company's investments in Idan and M-Systems, whereas the realized gains
for the same period were attributable to the Company's investment in Teledata.
The unrealized and realized gains recorded in the three-month period ended
September 30, 1995 were mainly attributable to the Company's investment in
Mercury Interactive Corporation.
The increase in the effective income tax rate in the quarter ended September 30,
1996 as compared to the same period ended September 30, 1995 is attributable to
the same reasons as discussed in Results of Operations - Nine months ended
September 30, 1996 compared to nine months ended September 30, 1995.
Discontinued Operations
Pri Ha'emek (Canned and Frozen Food) 88 Ltd. ("Pri Ha'emek"), the Company's
58.5%-owned food processing subsidiary, which initiated a recovery plan at the
end of 1995, recorded further losses in 1996. 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.
Therefore, on October 11, 1996, the Company agreed to sell all of its equity
interest in Pri Ha'emek to Agrifarm International Limited ("Agrifarm"), a
British company. This agreement is subject to receipt of regulatory approvals in
Israel, approvals of the Boards of Directors of the parties and a right of first
refusal in favor of another shareholder of Pri Ha'emek to complete the
transaction on the same terms as Agrifarm. Accordingly, the results of Pri
Ha'emek, whose financial statements were previously consolidated with the
Company's financial statements through June 30, 1996, have been presented as
discontinued operations for all periods presented in the consolidated financial
statements. In connection with the sale, the Company recorded $2,714,000 of
additional expenses and a tax benefit of $2,654,000 in the three month period
ended September 30, 1996. For the nine-month period ended September 30, 1996,
the Company recorded a tax benefit of approximately $4.1 million, which was
based on a total loss of its investment in Pri Ha'emek in the amount of $9.7
million.
Liquidity and Capital Resources
At September 30, 1996, cash and cash equivalents were $10.3 million as compared
with $16 million at December 31, 1995. In addition, Ampal had approximately $30
million of highly liquid interest-bearing securities included in the investments
caption at September 30, 1996 as compared with $34 million at December 31, 1995.
The decrease in cash and cash equivalents and short-term investments is
primarily related to the scheduled redemptions of debentures, 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
(a) 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 that date, 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
-12-
<PAGE>
hold 4,758,640 shares, assuming conversion of its Preferred Stock (equal to
22.7% of the outstanding Class A Stock as of September 30, 1996, assuming
conversion of Hapoalim's Preferred Stock) and 100% of the Common Stock, which
has superior voting rights. As of September 30, 1996, Rebar held 5,862,351
shares of Ampal Class A Stock (equal to 28.5% of the outstanding shares of Class
A Stock, not assuming conversion of Hapoalim's Preferred Stock). 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 no more than 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.
(b) On September 25, 1996 the Company's 94%-owned real estate subsidiary, which
is the owner of 800 Second Avenue, in New York City, entered into a nonbinding
letter of intent with the Government of Israel regarding the sale to the
Government of the portion of the building currently occupied by the Government
for a price of approximately $31 million. The building was purchased by the
Company's subsidiary in June 1995 for approximately $45 million. The Government
currently occupies slightly less than 50 percent of the building.
The transaction is subject to conditions, including approval of relevant
Israel Government bodies and execution of a binding agreement. The letter of
intent contemplates that the agreement will be signed in November 1996, with a
closing to take place in December 1996.
Subsequent Event
On October 17, 1996 the Company's indirect affiliate, MEMCO Software Ltd.
("MEMCO"), a provider of enterprise security solutions, conducted its initial
public offering of 3,870,000 Ordinary Shares(including 450,000 over-allotment
shares) at $15.00 per share. MEMCO sold 3,450,000 of these shares and received
net proceeds of approximately $46 million, and existing shareholders sold
420,000 shares. The Company will record a fourth quarter gain of approximately
$1.6 million, after taxes, with respect to the offering.
Prior to the offering, the Company's 42.5%-owned affiliate, Ophir, owned a 17.9%
interest in MEMCO, which it purchased for $2.5 million. Ophir sold Ordinary
Shares in the offering, reducing its ownership interest to 13.1%. Ophir
continues to hold 2,026,388 shares of MEMCO.
-13-
<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 October 3, 1996, at the Annual Meeting of Shareholders of Registrant,
the following persons were elected as directors by the following vote:
(i) CLASS A FOR AUTHORITY WITHHELD
------- --- ------------------
H.B. Henshel 16,316,952 97,720
I. Hochberg 16,316,698 97,974
H. Kronish 16,316,039 98,633
E. Sommer 16,317,348 97,324
(ii) COMMON/CLASS A FOR AUTHORITY WITHHELD
-------------- --- ------------------
A. Abend 32,659,467 169,877
M. Arnon 32,731,863 97,481
S.I. Batkin 32,731,263 98,081
Y. Elinav 32,725,520 103,824
L. Lefkowitz 32,725,583 103,761
H. Peled 32,731,520 97,824
S. Ravid 32,731,362 97,982
S. Recht 32,731,870 97,474
M.W. Sonnenfeldt 32,725,520 103,824
R. Steinmetz 32,734,020 95,324
Item 5. Other Information - None.
Item 6. Exhibits and Reports on Form 8-K
(a) Index to Exhibits:
Exhibit 10 - Material Contracts - English translation of a Share
Purchase Contract, dated October 11, 1996, between Ampal Industries,
Inc. and Agrifarm International Ltd., regarding the sale of shares of
Pri Ha'emek (Canned and Frozen Food) 88 Ltd................ Page E-1*
Exhibit 11 - Schedule Setting Forth Computation
of Earnings Per Class A Share...............................Page 15
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K - None.
* Refers to separately bound exhibit volume.
-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
Vice President - Accounting
and Controller
(Principal Accounting Officer)
Dated: November 14, 1996
-16-
EXHIBIT-10
[TRANSLATED FROM THE HEBREW]
SHARE PURCHASE CONTRACT
-----------------------
Made in Tel Aviv this 11th day of October 1996
BETWEEN: AMPAL INDUSTRIES, INC.
whose address for the purpose of this contract is c/o Ampal
(Israel) Ltd., of 111 Arlozorov Street, Tel Aviv
(hereinafter referred to as "the Vendor")
AND: AGRIFARM INTERNATIONAL LTD.
whose address for the purpose of this contract is c/o Hadassim
Agricultural Development Co. Ltd., POB 119 Rosh Pina 12000
(hereinafter referred to as "the Purchaser")
WHEREAS the Vendor, Ampal Industries (Israel) Ltd., Ampal Development
(Israel) Ltd. and Ampal Financial Services Ltd. (the said four are
hereinafter referred to as "Ampal") hold 8,223,7279 ordinary
shares of NIS 1 n.v. each (hereinafter referred to as "The
Shares") of Pri Ha'emek (Canned and Frozen Food) 88 Ltd.
(hereinafter referred to as "the Company"), representing as at
30th September 1996 approx. 58% of the Company's issued share
capital (prior to the conversion of the debentures);
AND WHEREAS the Company is a public company whose Shares are traded on the Tel
Aviv Stock Exchange Ltd. (hereinafter referred to as "the Stock
Exchange");
E-1
<PAGE>
AND WHEREAS the Purchaser has considerable experience in the food industry and
it has examined the state of the Company's business;
AND WHEREAS the Purchaser intends operating the Company as a going concern and
to act to rehabilitate it;
AND WHEREAS the Purchaser has the experience, expertise, know-how and means
required to operate the Company as a going concern;
AND WHEREAS the Vendor is unaware of any event which the Company is under a
legal duty to report to the Stock Exchange and/or the Securities
Authority and which has not been reported;
AND WHEREAS Ampal wishes to sell to the Purchaser, and the Purchaser wishes to
purchase from Ampal, the Shares being fully paid up and free of
any charge and third party right whatsoever with the Company being
"as is";
ACCORDINGLY, IT IS WARRANTED AND AGREED BETWEEN THE PARTIES AS FOLLOWS:
1. Recitals and Headings
1.1 The recitals to this contract constitute an integral part hereof and
every representation, warranty or undertaking included in the recitals
shall be deemed included in the body hereof.
1.2 The clause headings are for locational convenience only and shall be
given no weight for the purposes of the interpretation hereof.
2. The Transaction
2.1 The Vendor hereby undertakes to sell and/or procure that Ampal shall
sell the Shares to the Purchaser, and the Purchaser hereby undertakes
E-2
<PAGE>
to purchase the Shares from Ampal, upon the terms, conditions and
stipulations particularized below.
2.2 The Shares shall be transferred to the Purchaser on the closing date
(as defined below) being fully paid up and free of any charge and
third party right whatsoever against payment of the sum of NIS 8,223
in respect of all the Shares.
2.3 In consideration for the purchase of the Shares and the full and
precise performance of the Purchaser's undertakings pursuant to this
contract, the Vendor undertakes as follows:
2.3.1 Ampal shall assign to the Purchaser its rights in respect of an
owners' loan linked to the consumer price index ("the index") and
bearing interest at a rate of 3% per annum which was made
available to the Company by Ampal in the past in a total amount
(principal and interest) of NIS 1,000,000 (one million new
shekels); and also
2.3.2 Ampal shall assign to the Purchaser its rights in respect of an
owners' loan in the sum of NIS 2,000,000 (two million new
shekels) which was made available to the Company by Ampal
pursuant to clause 5.1 below; and also
2.3.3 Ampal shall waive its rights vis-a-vis the Company in respect of
the balance of an owners' loan debt (principal and interest),
save for the sum of NIS 1,000,000 in respect whereof the
provisions of clause 2.3.1 above shall apply, the loan pursuant
to clause 5.1 below in respect whereof the provisions of clause
2.3.2 above shall apply and debentures listed for trading on the
Stock Exchange which Ampal shall be entitled to continue holding;
and also
2.3.4 Ampal shall pay the Purchaser the sum of US$ 1,500,000 (one
million five hundred thousand US dollars) against the release of
the guarantee and deposit which was made available by Ampal and
Ampal (Israel) Ltd. as collateral to secure the Company's
liabilities up to the said amount to Bank Hapoalim Ltd.; and also
E-3
<PAGE>
2.3.5 Ampal shall pay the Purchaser the sum of NIS 2,000,000 (two
million new shekels);
and all upon the terms, conditions and stipulations particularized
below.
3. Conditions Precedent for the Implementation of the Transaction
The receipt of the approvals and consents particularized below constitutes
a condition precedent for the implementation of the transaction pursuant
hereto:
3.1 The receipt of the Director of Restrictive Trade Practices' consent to
the transaction.
3.2 The receipt of a written waiver to the Vendor's satisfaction of
Cheddar George Inc.'s rights in respect of the sale of the Shares.
The parties undertake to act in good faith to the best of their ability to
obtain the approvals and consents as soon as possible, including to sign
any document that may be reasonably required in respect thereof. If by 10th
November 1996 (or a later date of which the Vendor shall give written
notice to the Purchaser - if it gives notice - but by no later than 31st
December 1996), the approvals and consents as aforesaid have not been
received, this contract and all the parties' obligations pursuant hereto,
save for clauses 5.3 and 8 below, shall be null and void.
4. Implementation of the Transaction
On the first business day after receiving the approvals and consents
mentioned in clause 3 above (hereinafter referred to as "the Closing
Date"), the parties shall act simultaneously as follows:
4.1 The Purchaser and Ampal shall sign share transfer instruments in
respect of the Shares.
4.2 The Purchaser shall pay Ampal the consideration for the Shares
pursuant to clause 2.2 above.
4.3 The Vendor shall procure that Ampal shall act as follows:
E-4
<PAGE>
4.3.1 Ampal shall assign to the Purchaser all its rights in respect of
owners' loans as provided in clauses 2.3.1 and 2.3.2 above; and
also
4.3.2 Ampal shall waive its rights vis-a-vis the Company in respect of
the balance of the owners' loan debt as provided in clause 2.3.3
above; and
4.3.3 Ampal shall pay the Purchaser the amount provided in clause
2.3.4 above against the release of the guarantee and deposit as
provided in the said clause and the amount provided in clause
2.3.5 above. The said amount shall be remitted to the Company
pursuant to clause 4.4 below.
4.4 The Purchaser shall make available to the Company owners' loans in an
amount in NIS equal to US$ 1,500,000 together with the sum of NIS
2,000,000, linked to the Index and bearing interest at 3% per annum,
and it shall furnish Ampal with a document signed by Bank Hapoalim
Ltd. confirming the release of the guarantee and deposit as provided
in clause 2.3.4 above.
5. The Interim Period
5.1 The Vendor shall make available to the Company by 13th October 1996
the sum of NIS 2,000,000 (two million new shekels) as an owners' loan
linked to the index and bearing interest at 3% per annum. The said
loan shall be assigned to the Purchaser on the closing date pursuant
to clause 2.3.2 above.
5.2 From 13th October 1996, the Purchaser shall be involved in the
management of the Company and shall act jointly with the Vendor as
required in order to enable the continued routine management and
operation of the Company as a going concern.
5.3 The parties shall use their best endeavours so that Messrs. Yoram
Ben-Ami and Amram Yaniv shall be appointed members of the Company's
board of directors as soon as possible after the date of the execution
hereof. As soon as possible after the closing date, the parties shall
use their best endeavours to replace the Company's directors who are
Ampal employees with directors as the Purchaser shall instruct, or -
if this contract is annulled pursuant to clause 3
E-5
<PAGE>
above - the parties shall use their best endeavours to replace the
persons appointed pursuant to this clause 5.3 with directors as the
Purchaser shall instruct.
5.4 The parties shall use their best endeavours so that the Company's
signatory authorization during the period up to the closing date shall
require the joint signatures of one of the directors appointed
pursuant to clause 5.3 above together with one of the directors who
are Ampal employees in order to bind the Company.
5.5 The parties shall use their best endeavours to obtain the approvals
required of the Company with regard to the actions that shall be
effected pursuant to clauses 4.3 and 4.4 above by the closing date.
6. Additional Undertakings
6.1 The Purchaser hereby warrants that it is purchasing the Shares with
the Company being "as is" on the closing date without any
representation or liability by the Vendor and/or Ampal with regard to
the Company and all matters relating thereto, its value, profitability
or the value of the Shares, without any representations or
undertakings relating to the Company and without any indemnity
undertaking in respect of any non-conformity or difference deriving
from such matters or other undertaking to the Purchaser in connection
with the Company.
Without derogating from the generality of the aforegoing, the
Purchaser confirms that it is aware of the Company's managing
director's rights vis-a-vis the Company and the Vendor and it is
purchasing the Shares subject to the signed contractual obligations
and it shall be exclusively liable for the full and precise
performance thereof.
6.2 The Purchaser hereby warrants that it intends operating the Company as
a going concern and to act to rehabilitate it. The Purchaser shall use
the utmost efforts to bring the Company to profitability.
Without derogating from the generality of the aforegoing, the
Purchaser undertakes to make available to the Company, in addition to
the owners' loans pursuant to clause 4.4 above, further injections in
a further total amount of not less than NIS 5,000,000 (five million
new
E-6
<PAGE>
shekels) to improve the Company's working capital, either by way of
owners' loans or in any other manner.
6.3 It is hereby expressly clarified that the Vendor's undertakings
pursuant to this contract are to the Purchaser alone and they do not
grant any right to the Company or to any other person, and the
Purchaser's undertakings pursuant to this contract are to the Vendor
alone and they do not grant any right to the Company or to any other
person.
6.4 The parties undertake to act in good faith and to the best of their
ability to obtain all the consents and approvals that shall be
required in connection with the implementation of this contract,
including to sign any document that may be reasonably required in
respect thereof.
6.5 Ampal shall be entitled, at any time from the closing date and for 18
months thereafter (hereinafter referred to as "the option period"), to
give written notice to the Purchaser of its wish to purchase all or
part of the option Shares from it. If notice as aforesaid is given,
the Purchaser shall be under a duty to sell all or part of the option
Shares to Ampal as stated in the notice, with their being fully paid
up and free of any charge or third party right whatsoever, in
consideration for payment of the sum of NIS 0.5 in respect of each
share of NIS 1 n.v. The transfer of the Shares and the payment of the
consideration as aforesaid shall be effected on the date of giving the
notice. Ampal shall be entitled to give a number of notices pursuant
to this clause 6.5 and to exercise the options in instalments.
"The option Shares" means Shares representing 5.8% of all the
Company's issued Shares or - in the event that the Purchaser or a
related party to it purchases Shares of the Company from Cheddar
George Inc. - Shares representing 8.3% of all the Company's issued
Shares.
7. Approval of the Vendor's Board of Directors Committee
The Vendor's undertakings pursuant to this contract are subject to
obtaining the approval of the Vendor's board of directors executive
committee to the execution hereof.
E-7
<PAGE>
8. Confidentiality
Without derogating from the provisions of the law or the provisions of any
other contract that shall apply in respect of a duty of confidentiality,
the parties hereto shall maintain confidentiality, and shall not disclose
to another during the period in which they are shareholders of the Company
and thereafter, without the Company's prior written consent, any
information of a secret nature relating to the Company's business, to
proprietary information of the Company and suppliers or actual or potential
customers. These provisions shall not apply in respect of any information
which the party wishing to disclose it shall be able to prove that the
information (a) reached its possession without any express or implied duty
of confidentiality prior to receiving it, (b) came within the public domain
other than at its fault or responsibility, (c) was received by it from a
person who was entitled to disclose it, or (d) was under a duty to disclose
it pursuant to the applicable law.
9. Sending Notices
The addresses of the parties hereto are as particularized alongside their
names in the recitals. Any notice in connection with this contract given by
one of the parties to the other shall be deemed as having been delivered to
the addressee on the date on which it reached it or, if sent by registered
post to the said addresses - at the time it reached its addressee or at the
end of three business days from the time of dispatch - whichever is the
earlier.
10. Waiver
A delay in exercising the rights of one of the parties in connection with
this contract or the non-exercise of rights as aforesaid shall not be
deemed a waiver of such rights. A notice or demand vis-a-vis any party
shall not constitute a waiver of the rights of such party or a waiver of
the right of the party delivering the notice or demand to take further
action without notice or demand. A waiver made by one of the parties in
respect of a right or remedy in a specific case shall not be deemed a
waiver of a right or remedy as aforesaid in any other case.
E-8
<PAGE>
11. Inclusive Contract
This contract expresses and merges all the matters agreed upon between the
parties as at the date of the execution hereof in respect of the matters
dealt with herein.
12. Non-Assignment
This contract and the parties' rights and obligations pursuant hereto
cannot be assigned during the Option Period.
Notwithstanding the aforegoing, if permits are not received from the
Controller of Foreign Currency and the Bank of Israel as required to
implement this contract by the date of obtaining the approvals provided in
clause 3 above, all the Purchaser's rights and obligations pursuant to this
agreement shall be automatically conferred ipso facto, and without
requiring any additional document, upon Hadassim Agricultural Development
Co. Ltd. In such an event, the Purchaser shall be entitled to assign all
its rights and obligations pursuant to this agreement, subject to the
Vendor's consent, and the Vendor shall not refuse its consent save on
reasonable grounds, to another Israeli company connected with Hadassim
Agricultural Development Co. Ltd., provided that notice thereof is given by
the Purchaser to the Vendor prior to the closing date and that the assignee
confirms in writing to the Vendor all its obligations pursuant to this
agreement and signed every document required by the Vendor in such regard.
AS WITNESS THE HANDS OF THE PARTIES:
------------------------------------
/s/Ampal Industries, Inc. /s/Agrifarm International Ltd.
- -------------------------- --------------------------------
Ampal Industries, Inc. Agrifarm International Ltd.
Hadassim Agricultural Development Co. Ltd. confirms its consent and undertaking
pursuant to the provisions of clause 12 above.
/s/Hadassim Agricultural Development Co. Ltd.
- ---------------------------------------------
Hadassim Agricultural Development Co. Ltd.
E-9
<PAGE>
[TRANSLATED FROM THE HEBREW]
11th October 1996
Agrifarm International Ltd.
- ---------------------------
Dear Sirs,
In connection with the share purchase contract executed between us today ("the
contract"), it is expressed that if Bank Hapoalim Ltd. ("the Bank") stipulates
the release of the guarantee and deposit made available by Ampal and Ampal
(Israel) Ltd. as provided in clause 2.3.4 of the contract with the payment of
the interest in respect of the period which the amounts as aforesaid were made
available to the Company by the Bank in respect of the said collateral, Ampal
shall bear the interest as aforesaid in such amount as shall be agreed upon
between it and the Bank, so that the said amount shall be added to the amount
provided in clause 2.3.4 of the contract and shall be remitted to the Company as
a further owners' loan pursuant to clause 4.4 of the contract.
Yours faithfully,
(Signed)
/s/Ampal Industries, Inc.
- -------------------------
Ampal Industries, Inc.
E-10
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, 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
(Amounts in thousands, except (Unaudited) (Unaudited)
per share data)
<S> <C> <C> <C> <C>
Weighted average number of shares outstanding:
4% Preferred....................................... 197 205
6-1/2% Preferred................................... 1,035 1,102
Class A............................................ 20,523 20,745
Common............................................. 3,000 3,000
======= =======
Weighted average number of shares
outstanding assuming conversion of
preferred stock into Class A
shares:
Class A............................................ 24,613 89.14% 25,076 89.31%
Common............................................. 3,000 10.86 3,000 10.69
------- ------- ------- ------
27,613 100.00% 28,076 100.00%
======= ======= ======= =======
(Loss) income from continuing
operations............................................ $(1,013) $ 5,200
Loss from discontinued operations..................... (2,635) (2,128)
------- -------
NET (LOSS) INCOME................................. $(3,648) $ 3,072
======= =======
Allocation of net (loss) income on the
basis of the respective dividend
rights of the above classes of
stock, pro rata:
Class A............................................ $(3,252) 89.14% $ 2,744 89.31%
Common............................................. (396) 10.86 328 10.69
------- ------- ------- ------
$(3,648) 100.00% $ 3,072 100.00%
======= ======= ======= =======
(Loss) earnings per Class A share:
(Loss) earnings from continuing
operations.......................................... $(.04) $.19
Loss from discontinued operations.................... (.09) (.08)
----- ----
(Loss) earnings per Class A share...................... $(.13) $.11
===== ====
</TABLE>
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 10,285
<SECURITIES> 140,493
<RECEIVABLES> 62,795
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 20,435
<PP&E> 72,295
<DEPRECIATION> 10,059
<TOTAL-ASSETS> 298,244
<CURRENT-LIABILITIES> 33,759
<BONDS> 104,946
0
6,065
<COMMON> 24,189
<OTHER-SE> 129,285
<TOTAL-LIABILITY-AND-EQUITY> 298,244
<SALES> 7,773
<TOTAL-REVENUES> 29,860
<CGS> 0
<TOTAL-COSTS> 8,823
<OTHER-EXPENSES> 9,626
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,916
<INCOME-PRETAX> 495
<INCOME-TAX> 1,508
<INCOME-CONTINUING> (1,013)
<DISCONTINUED> (2,635)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,648)
<EPS-PRIMARY> (.13)
<EPS-DILUTED> (.13)
</TABLE>
