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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 14, 1999
AMPAL-AMERICAN ISRAEL CORPORATION
(Exact Name of Registrant as Specified in Charter)
New York 0-538 13-0435685
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(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification No.)
Incorporation
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 or Former Address, if Changed Since Last Report.)
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Item 2. Acquisition or Disposition of Assets.
On April 14, 1999, Ampal (Israel) Ltd. ("Ampal Israel"), a
wholly-owned subsidiary of the Registrant, sold its 46% equity interest in
Moriah Hotels Ltd. ("Moriah"), which owns and operates hotels in Israel, to Koor
Tourism Enterprises Ltd. and Sheraton International Ltd. (collectively, the
"Purchaser") for $29.6 million.
Prior to the sale, on April 12, 1999 Ampal Israel received a
dividend in the amount of $7.9 million from Moriah.
The purchase price was determined by inviting proposals from
interested purchasers subsequent to setting a minimum fair market value of $80
million for Moriah (prior to the issuance of dividends).
The sale was made pursuant to an agreement entered into
between Ampal Israel and the Purchaser on January 25, 1999 (the "Agreement").
Gmul Investment Co. Ltd. and Amot Investments Ltd., entities
which collectively owned a 47% equity interest in Moriah, sold their equity
interest on the same terms as Ampal Israel.
HVE - Hevrat Ovdim Investments Ltd. ("HVE"), the owner of a 7% equity
interest in Moriah was given the option to sell its equity interest to the
Purchaser on the same terms offered to Ampal Israel. To the Registrant's best
knowledge, HVE has exercised its option.
At the time of the disposition, Bank Hapoalim B.M.
("Hapoalim") had a 25.5% equity interest in the Registrant (assuming the
conversion of all of Hapoalim's Preferred shares in the Registrant) and a 22.5%
equity interest in Koor. The Registrant and Koor do not have any common
directors. Hapoalim does not have a controlling interest or the right to
nominate officers in either the Registrant or Koor.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Pro Forma Financial Information Page
Pro Forma Consolidated Balance Sheet
as of December 31, 1998 (Unaudited) 3
Pro Forma Consolidated Statement of Income for
the Year Ended December 31, 1998 (Unaudited) 4
Notes and Management's Assumptions to Pro
Forma Consolidated Financial Statements for
the Year Ended December 31, 1998 (Unaudited) 5
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Item 7(b) PRO FORMA FINANCIAL INFORMATION
The following Pro Forma Consolidated Balance Sheet as of December 31, 1998, and
the Pro Forma Consolidated Statement of Income for the year ended December 31,
1998, have been prepared to reflect the disposition transaction and the
adjustments described in the accompanying notes. The pro forma financial
information is based on the historical consolidated financial statements of
Ampal-American Israel Corporation (the "Registrant") and its Subsidiaries
(collectively, the "Company") and should be read in conjunction with the notes
and management's assumptions with respect thereto. The Pro Forma Consolidated
Balance Sheet was prepared as if the disposition transaction occurred on
December 31, 1998. The Pro Forma Consolidated Statement of Income for the year
ended December 31, 1998 was prepared assuming the disposition transaction
occurred on the first day of the period presented. The pro forma financial
information is unaudited and not necessarily indicative of the consolidated
results which actually would have occurred if the disposition transaction had
been consummated at the beginning of the period presented, nor does it purport
to represent the future financial position and results of operations for future
periods.
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<TABLE>
<CAPTION>
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET (UNAUDITED)
(Dollars in thousands)
December 31, 1998
-----------------
Pro Forma
---------
Historical Adjustments Pro Forma
ASSETS ---------- ----------- ---------
<S> <C> <C> <C>
Cash and cash equivalents $ 12,047 $ 25,875 (a) $ 37,922
Deposits, notes and loans receivable 27,816 27,816
Investments 214,421 214,421
Investment held for sale 25,104 (25,104) (b) -
Real estate rental property, less
accumulated depreciation of $6,492 29,735 29,735
Property and equipment, less accumulated
depreciation of $2,608 3,227 3,227
Other assets 16,896 16,896
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TOTAL ASSETS $329,246 $330,017
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Notes and loans payable:
Related parties $ 57,557 $ 57,557
Others 40,636 40,636
Debentures 32,817 32,817
Accounts and income taxes payable, accrued
expenses and minority interests 37,071 (7,286) (c) 29,785
-------- --------
Total liabilities 168,081 160,795
-------- --------
SHAREHOLDERS' EQUITY
4% Cumulative Convertible Preferred Stock, $5 par value;
authorized 189,287 shares; issued and outstanding 172,238 shares 861 861
6-1/2% Cumulative Convertible Preferred Stock, $5 par value;
authorized 988,055 shares; issued and outstanding 925,279 shares 4,626 4,626
Class A Stock, $1 par value; authorized
60,000,000 shares; issued 24,684,822 shares;
outstanding 24,079,422 shares 24,685 24,685
Additional paid-in capital 57,829 57,829
Retained earnings 90,615 8,057 (d) 98,672
Treasury Stock, 605,400 shares of
Class A Stock at cost (3,829) (3,829)
Accumulated other comprehensive loss (13,622) (13,622)
-------- --------
Total shareholders' equity 161,165 169,222
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $329,246 $330,017
======== ========
</TABLE>
The accompanying notes and management's assumptions to the pro forma
consolidated financial statements are an integral part of this statement.
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<TABLE>
<CAPTION>
AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(Dollars in thousands, except per share data)
Year Ended December 31, 1998
---------------------------
Pro Forma
---------
Historical Adjustments Pro Forma
---------- ----------- ---------
REVENUES:
<S> <C> <C> <C>
Equity in earnings of affiliates $ 7,328 $ (440) (a) $ 6,888
Manufacturing 6,768 6,768
Interest:
Related parties 4,339 1,483 (b) 5,822
Others 987 987
Rental income 7,302 7,302
Realized and unrealized (losses) gains
on investments (568) 12,836 (c) 12,268
Gain on issuance of shares by affiliate 1,032 1,032
Other 2,763 2,763
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Total revenues 29,951 43,830
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EXPENSES:
Manufacturing 8,492 8,492
Interest:
Related parties 5,122 5,122
Others 7,195 7,195
Rental property operating expenses 3,550 3,550
Loss from impairment of investments 1,890 1,890
Minority interests (1,345) (1,345)
Other 6,393 6,393
-------- --------
Total expenses 31,297 31,297
-------- --------
(Loss) income before income taxes (1,346) 12,533
(Benefit) provision for income taxes (3,521) 4,858 (d) 1,337
-------- --------
NET INCOME $ 2,175 $ 11,196
======== ========
Basic EPS
Earnings per Class A share $ .08 $ .45
===== =====
Shares used in calculation (in thousands) 23,911 23,911
Diluted EPS
Earnings per Class A share $ .07 $ .39
===== =====
Shares used in calculation (in thousands) 27,624 27,624
</TABLE>
The accompanying notes and management's assumptions to the pro forma
consolidated financial statements are an integral part of this statement.
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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
NOTES AND MANAGEMENT'S ASSUMPTIONS
TO PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1998 (UNAUDITED)
1. BASIS OF PRESENTATION:
On April 14, 1999, the Company sold all of its interest in the Moriah Hotels
Ltd. ("Moriah") to Koor Tourism Enterprises Ltd. and Sheraton International Ltd.
for $29.6 million. On April 12, 1999, prior to the sale, the Company received a
dividend from Moriah in the amount of $7.9 million.
The accompanying unaudited pro forma consolidated balance sheet is presented as
if the disposition transaction occurred on December 31, 1998.
The accompanying unaudited pro forma consolidated statement of income is
presented as if the disposition transaction occurred on January 1, 1998.
These pro forma financial statements should be read in conjunction with the
historical financial statements and notes thereto of the Company as of December
31, 1998. In management's opinion, all material adjustments necessary to reflect
the effects of the disposition transaction by the Company have been made.
The unaudited pro forma consolidated financial statements are not necessarily
indicative of the actual financial position of the Company as of December 31,
1998, or what the actual results of operations of the Company would have been
assuming the disposition transaction had been completed as of January 1, 1998,
nor are they necessarily indicative of the results of operations for future
periods.
2. ADJUSTMENTS TO PRO FORMA CONSOLIDATED BALANCE SHEET
(a) To reflect proceeds from the sale of the investment in Moriah and the
dividend received from Moriah, less payment of taxes, as if the
transaction had occurred on December 31, 1998.
(b) To eliminate the investment in Moriah.
(c) To eliminate the deferred tax liability in connection with the sale of
Moriah.
(d) To reflect the net gain on the sale of the investment in Moriah.
3. ADJUSTMENTS TO PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(a) To reflect a decrease in equity in earnings of affiliates as if the sale
of the investment in Moriah had been made at the beginning of the
period.
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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
NOTES AND MANAGEMENT'S ASSUMPTIONS
TO PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1998 (UNAUDITED)
(b) To reflect an increase in interest income (as if the sale had been made
at the beginning of the period), based on the 90-day London Interbank
Offered Rate ("Libor") minus .1%.
(c) To reflect the gain on sale of the investment in Moriah.
(d) To reflect a tax provision on the above pro forma adjustments.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registration has duly caused this report to be signed on its behalf by
the undersigned, thereto duly authorized.
AMPAL-AMERICAN ISRAEL CORPORATION
Date: April 27, 1999 By: /s/ ELI S. GOLDBERG
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Eli S. Goldberg, Secretary
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