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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1997
-----------------------------
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 0-538
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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 the issuer's Class A Stock, its
only authorized common stock, is 23,807,385 (as of October 31, 1997).
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AMPAL-AMERICAN ISRAEL CORPORATION
---------------------------------
Index to Form 10-Q
PAGE
Part I Financial Information
Consolidated Statements of Income
Nine Months Ended September 30, 1997 and 1996......... 1
Three Months Ended September 30, 1997 and 1996........ 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
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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1997 1996
- -------------------------------------------------------------------------------
(Dollars in thousands, except per share data) (Unaudited) (Unaudited)
(Note 2)
REVENUES
Equity in earnings of affiliates .....................$ 17,504 $ 1,445
Manufacturing (Note 6) ............................... 8,450 7,773
Interest:
Related parties...................................... 5,991 8,253
Others............................................... 1,979 1,571
Rental income......................................... 5,480 8,729
Realized and unrealized gains on investments.......... 5,750 1,820
Other................................................. 1,559 1,540
-------- --------
Total revenues................................... 46,713 31,131
-------- --------
EXPENSES
Manufacturing (Note 6)................................ 9,229 8,823
Interest:
Related parties...................................... 1,942 3,021
Others............................................... 5,545 7,895
Rental property operating expenses.................... 2,256 4,291
Loss from impairment of investments................... 977 1,271
Other................................................. 6,203 5,335
-------- --------
Total expenses................................... 26,152 30,636
-------- --------
Income from continuing operations before
income taxes......................................... 20,561 495
Provision for income taxes............................ 8,663 1,508
-------- --------
Income (loss) from continuing operations............. 11,898 (1,013)
Loss from discontinued operations..................... - (2,635)
-------- --------
NET INCOME (LOSS)................................$ 11,898 $ (3,648)
======== ========
Earnings (loss) per Class A share (Note 4):
Earnings (loss) from continuing operations...... $ .43 $(.04)
Loss from discontinued operations.................... - (.09)
----- ----
Earnings (loss) per Class A share..................... $ .43 $(.13)
===== =====
Weighted average number of Class A and
equivalent shares outstanding (in thousands)......... 27,614 24,613
The accompanying notes are an integral part of the consolidated financial
statements.
1
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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED SEPTEMBER 30, 1997 1996
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(Dollars in thousands, except per share data) (Unaudited) (Unaudited)
(Note 2)
REVENUES
Equity in earnings of affiliates.....................$ 8,293 $ 97
Manufacturing (Note 6)............................... 2,164 2,569
Interest:
Related parties..................................... 1,666 2,048
Others.............................................. 751 441
Rental income........................................ 1,773 3,003
Realized and unrealized gains (losses) on
investments......................................... 727 (311)
Other................................................ 522 596
-------- --------
Total revenues.................................. 15,896 8,443
-------- --------
EXPENSES
Manufacturing (Note 6)............................... 2,494 3,368
Interest:
Related parties..................................... 650 907
Others.............................................. 1,780 2,011
Rental property operating expenses................... 173 1,408
Loss from impairment of investment................... - 1,143
Other................................................ 2,042 2,021
-------- ------
Total expenses.................................. 7,139 10,858
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Income (loss) from continuing operations before
income taxes........................................ 8,757 (2,415)
Provision for income taxes........................... 4,149 150
------- --------
Income (loss) from continuing operations............. 4,608 (2,565)
Loss from discontinued operations ................... - (60)
-------- --------
NET INCOME (LOSS)...............................$ 4,608 $ (2,625)
======== ========
Earnings (loss) per Class A share (Note 4) .......... $ .17 $ (.09)
===== ======
Weighted average number of Class A and
equivalent shares outstanding (in thousands)........ 27,616 24,613
The accompanying notes are an integral part of the consolidated financial
statements.
2
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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS
September 30, December 31,
ASSETS AS AT 1997 1996
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(Dollars in thousands) (Unaudited) (Note 2)
Cash and cash equivalents........................ $ 24,273 $ 20,633
Deposits, notes and loans receivable............... 59,407 57,041
Investments...................................... 128,313 123,084
Real estate rental property, less accumulated
depreciation of $5,710 and $6,215 (Note 3)...... 28,899 58,199
Property and equipment, less accumulated
depreciation of $2,565 and $4,041 ................ 3,605 5,571
Other assets....................................... 17,590 19,023
-------- --------
TOTAL ASSETS.......................................$262,087 $283,551
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
3
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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 1997 1996
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(Dollars in thousands) (Unaudited) (Note 2)
LIABILITIES Notes and loans payable:
Related parties..................................... $ 16,800 $ 34,005
Others.............................................. 5,854 10,538
Debentures............................................ 42,696 57,871
Accounts and income taxes payable, accrued
expenses and minority interests...................... 35,777 29,017
-------- --------
Total liabilities............................. 101,127 131,431
-------- --------
SHAREHOLDERS' EQUITY
4% Cumulative Convertible Preferred Stock,
$5 par value; authorized 189,287 and 650,000
shares; issued and outstanding 184,371 and
190,936 shares..................................... 922 955
6-1/2% Cumulative Convertible Preferred Stock,
$5 par value; authorized 988,055 and
4,282,850 shares; issued and outstanding 972,333
and 1,002,483 shares............................... 4,861 5,012
Class A Stock, $1 par value; authorized
60,000,000 shares; issued 24,382,695 and
24,256,420 shares; outstanding 23,777,295 and
23,651,020 shares.................................. 24,383 24,257
Additional paid-in capital............................ 57,483 57,410
Retained earnings..................................... 86,841 74,943
Treasury Stock, 605,400 shares of Class A Stock,
at cost.............................................. (3,829) (3,829)
Cumulative translation adjustments.................... (9,701) (6,530)
Unrealized loss on marketable securities.............. - (98)
-------- --------
Total shareholders' equity.................... 160,960 152,120
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY............ $262,087 $283,551
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
4
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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1997 1996
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(Dollars in thousands) (Unaudited) (Unaudited)
(Note 2)
Cash flows from operating activities:
Net income (loss)....................................$ 11,898 $ (3,648)
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in earnings of affiliates.................... (17,504) (1,445)
Loss from discontinued operations................... - 2,635
Realized and unrealized gains on investments........ (5,750) (1,820)
Depreciation expense................................ 1,232 1,526
Amortization expense................................ 1,379 2,882
Loss from impairment of investments................. 977 1,271
Minority interests.................................. (360) (379)
Decrease (increase) in other assets.................. 760 (1,996)
Increase (decrease) in accounts and income taxes
payable, accrued expenses and minority
interests........................................... 7,422 (1,284)
Investments made in trading securities............... (7,624) (1,610)
Proceeds from sale of trading securities............. 5,751 2,471
Dividends received from affiliates................... 7,921 -
------- -------
Net cash provided by (used in) operating
activities......................................... 6,102 (1,397)
------- -------
Cash flows from investing activities:
Deposits, notes and loans receivable collected....... 13,975 15,527
Deposits, notes and loans receivable granted......... (993) (3,453)
Investments made in:
Available-for-sale securities....................... - (228)
Affiliates and others............................... (7,449) (5,107)
Proceeds from sale of investments:
Available-for-sale securities....................... 1,537 -
Others.............................................. 16,768 5,362
Proceeds from sale of real estate rental
property............................................ 15,046 -
Purchase of property and equipment................... (843) (494)
Purchase of real estate rental property.............. (1,018) (895)
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Net cash provided by investing activities........... 37,023 10,712
------- -------
The accompanying notes are an integral part of the consolidated financial
statements.
5
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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1997 1996
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(Dollars in thousands) (Unaudited) (Unaudited)
(Note 2)
Cash flows from financing activities:
Notes and loans payable received:
Related parties......................................$ 1,244 $ 1,053
Others............................................... 590 5,535
Notes and loans payable repaid:
Related parties...................................... (18,701) (4,606)
Others............................................... (4,959) (1,573)
Debentures repaid..................................... (16,204) (16,237)
-------- --------
Net cash (used in) financing activities.............. (38,030) (15,828)
-------- --------
Effect of exchange rate changes on cash and
cash equivalents...................................... (1,455) (1,781)
-------- --------
Net increase (decrease) in cash and cash
equivalents........................................... 3,640 (8,294)
Cash and cash equivalents at beginning of
period................................................ 20,633 25,734
-------- --------
Cash and cash equivalents at end of period.............$ 24,273 $ 17,440
======== ========
Supplemental Disclosure of Cash Flow Information
Cash paid during the period:
Interest:
Related parties......................................$ 968 $ 1,800
Others............................................... 2,933 3,073
-------- --------
Total interest paid................................$ 3,901 $ 4,873
======== ========
Income taxes paid.....................................$ 568 $ 2,844
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
6
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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, 1997 1996
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(Dollars in thousands, except share amounts) (Unaudited) (Unaudited)
4% PREFERRED STOCK
Balance, beginning of year............................$ 955 $ 995
Conversion of 6,565 and 3,507 shares into
Class A Stock........................................ (33) (17)
-------- --------
Balance, end of period................................$ 922 $ 978
======== ========
6-1/2% PREFERRED STOCK
Balance, beginning of year............................$ 5,012 $ 5,263
Conversion of 30,150 and 35,228 shares into
Class A Stock........................................ (151) (176)
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Balance, end of period................................$ 4,861 $ 5,087
======== ========
CLASS A STOCK
Balance, beginning of year............................$ 24,257 $ 21,066
Issuance of shares upon conversion of
Preferred Stock...................................... 123 123
Issuance of additional shares......................... 3 -
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Balance, end of period................................$ 24,383 $ 21,189
======== ========
COMMON STOCK
Balance, beginning of year....................... $ - $ 3,000
-------- --------
Balance, end of period........................... $ - $ 3,000
======== ========
ADDITIONAL PAID-IN CAPITAL
Balance, beginning of year............................$ 57,410 $ 57,310
Conversion of Preferred Stock......................... 61 70
Issuance of additional shares......................... 12 -
-------- --------
Balance, end of period................................$ 57,483 $ 57,380
======== ========
RETAINED EARNINGS
Balance, beginning of year............................$ 74,943 $ 85,559
Net income (loss)..................................... 11,898 (3,648)
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Balance, end of period................................$ 86,841 $ 81,911
======== ========
CUMULATIVE TRANSLATION ADJUSTMENTS
Balance, beginning of year............................$ (6,530) $ (4,354)
Foreign currency translation adjustment............... (3,171) (1,749)
-------- --------
Balance, end of period................................$ (9,701) $ (6,103)
======== ========
UNREALIZED LOSS ON MARKETABLE SECURITIES
Balance, beginning of year............................$ (98) $ (595)
Unrealized gain, net.................................. 98 40
Transfer to trading securities........................ - 116
Write-off due to permanent impairment................. - 365
-------- --------
Balance, end of period................................$ - $ (74)
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
7
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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 "Company" refers to
Ampal-American Israel Corporation ("Ampal") and its consolidated
subsidiaries.
2. The December 31, 1996 consolidated balance sheet presented herein was
derived from the audited December 31, 1996 consolidated financial
statements of the Company.
Reference should be made to the Company's consolidated financial
statements for the year ended December 31, 1996 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,
1996 consolidated financial statements for additional details of the
Company's consolidated financial condition, results of operations and
cash flows. The details in those notes have not changed except as a
result of normal transactions in the interim. Certain amounts in the
1996 consolidated 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 for a fair presentation of the results of the interim period
have been included.
3. On January 31, 1997, the Company sold to the Government of Israel (the
"Government") for $31 million a condominium unit in the 290,000
square-foot office building located at 800 Second Avenue, New York, New
York which is occupied by the Government. As a result of this
transaction, the Company recorded a loss of $1.1 million ($.6 million
net of taxes) in its December 31, 1996 financial statements.
4. In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128, Earnings
Per Share. This statement establishes standards for computing and
presenting earnings per share ("EPS"), replacing the presentation of
currently required Primary EPS with a presentation of Basic EPS. For
entities with complex capital structures, the statement requires the
dual presentation of both Basic EPS and Diluted EPS on the face of the
Statement of Income. Under this new standard, Basic EPS is computed
based on the weighted average number of shares actually outstanding
during the period. Diluted EPS includes the effect of potential
dilution from the conversions of 6-1/2% and 4% Preferred Stocks to
Class A Stock. SFAS No. 128 is effective for financial statements
issued for periods ending after December 15, 1997, and earlier
application in the interim financial statements is not permitted. When
adopted, the Company will be required to restate its EPS data for all
prior periods presented.
Had the Company applied the principles of SFAS No. 128, earnings per
share data on a pro forma basis would be as follows:
Nine months ended September 30, 1997 1996
---- ----
Basic EPS:
Earnings (loss) from continuing operations.. $ .50 $ (.05)
Loss from discontinued operations........... - (.11)
------- -------
Earnings (loss) per Class A share........... $ .50 $ (.16)
======= =======
8
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Nine months ended September 30, 1997 1996
---- ----
Diluted EPS:
Earnings (loss) from continuing operations.. $ .42 $ (.05)
Loss from discontinued operations........... - (.09)
------- -------
Earnings (loss) per Class A share........... $ .42 $ (.14)
======= =======
Shares used in calculation (in thousands):
Basic EPS................................... 23,722 23,524
Diluted EPS................................. 27,614 27,613
Three months ended September 30, 1997 1996
---- ----
Basic EPS:
Earnings (loss) per Class A share........... $ .19 $ (.12)
======= =======
Diluted EPS:
Earnings (loss) per Class A share........... $ .16 $ (.10)
======= =======
Shares used in calculation (in thousands):
Basic EPS................................... 23,767 23,566
Diluted EPS................................. 27,616 27,613
5. On May 8, 1997, the Company sold all of its direct holdings in Orlite
Industries (1959) Ltd. ("Orlite") and a wholly-owned subsidiary which
held a separate interest in Orlite to Investment Company of Bank
Hapoalim for an aggregate purchase price of $5.3 million plus interest.
The Company recorded a gain on sale of $.3 million in its June 30, 1997
consolidated financial statements.
6. On June 26, 1997, the main factory of the Company's 85%-owned
subsidiary, Paradise Industries Ltd. ("Paradise"), was heavily damaged
by a fire and has been closed since then. Paradise carries both fire
damage and business interruption insurance covering the factory.
Paradise was, however, able to resume its activities at the end of the
third quarter by assembling mattresses and sofa beds out of its
newly-built assembly plant rather than manufacturing them. Paradise
uses imported and domestically produced components in its assembly
process. Paradise expects to reach a settlement with its insurance
company by the end of the year. It is too early to determine the amount
of such settlement at this time, and there is no assurance that such
settlement will be reached.
9
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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
--------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1996:
Consolidated income from continuing operations increased to $11.9 million for
the nine-month period ended September 30, 1997, from a $1 million loss for the
same period in 1996. The increase resulted primarily from the increases in
equity in earnings of affiliates, realized and unrealized gains on investments,
and net interest income in 1997 as compared to net interest expense in 1996.
Equity in earnings of affiliates increased from $1.4 million for the nine months
ended September 30, 1996, to $17.5 million for the same period in 1997. The
increase is primarily attributable to the significantly improved earnings of
Ophir Holdings Ltd. ("Ophir"), the Company's 42.5%-owned affiliate, which is a
holding company with interests in high technology and real estate companies, and
to increased earnings of Coral World International Ltd. ("CWI"), the Company's
50%-owned affiliate, which owns and operates marine parks in Eilat (Israel) and
Perth and Manly (Australia). The increase in Ophir's 1997 earnings resulted from
the realized and unrealized gains on its investment in Teledata Communications
Ltd. ("Teledata"), a gain on sale of office and commercial real estate located
in Petach Tikva, Israel and lower interest expense which resulted from
repayments of loans.
CWI reported earnings in 1997 as compared to losses it incurred in the
nine-month period ended September 30, 1996. The losses recorded by CWI in 1996
were primarily attributable to the company's investments in marine parks in
Nassau (Bahamas) and St. Thomas (U.S. Virgin Islands), which were sold in
September 1996 and April 1997, respectively.
The increases noted above were partially offset by the losses recorded by the
Company's 50%-owned affiliate, Trinet Venture Capital Ltd. ("Trinet"), a
high-technology venture capital fund which recorded unrealized losses on its
investments in the nine months ended September 30, 1997 as compared to
unrealized gains in the same period in 1996, and losses of Carmel Container
Systems Limited ("Carmel"), the Company's 20.7%-owned affiliate, which is a
manufacturer of paper-board packaging and related products. Carmel recorded
losses in the nine months ended September 30, 1997 as compared to earnings in
the same period in 1996 primarily because of a decrease in sales volume as a
result of the economic slowdown in Israel, a decrease in sales prices as a
result of escalating competition, an increase in costs associated with the
running-in of a new plant and the one-time expenses incurred with respect to the
closing of old plants.
In the nine months ended September 30, 1997, the Company recorded $4.2 million
of gains on sale of investments, $2.9 million of which is attributable to its
direct investment in Teledata, as compared to $1.7 million of gains on sale of
investments, including $.9 million with respect to Teledata, recorded in the
same period in 1996.
The Company also recorded $1.6 million of unrealized gains on investments which
are classified as trading securities as compared to $.1 million of unrealized
gains on investments in trading securities in the same period in 1996. At
September 30, 1997 and December 31, 1996, the aggregate fair value of trading
securities amounted to approximately $9 million and $4.7 million, respectively.
The Company recorded net interest income in the nine months ended September 30,
1997, as compared to net interest expense in the same period in 1996. The
increase in net
10
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interest income is primarily attributable to debt reduction in connection with
the sale of a condominium unit in an office building ("800 Second Avenue")
located at 800 Second Avenue New York, New York. See Liquidity and Capital
Resources.
On June 26, 1997, the main factory of the Company's 85%-owned subsidiary,
Paradise Industries Ltd. ("Paradise"), was heavily damaged by a fire and has
been closed since then. Paradise carries both fire damage and business
interruption insurance covering the factory. Paradise was, however, able to
resume its activities at the end of the third quarter by assembling mattresses
and sofa beds out of its newly-built assembly plant rather than manufacturing
them. Paradise uses imported and domestically produced components in its
assembly process. Paradise expects to reach a settlement with its insurance
company by the end of the year. It is too early to determine the amount of such
settlement at this time, and there is no assurance that such settlement will be
reached.
In 1997, the Company recorded a $1 million loss from impairment of its
investment in a distribution software company. In the nine-month period ended
September 30, 1996 the Company recorded a $1.3 million loss from impairment of
its investment in M.D.F. Industries Ltd. ("M.D.F.").
The decreases in rental income and rental property operating expenses are
attributable to the sale of a condominium unit in 800 Second Avenue.
The change in the effective income tax rate in 1997 as compared to 1996 is
mainly attributable to the losses of certain Israeli subsidiaries in 1996 for
which no tax benefits were available.
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1996:
Consolidated income from continuing operations increased to $4.6 million for the
three-month period ended September 30, 1997, from a $2.6 million loss for the
same period in 1996. The increase in income resulted primarily from the
increases in equity in earnings of affiliates, realized and unrealized gains on
investments, the loss from impairment of the Company's investment in M.D.F.
recorded in the third quarter of 1996 and lower net interest expense in 1997 as
compared to the same period in 1996.
Equity in earnings of affiliates increased from $.1 million for the three months
ended September 30, 1996, to $8.3 million for the same period in 1997. The
increase is primarily attributable to the improved earnings of Ophir which
recorded realized and unrealized gains on its investment in Teledata and lower
interest expense.
In the quarter ended September 30, 1997, the Company recorded $.1 million of
gains on sale of investments, as compared to $.6 million of gains on sale of
investments which are primarily attributable to its direct investment in
Teledata recorded in the same period in 1996.
The Company also recorded $.6 million of unrealized gains on investments which
are classified as trading securities in the three-month period ended September
30, 1997, as compared to $.9 million of unrealized losses on investments in
trading securities in the same period in 1996.
The Company recorded lower net interest expense in the three months ended
September 30, 1997, as compared to the same period in 1996. See Discussion on
Results of Operations - Nine months ended September 30, 1997 compared to nine
months ended September 30, 1996.
The decreases in rental income and rental property operating expenses are
attributable to the sale of a condominium unit in 800 Second Avenue.
11
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997, cash and cash equivalents were approximately $24.3
million as compared with approximately $20.6 million at December 31, 1996. In
addition, Ampal had approximately $7.5 million of highly liquid interest bearing
securities included in the investments caption at September 30, 1997 as compared
with $14.5 million at December 31, 1996.
The significant factors which affected the Company's cash flow were as follows:
Scheduled debenture redemptions amounted to approximately $16 million. For the
balance of 1997, scheduled debenture redemptions aggregate approximately $1.1
million.
The Company received $14 million in repayment of deposits and notes and loans
receivable.
In September 1997, the Company received a $7.9 million dividend from Ophir
Holdings Ltd.
In 1997, the Company made several new investments in the high-technology field
aggregating $6.2 million, notably (1) a $1 million investment in UNIC View Ltd.,
a manufacturer and marketer of a liquid screen display projector for video,
large-screen television and computer projection systems and a developer of a new
projector engine for home use, (2) a $.75 million investment in FundTech Ltd., a
developer of software for worldwide banking institutions to facilitate fund
transfers, (3) a $1 million investment in NKO, Inc., a developer of low-cost
facsimile transmission services, (4) a $.4 million investment for approximately
12% of X-Acct Technologies Ltd., a developer of billing, auditing and accounting
software for TCP/IP networks which allows such networks to generate reports of
network transactions and services by treating them exactly like telephone calls,
(5) a $2 million investment in PowerDsine, a developer, manufacturer and
marketer of innovative modules and components for the telecommunications
industry and (6) a $.5 million investment for 24.99% of Ortek Ltd., a developer
and manufacturer of electro-optical devices and systems for the military and
civilian markets. Ortek is a subsidiary of ELOP Electro-Optical Industries Ltd.,
the industry leader in electro-optics in Israel.
On November 3, 1997, the Company invested $1.25 million to acquire approximately
12% of Shiron Satellite Communications (1996) Ltd., a developer of satellite
modems which achieve high data rates, designed to answer the requirements of
satellite data and voice applications such as rural telephone, video
conferencing and other applications. In addition, Shiron is developing a two-way
fast Internet access via satellite system. The Company has preliminarily agreed,
subject to execution of a formal agreement, to invest $2 million to acquire
approximately 10% of Shellcase Ltd., an Israeli company which has developed a
packaging process for computer chips. These packages are the smallest available
to the computer industry.
On January 31, 1997, the Company sold a condominium unit in 800 Second Avenue to
the Government of Israel (the "Government") for $31 million. At that time the
Government paid $15 million and gave the Company a note for the remaining $16
million which is payable on January 30, 1998. The decrease in real estate rental
property and notes and loans payable are primarily attributable to the
aforementioned sale.
As a result of the improvement in the Company's earnings in 1997 together with
its significant reduction of debt, the Company's debt to equity ratio has
decreased from .67 to 1 at December 31, 1996, to .41 to 1 at September 30, 1997.
RECENTLY ISSUED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 128, Earnings Per
Share. This statement establishes standards for computing and presenting
earnings per share
12
<PAGE>
("EPS"), replacing the presentation of currently required primary EPS with a
presentation of Basic EPS. For entities with complex capital structures, the
statement requires the dual presentation of both Basic EPS and Diluted EPS on
the face of the statement of income. Under this new standard, Basic EPS is
computed based on the weighted average number of shares actually outstanding
during the period. Diluted EPS includes the effect of potential dilution from
the conversions of 6-1/2% and 4% Preferred Stocks to Class A Stock. SFAS No. 128
is effective for financial statements issued for periods ending after December
15, 1997, and earlier application is not permitted. When adopted, the Company
will be required to restate its EPS data for all prior periods presented. The
Company reflected the effect of adoption of SFAS No. 128, on a pro forma basis,
in Note 4 to its September 30, 1997 consolidated financial statements.
In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive Income. This
statement establishes standards for reporting and display of comprehensive
income and its components (revenues, expenses, gains and losses) in a full set
of general-purpose financial statements. This statement requires that all items
that are required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. This statement does not
require a specific format for that financial statement but requires that an
enterprise display an amount representing total comprehensive income for the
period in that financial statement. SFAS No. 130 is effective for fiscal years
beginning after December 15, 1997 with earlier application permitted. When
adopted, the Company will be required to reclassify financial statements for all
prior periods presented. The Company does not plan to adopt SFAS No. 130 prior
to the effective date.
13
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AMPAL-AMERICAN ISRAEL CORPORATION
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS - None.
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS - None.
Item 3. DEFAULTS UPON SENIOR SECURITIES - None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None.
Item 5. OTHER INFORMATION - Pursuant to an agreement dated September 9,
1997 (with an effective date of January 1, 1997) between Mr. Raz
Steinmetz and Ampal Industries (Israel) Limited, a wholly-owned
subsidiary of Ampal, Mr. Steinmetz agreed to devote not less than
50% of his business time to Ampal-related matters. As
compensation, Mr. Steinmetz will receive $100,000 per annum plus
benefits. Mr. Steinmetz's agreement is attached hereto
as Exhibit 10. Mr. Steinmetz is a director of Ampal and Chairman
of Ampal's Executive Committee. He is also an executive officer
and director of Rebar Financial Corp., Ampal's principal
shareholder.
<TABLE>
<CAPTION>
<S> <C>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Index to Exhibits:
Exhibit 3a - Amended and Restated Certificate of
Incorporation of Ampal dated May 28, 1997 (filed as
Exhibit 3a to Form 10-Q for the quarter ended June 30, 1997
and incorporated herein by reference. File No. 0-538)
Exhibit 3b - By-Laws of Ampal as amended on September 10, 1997..... Page 17
Exhibit 10 - Agreement dated September 9, 1997, between
Ampal Industries (Israel) Limited and Raz Steinmetz................. Page 45
Exhibit 11 - Schedule Setting Forth Computation
of Earnings Per Class A Share....................................... Page 47
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K. No Reports on Form 8-K were filed between July 1, 1997 and September 30, 1997.
</TABLE>
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/ Yehoshua Gleitman
-------------------------
Yehoshua Gleitman
Chief Executive Officer
(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, 1997
15
<PAGE>
AMPAL-AMERICAN ISRAEL CORPORATION
Exhibit Index
Exhibit No. Description
3a Amended and Restated Certificate of
Incorporation of Ampal dated May 28, 1997
(filed as Exhibit 3b to Form 10-Q for the
quarter ended June 30, 1997 and incorporated
herein by reference. File No. 0-538)
3b By-Laws of Ampal as amended on September 10, 1997.... Page 17
10 Agreement dated September 9, 1997, between
Ampal Industries (Israel) Limited and Raz Steinmetz.. Page 45
11 Schedule Setting Forth Computation of Earnings
Per Share of Class A Stock.......................... Page 47
27 Financial Data Schedule.
16
<PAGE>
EXHIBIT 3b
BY-LAWS
OF
AMPAL-AMERICAN ISRAEL CORPORATION
ARTICLE I
OFFICES
Section 1.1 OFFICES. The principal office of the corporation shall be
located in the City, County and State of New York; other offices, either within
or without the State of New York, shall be at such place or places as the Board
of Directors may from time to time determine or the business of the corporation
requires.
ARTICLE II
SHAREHOLDERS
Section 2.1 ANNUAL MEETINGS. Annual meetings of the shareholders for the
election of directors and for transaction of other business shall be held at
such time and on such date as shall be designated by the Board of Directors, at
the principal office of the corporation in the State of New York or at such
other place within or without the State of New York as shall be designated by
the Board of Directors and specified in the notice of each such meeting.
<PAGE>
Section 2.2 SPECIAL MEETINGS OF SHAREHOLDERS. Special meetings of the
shareholders may be held either within or without the State of New York, at any
time and place and for any purpose or purposes, unless otherwise prescribed by
law or by the Certificate of Incorporation, and shall be called by the Chief
Executive Officer, President or Secretary or by any officer of the corporation,
by order of the Board of Directors, or upon the request in writing of
shareholders representing at least 25% of the voting power of the outstanding
shares entitled to vote. Such request shall state the purpose or purposes of
the proposed meeting.
Section 2.3 NOTICE OF MEETINGS. Notice of all meetings of shareholders
shall be in writing, shall state the place, date and hour of the meeting and,
except in the case of the annual meeting, indicate that it is being issued by or
at the direction of the person or persons calling the meeting. Notice of any
special meeting shall also state the purpose or purposes for which the meeting
is called. If, at any meeting, action is proposed to be taken which would, if
taken, entitle shareholders fulfilling the statutory requirements to receive
payment for their shares, the notice of such meeting shall include a statement
of that purpose and to that effect. A copy of the notice of any meeting shall
be given, personally or by mail, not less than ten nor more than fifty days
before the date of the
2
<PAGE>
meeting to each shareholder entitled to vote at such meeting. If mailed, such
notice shall be deemed given when deposited in the United States mail, with
postage thereon prepaid, directed to the shareholder at his address as it
appears on the record of shareholders, or, if he shall have filed with the
Secretary of the corporation a written request that notices to him be mailed to
some other address, then directed to him at such other address.
Section 2.4 ADJOURNED MEETINGS. The shareholders present at a meeting of
shareholders may adjourn the meeting despite the absence of a quorum. Notice of
any adjourned meeting of the shareholders shall not be required, if the time and
place to which the meeting is adjourned are announced at the meeting at which
the adjournment is taken, but if after the adjournment the Board of Directors
fixes a new record date for the adjourned meeting, notice of the adjourned
meeting shall be given to each shareholder of record on the new record date
entitled to notice.
Section 2.5 FIXING RECORD DATE. The Board of Directors may fix, in
advance, a date as the record date for the purpose of determining the
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or to express consent to or to dissent from any
proposal without a meeting, or for the purpose of determining shareholders
entitled to receive payment of any dividend or the allotment of any
3
<PAGE>
rights, or for the purpose of any other action. Such date shall be not more
than fifty nor less than ten days before the date of such meeting, nor more than
fifty days prior to any other action. If no record date is fixed, the record
date for the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders shall be at the close of the business day preceding the
day on which notice is given; the record date for determining shareholders for
any purpose other than that specified in the preceding clause shall be at the
close of business on the day on which the resolution of the directors relating
thereto is adopted.
Section 2.6 QUORUM. Except as otherwise provided by law, by the
Certificate of Incorporation, or by these By-Laws, the holders of record of one-
third of the shares entitled to vote at any meeting of shareholders, present in
person or by proxy shall be necessary to constitute a quorum for the transaction
of any business. When a quorum is once present to organize a meeting of
shareholders, it is not broken by the subsequent withdrawal of any of the
shareholders.
Section 2.7 VOTE OF SHAREHOLDERS. Except as otherwise required by law, at
any meeting at which a quorum is present, all elections shall be had and all
questions decided by a plurality of the votes cast by the shareholders so
present in person or represented by proxy or, in cases where any class of stock
votes
4
<PAGE>
as a class, by a plurality of the votes cast by the holders of such class of
stock so present in person or by proxy. All voting shall be by voice vote
unless the person presiding at the shareholders' meeting shall direct that the
vote be by written ballot, or the owners and holders of not less than 20% of the
shares entitled to vote shall in writing demand that the vote in question be by
ballot.
Section 2.8 PROXIES. Every shareholder entitled to vote at a meeting of
the shareholders or to express consent or dissent without a meeting may
authorize another person to act for him by proxy. Every proxy must be in
writing and signed by the shareholder or his attorney-in-fact, and no proxy
shall be valid after the expiration of eleven months from the date thereof,
unless otherwise provided in the proxy. Every proxy shall be revocable at the
pleasure of the shareholder executing it, except as otherwise provided by law.
Section 2.9 LIST OF SHAREHOLDERS AT MEETINGS. A list of shareholders as
of the record date, certified by the Secretary or other officer responsible for
its preparation or by the transfer agent, shall be produced at any meeting of
shareholders upon the request thereat or prior thereto of any shareholder. If
the right to vote at any meeting is challenged, the inspectors of election, if
any, or person presiding thereat, shall require such list of shareholders to be
produced as evidence of the right of
5
<PAGE>
the persons challenged to vote at such meeting, and all persons who appear from
such list to be shareholders entitled to vote thereat may vote at such meeting.
Section 2.10 INSPECTORS AT SHAREHOLDERS' MEETING. The Board of Directors,
in advance of any shareholders' meeting, may appoint one or more inspectors to
act at the meeting or any adjournment thereof. If inspectors are not so
appointed, the person presiding at a shareholders' meeting may, and on the
request of any shareholder entitled to vote thereat shall, appoint one or more
inspectors. In case any person appointed fails to appear or act, the vacancy
may be filled by appointment made by the Board in advance of the meeting or at
the meeting by the person presiding thereat. Each inspector, before entering
upon the discharge of his duties, shall take and sign an oath faithfully to
execute the duties of inspector at such meeting with strict impartiality and
according to the best of his ability.
Section 2.11 WAIVER OF NOTICE. Notice of a shareholders' meeting need not
be given to any shareholder who submits a signed waiver of notice, in person or
by proxy, whether before or after the meeting. The attendance of any
shareholder at a meeting, in person or by proxy, without protesting prior to the
conclusion of the meeting the lack of notice of such meeting, shall constitute a
waiver of notice by him.
6
<PAGE>
Section 2.12 WRITTEN CONSENT OF SHAREHOLDERS WITHOUT A MEETING. Any
shareholder action required as permitted by law, the Certificate of
Incorporation or these By-Laws, to be taken by vote may be taken without a
meeting on written consent, setting forth the action so taken, signed by the
holders of all outstanding shares entitled to vote thereon.
ARTICLE III
DIRECTORS
Section 3.1 POWERS OF THE BOARD OF DIRECTORS. Except as otherwise
provided by law, by the Certificate of Incorporation or by these By-Laws, the
property, business and affairs of the corporation shall be managed by the Board
of Directors (sometimes hereinafter referred to as the "Board").
Section 3.2 NUMBER, ELECTION, TENURE AND QUALIFICATIONS OF DIRECTORS.
Until changed by amendment to these By-Laws or resolution of the Board of
Directors the number of directors shall be not less than 3 nor more than 29
members, with the actual number of members of the Board of Directors to be set
from time to time by resolution of the Board of Directors. Such an amendment or
resolution shall require the affirmative vote of a majority of the entire Board.
Directors need not be shareholders. Except as otherwise provided by law or
these By-Laws, the directors shall be elected at the annual meetings of the
7
<PAGE>
shareholders, and each director shall hold office until the next annual meeting
of shareholders and until his successor has been elected and qualified. No
decrease in the number of directors by amendment of these By-Laws shall shorten
the term of any incumbent director.
Section 3.3 NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Newly created
directorships resulting from an increase in the authorized number of directors
and vacancies occurring in the Board through death, resignation or
disqualification or for any other reason, including the removal of directors
without cause, may be filled by the vote of a majority of the directors then in
office, although less than a quorum exists, or by the shareholders, and the
directors so chosen shall hold office until the next annual meeting of
shareholders and until their successors shall be duly elected and qualified
unless sooner displaced.
Section 3.4 REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held without call or formal notice at such place either within or without
the State of New York, and at such times as the Board may by vote from time to
time determine. There shall be a regular meeting of the Board of Directors which
may be held without call or formal notice immediately after and at the same
place as the annual meeting of the shareholders or any special meeting of the
shareholders at which a Board of
8
<PAGE>
Directors is elected.
Section 3.5 SPECIAL MEETINGS. Special meetings of the Board of Directors
may be held at any place within or without the State of New York at any time
when called by the Chief Executive Officer, the President or Secretary or two or
more directors, notice of the time and place thereof being given to each
director by leaving such notice with him at his residence or usual place of
business or by mailing, cabling, telegraphing or telexing it, prepaid, addressed
to him at his post office address as it appears on the books of the corporation,
at least two days before the meeting. Notice shall be deemed given when sent in
accordance with these By-Laws. Neither the call, notice nor waiver of notice
need specify the purpose of any special meeting of the Board of Directors.
Section 3.6 QUORUM. One-third of the entire Board of Directors shall
constitute a quorum, but in no case less than two directors. A majority of the
directors present, whether or not a quorum exists, may adjourn a meeting to
another time and place without further notice until a quorum shall attend.
Section 3.7 ACTION BY THE BOARD OF DIRECTORS. The vote of a majority of
the directors present at the time of the vote, if a quorum is present at such
time, shall be the act of the Board, except where a larger vote is required by
law, by the Certificate of Incorporation or these By-Laws.
9
<PAGE>
Section 3.8 COMPENSATION OF DIRECTORS. The Board of Directors shall have
authority to fix the compensation of directors for services in any capacity.
Section 3.9 RESIGNATION AND REMOVAL OF DIRECTORS.
(a) Any director may resign at any time by giving written notice thereof
to the Chief Executive Officer, the President or to the Board of Directors, and
such resignation shall take effect at the time therein specified without the
necessity of further action by the Board.
(b) Any director elected by the holders of the Preferred Stock of the
corporation voting as a separate class may be removed with or without cause by
vote of the holders of the class of stock electing such director at a meeting.
Any other director may be removed with or without cause by vote of the
shareholders at a meeting or for cause by vote of the Board of Directors at a
meeting.
Section 3.10 INTERESTED DIRECTORS.
(a) Unless previously disclosed or otherwise known, each director of the
corporation shall inform the Board or the committee thereof considering any
contract or other transaction with any other corporation, firm, association or
entity if such director is a director or officer of such other corporation,
firm, association or other entity or has a substantial financial interest
therein;
10
<PAGE>
(b) No contract or other transaction between the corporation and one or
more of its directors, or between the corporation and any other corporation,
firm, association or other entity in which one or more of its directors are
directors or officers, or have a substantial financial interest, shall be either
void or voidable for this reason alone or by reason alone that such director or
directors are present at the meeting of the Board, or of a committee thereof,
which approves such contract or transaction, or that his or their votes are
counted for such purpose:
(1) If the material facts as to such director's interest and as to
any such common directorship, officership or financial interest are
disclosed in good faith or known to the Board or committee, and the Board
or committee approves such contract or transaction by a vote sufficient for
such purpose without counting the vote or votes of such interested director
or directors or, if the votes of the disinterested directors are
insufficient to constitute an act of the Board as provided by law, by
unanimous vote of the disinterested directors; or
(2) If the material facts as to such director's interest and as to
any such common directorship, officership or financial interest are
disclosed in good faith or known to the shareholders entitled to vote
thereon, and such
11
<PAGE>
contract or transaction is approved by vote of such shareholders.
(3) If there is no good faith disclosure of the material facts as to
the director's interest in the contract or transaction and if there is no
knowledge of such interest, or if the vote of such interested director was
necessary for the approval of such contract or transaction at a meeting of
the Board or committee at which it was approved, and the party or parties
thereto shall establish affirmatively that the contract or transaction was
fair and reasonable as to the corporation at the time it was approved by
the Board or committee or the Shareholders.
(c) Interested directors may be counted in determining the presence of a
quorum at a meeting of the Board or of a committee which approves such contract
or transaction.
Section 3.11 WAIVER OF NOTICE. Notice of a meeting need not be given to
any director who signed a waiver of notice whether before or after the meeting,
or who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice to him.
Section 3.12 THE ENTIRE BOARD OF DIRECTORS. As used in these By-Laws the
term "the entire Board of Directors" or "the entire Board" means the number of
directors the Board would have if there were no vacancies.
12
<PAGE>
Section 3.13 PARTICIPATION AT MEETINGS BY USE OF COMMUNICATIONS EQUIPMENT.
Any one or more members of the Board of Directors or any committee thereof may
participate in a meeting of the Board of Directors or a committee thereof by
means of a conference telephone or similar communications equipment allowing all
persons participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting.
Section 3.14 CONSENT IN LIEU OF MEETING. Unless otherwise restricted by
the certificate of incorporation or these By-Laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all members of the Board of
Directors or committee, as the case may be, consent in writing to the adoption
of a resolution authorizing the action and the resolution and the written
consents thereto are filed with the minutes of the proceedings of the Board or
committee.
ARTICLE IV
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
OF THE BOARD
Section 4.1 HOW CONSTITUTED AND POWERS. The Board of Directors, by
resolution adopted by a majority of the entire Board, may designate from among
its members an Executive
13
<PAGE>
Committee and other committees, each consisting of three or more directors. No
such committee shall have authority as to the following matters:
(1) The submission to shareholders of any action that needs shareholders'
authorization by law.
(2) The filling of vacancies in the Board of Directors or in any
committee.
(3) The fixing of compensation of the directors for serving on the Board
or on any committee.
(4) The amendment or repeal of By-Laws, or the adoption of new By-Laws.
(5) The amendment or repeal of any resolution of the Board which by its
terms shall not be so amendable or repealable.
Except as provided above and except to the extent the Board, by resolution,
withholds from or denies to the Executive Committee any power or authority, the
Executive Committee shall have all the authority of the Board of Directors.
Except as provided above, each other committee designated by the Board of
Directors shall have such authority as is specifically delegated to it by
resolution of the Board of Directors.
Section 4.2 ALTERNATE COMMITTEE MEMBERS. The Board may designate one or
more directors as alternate members of any committee established under this
Article, who may replace any
14
<PAGE>
absent member or members at any meeting of such committee.
Section 4.3 ORGANIZATION, ETC. The Executive Committee (or other
committee established under this Article) may choose its own Chairman and
Secretary and shall keep minutes of all of its acts and proceedings and report
the same from time to time to the Board of Directors.
Section 4.4 MEETINGS. Regular meetings of the Executive Committee (or
other committee established under this Article), of which no notice shall be
necessary, shall be held at such times and in such places as shall be fixed by a
majority of the Committee. Special meetings of the Committee shall be called at
the request of any member of the Committee. Notice of each special meeting of
the Committee shall be sent by mail, telegraph, cable or wireless or telephone
not later than the day before the date on which the meeting is to be held.
Notice of any such meeting need not be given to any member of the Committee,
however, if waived by him in writing or by telegraph, cable or wireless, before
or after the meeting; and any meeting of the Committee shall be a legal meeting
without notice thereof having been given, if all the members of the Committee
shall be present thereat.
Section 4.5 QUORUM AND MANNER OF ACTING. A majority of the Executive
Committee (or other committee established under this Article), shall constitute
a quorum for the transaction of
15
<PAGE>
business, and the act of a majority of those present at the meeting at which a
quorum is present shall be the act of the Executive Committee.
Section 4.6 GENERAL. Each committee established by the Board of Directors
shall serve at the pleasure of the Board of Directors, which may fill vacancies
in any such committee.
ARTICLE V
OFFICERS
Section 5.1 AUTHORIZED OFFICERS. The officers of the corporation shall be
a Chairman of the Board of Directors, a Chief Executive Officer, a President,
one or more Vice-Presidents, a Secretary, a Treasurer and a Controller, and such
other officers, including one or more Assistant Vice-Presidents, Assistant
Secretaries, Assistant Treasurers and Assistant Controllers, as the Board may
from time to time determine as the business of the corporation may require. The
President shall be chosen from among the directors, but no other officer need be
a director. One person may hold the office of, and perform the duties of, any
one or more of the above mentioned positions, except those of President and
Secretary or Assistant Secretary.
Section 5.2 ELECTION OR APPOINTMENT AND TERM OF OFFICE. The officers of
the corporation shall be elected by the Board of Directors and, except as
otherwise provided by these By-Laws,
16
<PAGE>
shall hold office until the first meeting of the Board following the next annual
meeting of shareholders and until his successor has been elected or appointed
and qualified.
Section 5.3 RESIGNATION AND REMOVAL. Any officer may resign at any time
by giving written notice thereof to the Chief Executive Officer, President or to
the Board of Directors, and such resignation shall take effect at the time
therein specified. Any officer may be removed from office, with or without cause
by a vote of a majority of the entire Board of Directors.
Section 5.4 VACANCIES. A vacancy occurring in any office shall be filled
by the Board of Directors.
Section 5.5 COMPENSATION. Each officer shall receive such salary as
compensation as may be determined by the Board of Directors, and no officer
shall be prevented from receiving such compensation by reason of the fact that
he is also a director of the corporation.
Section 5.6 CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the Board
of Directors shall, when present, preside at all meetings of the shareholders
and the Board of Directors.
Section 5.7 CHIEF EXECUTIVE OFFICER. The Chief Executive Officer of the
corporation, subject to the direction of the Board of Directors, shall have
general and active control of its affairs and business and general supervision
of its offices, agents and employees. The Chief Executive Officer shall see
that
17
<PAGE>
all orders and resolutions of the Board are carried into effect. He may sign
deeds, mortgages, bonds, contracts or other instruments which the Board of
Directors has authorized to be executed, except in cases where the signing and
execution thereof shall be expressly delegated by the Board of Directors or by
these By-Laws to some other officer or agent of the corporation, or shall be
required by law to be otherwise signed or executed. He shall perform all duties
incident to the office of Chief Executive Officer and such other duties as may
be prescribed by the Board of Directors from time to time. He shall have
custody of the treasurer's bond, if any. In the event of the absence, death, or
incapacity of the President, the Chief Executive Officer shall have the powers
and duties of the President.
Section 5.8 PRESIDENT. The President, subject to the direction of the
Board of Directors, shall have general and active control of the operations,
affairs and business of the corporation in North America and general supervision
of the corporation's officers, agents and employees in North America. He may
sign deeds, mortgages, bonds, contracts or other instruments which the Board of
Directors has authorized to be executed, except in cases where the signing and
execution thereof shall be expressly delegated by the Board of Directors or by
these By-Laws to some other officer or agent of the corporation, or shall be
required by law to be otherwise signed or executed.
18
<PAGE>
In the event of the absence, death or incapacity of the Chief Executive Officer,
the President shall have the powers and the duties of the Chief Executive
Officer.
Section 5.9 VICE-PRESIDENTS. Each Vice-President shall assist the Chief
Executive Officer and the President and shall perform such duties as may be
assigned to him by the Chief Executive Officer, the President or the Board of
Directors. In the event of the absence, death or incapacity of both the Chief
Executive Officer and the President, the Vice-Presidents in the order designated
by the Board of Directors, or if no such designation has been made, in order of
seniority in office, shall have the powers and duties of the Chief Executive
Officer and President. Any Vice-President may sign, with the Secretary or other
proper officer of the corporation thereunto authorized by the Board of
Directors, certificates representing shares of the corporation.
Section 5.10 THE SECRETARY. The Secretary shall act as Secretary of all
meetings of the Board of Directors and of the Executive Committee and of the
stockholders of the corporation, and shall keep the minutes thereof in the
proper book or books to be provided for that purpose; he shall see that all
notices required to be given by the corporation are duly given and served; he
may, with the President or Chief Executive Officer or any of the
Vice-Presidents, sign certificates for stock of the
19
<PAGE>
corporation; he shall be custodian of the seal of the corporation and shall
affix the seal or cause it to be affixed to all certificates for stock of the
corporation and to all documents the execution of which on behalf of the
corporation under its corporate seal is duly authorized in accordance with the
provisions of these By-Laws; he shall have charge of the stock records and also
of the other books, records and papers of the corporation relating to its
organization and management as a corporation, and shall see that the reports,
statements and other documents required by law are properly kept and filed; and
shall, in general, perform all the duties incident to the office of secretary
and such other duties as from time to time may be assigned to him by the Board
of Directors or by the Executive Committee, the Chief Executive Officer or the
President.
Section 5.11 TREASURER. The Treasurer shall have charge and custody of,
and be responsible for, all funds, securities, evidences of indebtedness and
other personal property of the corporation and shall deposit, or cause to be
deposited, the same in accordance with instructions of the Board of Directors.
He shall receive and give receipts and acquittances for moneys paid in on
account of the corporation, and shall pay out of the funds on hand all bills,
payrolls and other just debts of the corporation. He shall enter regularly in
the books belonging to the corporation to be kept by him for that purpose, full
and
20
<PAGE>
accurate accounts of all moneys received and paid out by him on account of the
corporation. He shall have the right to require, from time to time, reports or
statements giving such information as he may desire with respect to any and all
financial transactions of the corporation from the officers or agents
transacting the same. Upon the request of the Board, the Chief Executive
Officer, the President or the Executive Committee, he shall make such reports to
them as they shall require from time to time relating to the financial condition
of the corporation and all his transactions as Treasurer. He shall perform all
other duties incident to the office of Treasurer and such other duties as from
time to time may be assigned to him by the Chief Executive Officer, the
President, the Board of Directors or the Executive Committee. He may sign, with
the Chief Executive Officer, the President or a Vice-President, certificates for
stock of the corporation.
The Treasurer shall, if required by the Board of Directors, give the
corporation a bond in such sums and with such securities as may be satisfactory
to the Board, conditioned upon the faithful performance of his duties and for
the restoration to the corporation in case of his death, resignation, retirement
or removal from office, of all books, papers, vouchers, money and other property
of whatever kind belonging to the corporation in his possession or under his
control.
21
<PAGE>
Section 5.12 ASSISTANT SECRETARIES, ASSISTANT TREASURERS AND ASSISTANT
CONTROLLERS. The Assistant Secretary, Assistant Treasurer and Assistant
Controller, or, if there be more than one, the Assistant Secretaries, Assistant
Treasurers and Assistant Controllers in the order determined by the Board of
Directors shall, in the absence or disability of the Secretary, Treasurer or the
Controller, perform the duties of the Secretary, the Treasurer and the
Controller, respectively, and shall perform such other duties and have such
other powers as from time to time may be assigned to them or any of them by the
Chief Executive Officer, President or Board of Directors or Executive Committee.
The Assistant Treasurer or Treasurers shall, if required by the Board of
Directors, give the corporation a bond in such sums and with such securities as
shall be satisfactory to the Board, conditioned upon the faithful performance of
their duties and for the restoration to the corporation in case of their death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind belonging to the corporation in their
possession or under their control.
22
<PAGE>
ARTICLE VI
SHARES
Section 6.1 CERTIFICATES FOR SHARES. Certificates for stock of the
corporation shall be in such form as shall be approved by the Board of
Directors. The certificates for such stock shall be numbered in the order of
their issue, shall be signed by the Chief Executive Officer, President or one of
the Vice-Presidents and by the Secretary, an Assistant Secretary, the Treasurer
or an Assistant Treasurer, and the seal of the corporation shall be affixed
thereto, which seal may be facsimile, engraved or printed. Where any such
certificate is signed by a transfer agent or transfer clerk acting on behalf of
the corporation and by a registrar, the signatures of the Chief Executive
Officer, the President, a Vice President, Secretary, Assistant Secretary,
Treasurer or Assistant Treasurer upon such certificate may be facsimiles,
engraved or printed. In case any officer or officers who shall have signed or
whose signature or facsimile signature or signatures shall be used on any such
certificate or certificates shall cease to be such officer or officers of the
corporation, whether because of death, resignation, removal or otherwise, before
such certificate or certificates shall have been delivered by the corporation,
such certificate or certificates shall nevertheless, unless otherwise ordered by
the Board of Directors, be issued and delivered as
23
<PAGE>
though the person or persons who signed such certificate or certificates or
whose facsimile signature or signatures shall have been used thereon had not
ceased to be such officer or officers of the corporation.
Section 6.2 TRANSFER OF SHARES. Upon surrender to the corporation or to a
transfer agent of the corporation of a certificate representing shares, duly
endorsed or accompanied with proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the corporation to issue a new
certificate to the person entitled thereto, and cancel the old certificate. The
corporation shall be entitled to treat the holder of record of any shares or
share of stock as the holder in fact thereof, and, accordingly, shall not be
bound to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person whether or not the corporation shall have
express or other notice thereof, except as may be required by law.
Section 6.3 RECORD OF SHAREHOLDERS. The corporation shall keep at its
principal office in the State of New York, or at the office of its transfer
agent or registrar in the State of New York a record in written form, or in any
other form capable of being converted into written form within a reasonable
time, which shall contain the names and addresses of all the shareholders, the
number and class of shares held by each, the dates when they
24
<PAGE>
respectively became the owners thereof, and, when shares are originally issued
by the corporation, the amount paid therefor.
Section 6.4 LOST CERTIFICATES. In case of the alleged loss, destruction
or mutilation of a certificate or certificates representing shares, the Board of
Directors may direct the issuance of a new certificate or certificates in lieu
thereof upon such terms and conditions in conformity with law as it may
prescribe.
ARTICLE VII
INDEMNIFICATION
Section 7.1 INDEMNIFICATION OF CERTAIN PERSONS. To the fullest extent
permitted by the laws and statutes of the State of New York:
(a) The corporation shall indemnify any person made, or threatened to be
made, a party to an action or proceeding other than one by or in the right of
the corporation to procure a judgment in its favor, by reason of the fact that
such person, his testator or intestate, is or was a director or officer of the
corporation against any reasonable expenses, including attorneys' fees, actually
and necessarily incurred by him as a result of such action or proceeding, or any
appeal therein, except in relation to matters as to which such person is
adjudged to have breached his duty to the corporation; and
25
<PAGE>
(b) The corporation shall indemnify any person made, or threatened to be
made a party to an action or proceeding other than one by or in the right of the
corporation to procure a judgment in its favor, whether civil or criminal,
including without limitation, one by or in the right of any other corporation,
domestic or foreign, which any director or officer of the corporation served in
any capacity at the request of the corporation, by reason of the fact that such
person, his testator or intestate was a director or officer of the corporation,
or served in such other corporation, in any capacity, against any and all
judgments, fines, amounts paid in settlement, and reasonable expenses, including
attorneys' fees, actually and necessarily incurred by him as a result of such
action or proceeding, or any appeal therein, if such person acted in good faith,
for a purpose which he reasonably believed to be in the best interests of the
corporation and, in criminal actions or proceedings in addition had no
reasonable cause to believe that his conduct was unlawful.
Section 7.2 INDEMNIFICATION FOR EXPENSES. Indemnification for expenses
incurred in any civil or criminal action or proceeding as authorized under
Section 7.1 (a) and (b) may be paid by the corporation in advance of the final
disposition of such action or proceeding in the manner authorized by the laws
and statutes of the State of New York subject to repayment by the
26
<PAGE>
person, his testator or intestate, to the extent the expenses so advanced by the
corporation exceed the indemnification to which such person is entitled or if
such person is ultimately found not entitled to indemnification under the laws
and statutes of the State of New York.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 SEAL. The corporate seal of the corporation shall be circular
in form and shall contain the name of the corporation, the year of its
organization and such other legend as may from time to time be determined by the
Board.
ARTICLE IX
AMENDMENT AND REPEAL
Section 9.1 MODE OF AMENDMENT OR REPEAL. These By-Laws may be amended,
repealed or new By-Laws adopted, by a majority vote of the shares at the time
entitled to vote in the election of any directors or, except as provided in
Section 3.2 of these By-Laws, by the affirmative vote of a majority of the
members of the Board of Directors present at any meeting duly called and held at
which a quorum is present, provided that a reference to the proposed action is
contained in the notice or waiver of notice of any meeting held for such
purpose. Any By-Law adopted by the Board
27
<PAGE>
may be amended or repealed by the shareholders entitled to vote thereon as
herein provided.
Section 9.2 BY-LAWS REGULATING IMPENDING ELECTION. If any By-Law
regulating an impending election of directors is adopted, amended or repealed by
the Board, there shall be set forth in the notice of the next meeting of
shareholders for the election of directors the By-Law so adopted, amended or
repealed, together with a concise statement of the changes made.
28
<PAGE>
EXHIBIT 10
9 September 1997
Raz Steinmetz
97 Haeshel Street
Dear Raz:
This letter confirms the terms under which you have been and will be employed by
Ampal Industries (Israel) Limited on a part time basis. The terms of this
letter agreement shall be effective for all purposes as of 1 January 1997.
1. You will be an employee of Ampal Industries (Israel) Limited and will
devote not less than 50% of your business time to Ampal related matters.
Your work will involve strategic planning matters, review of new and
existing investments and such other matters as you and the Chief Executive
Officer of Ampal-American Israel Corporation ("Ampal US") determine to be
appropriate.
2. As compensation for your services, you will receive a salary of
US$100,000 per annum, payable in the equivalent in NIS and subject to all
required income tax withholding. Social benefits, as required by law and
as agreed to between you and the Chief Executive Officer shall be in
addition to this salary. You will be also be entitled to reimbursement of
all expenses incurred by you in connection with your employment and work
for Ampal, subject to documentation in accordance with the customary
policies of the company, and for reimbursement of your automobile expenses.
3. Your status as an employee of Ampal Industries (Israel) Limited may be
terminated at any time by you or by Ampal (subject to the approval of the
Executive Committee of the Board of Directors of Ampal US) on not less than
30 days prior notice. The terms of this agreement may be amended by mutual
agreement of you and the company provided such amendment is approved by the
Executive Committee of the Board of Directors of Ampal US and by the
Related Party Committee of the Board of Directors of Ampal US.
<PAGE>
2
Please sign the enclosed copy of this letter to confirm your agreement to the
foregoing.
Very truly yours,
Ampal Industries (Israel) Limited
By: /s/ Yehoshua Gleitman
----------------------------
Accepted and agreed to:
/s/ Raz Steinmetz
- --------------------------------
Raz Steinmetz
<PAGE>
Exhibit 11
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
SCHEDULE SETTING FORTH COMPUTATION OF EARNINGS PER SHARE OF CLASS A STOCK
NINE MONTHS ENDED SEPTEMBER 30, 1997 1996
- -------------------------------------------------------------------------------
(Amounts in thousands, except (Unaudited) (Unaudited)
per share data)
Weighted average number of shares outstanding:
4% Preferred.......................... 188 197
6-1/2% Preferred...................... 984 1,035
Class A............................... 23,722 20,523
Common................................ - 3,000
====== =======
Weighted average number of shares outstanding assuming conversion of preferred
stock into Class A stock:
<TABLE>
<S> <C> <C> <C> <C>
Class A................................27,614 100.00% 24,613 89.14%
Common................................. - - 3,000 10.86
------ ------- ------- ------
27,614 100.00% 27,613 100.00%
====== ======== ====== =======
</TABLE>
Income (loss) from continuing
operations..............................$11,898 $(1,013)
Loss from discontinued operations......... - (2,635)
------- -------
NET INCOME (LOSS)....................$11,898 $(3,648)
======= =======
Allocation of net income (loss) on the basis of the respective dividend rights
of the above classes of stock, pro rata:
<TABLE>
<S> <C> <C> <C> <C>
Class A...............................$11,898 100.00% $(3,252) 89.14%
Common................................ - - (396) 10.86
------- ------ ------- ------
$11,898 100.00% $(3,648) 100.00%
======= ======= ======= =======
</TABLE>
Earnings (loss) per Class A share:
Earnings (loss) from continuing
operations............................. $ .43 $(.04)
Loss from discontinued operations.. - (.09)
----- -----
Earnings (loss) per Class A share......... $ .43 $(.13)
===== =====
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 24,273
<SECURITIES> 128,313
<RECEIVABLES> 59,407
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 17,590
<PP&E> 40,779
<DEPRECIATION> 8,275
<TOTAL-ASSETS> 262,087
<CURRENT-LIABILITIES> 35,777
<BONDS> 65,350
0
5,783
<COMMON> 24,383
<OTHER-SE> 130,794
<TOTAL-LIABILITY-AND-EQUITY> 262,087
<SALES> 8,450
<TOTAL-REVENUES> 46,713
<CGS> 0
<TOTAL-COSTS> 9,229
<OTHER-EXPENSES> 9,436
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,487
<INCOME-PRETAX> 20,561
<INCOME-TAX> 8,663
<INCOME-CONTINUING> 11,898
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,898
<EPS-PRIMARY> .43
<EPS-DILUTED> .43
</TABLE>
