<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 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
-------------------- --------------------
Commission file number 1-8707
PEC Israel Economic Corporation
- ---------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Maine 13-1143528
- --------------------------------------- -----------------------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
511 Fifth Avenue, New York, N.Y. 10017
- -------------------------------------- -----------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (212) 687-2400
- ----------------------------------------------------------------------------
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 .
----- ----
As of August 13, 1997 there were outstanding 18,508,388 shares of Common
Stock with par value of $1.00 per share.
Page 1 of 16 pages
<PAGE>
PART 1 - FINANCIAL INFORMATION
PEC ISRAEL ECONOMIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Unaudited Audited
June 30, December 31,
1997 1996
----------- ------------
<S> <C> <C>
Assets (in thousands - except per share amounts)
Cash and cash equivalents $ 20,159 $ 7,044
Investments 393,640 391,802
Assets of General Engineers Limited 4,401 4,763
Other assets 5,101 4,094
---------- -----------
Total assets $ 423,301 $ 407,703
---------- -----------
---------- -----------
Liabilities and Shareholders' Equity
Liabilities:
Liabilities of General Engineers Limited $ 1,319 $ 1,384
Deferred income taxes 28,770 26,428
Other liabilities 5,687 6,015
---------- -----------
Total liabilities 35,776 33,827
---------- -----------
Shareholders' equity:
Common stoock, $1.00 par value 31,952 31,952
Additional paid-in capital 103,282 103,282
Unrealized gain on marketable securities, net 7,340 1,938
Cumulative translation adjustment (43,569) (26,317)
Retained earnings 305,930 280,431
---------- -----------
404,935 391,286
Treasury stock (17,410) (17,410)
---------- -----------
Total shareholder's equity 387,525 373,876
---------- -----------
Total liabilities and shareholders' equity $ 423,301 $ 407,703
---------- -----------
---------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 2 of 16 pages
<PAGE>
PEC ISRAEL ECONOMIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
For the For the
Six Months Ended: Three Months Ended:
------------------- -----------------------
6/30/97 6/30/96 6/30/97 6/30/96
-------------------- -----------------------
<S> <C> <C>
(In thousands -
except per share amounts)
Revenues:
Interest and dividends $ 600 $ 558 $ 357 $ 248
Equity in net income of Affiliated Companies 24,005 16,877 11,990 7,963
Net (loss) gain on issuance of shares by Affiliated Companies (92) 1,304 (92) --
Revenues of General Engineers Limited 4,021 4,286 1,866 2,281
Net gain on sales of investments in Affiliated Companies 5,639 3,202 564 2,210
Net gain on sales, and change in market
value, of trading securities 3,235 3,032 3,171 1,380
Other 2,269 573 1,819 199
------- ------- ------- -------
39,677 29,832 19,675 14,281
------- ------- ------- -------
Expenses:
General and administrative 1,860 1,743 926 841
Cost of sales and expenses of General Engineers Limited 4,021 4,267 1,886 2,282
------- ------- ------- -------
5,881 6,010 2,812 3,123
------- ------- ------- -------
Income before income taxes 33,796 23,822 16,863 11,158
Income taxes 8,297 4,946 4,337 2,673
------- ------- ------- -------
Net income $25,499 $18,876 $12,526 $8,485
------- ------- ------- -------
------- ------- ------- -------
Earnings per common share $ 1.38 $ 1.00 $ 0.68 $ 0.45
------- ------- ------- -------
------- ------- ------- -------
Number of shares outstanding 18,508,388 18,758,888 18,508,388 18,758,588
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
Page 3 of 16 pages
<PAGE>
PEC ISRAEL ECONOMIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Unrealized Gain Cumulative
Common Paid-in on Marketable Translation Retained Treasury
Stock Capital Securities Adjustment Earnings Stock Total
-------- --------- -------------- ------------ --------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1997 $31,952 $103,282 $1,938 ($26,317) $280,431 ($17,410) $ 373,876
Change in market value
of available-for-
sale equity securities,
net of tax - - 5,402 - - - 5,402
Change in cumulative
translation adjustment - - - (17,252) - - (17,252)
Net income - - - - 25,499 - 25,499
------- -------- ------- --------- --------- --------- --------
Balance, June 30, 1997 $31,952 $103,282 $7,340 ($43,569) $305,930 ($17,410) $387,525
------- -------- ------- --------- --------- --------- --------
------- -------- ------- --------- --------- --------- --------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
Page 4 of 16 pages
<PAGE>
PEC ISRAEL ECONOMIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended:
-------------------------
6/30/97 6/30/96
-------------------------
(In thousands)
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 25,499 $ 18,876
Adjustments to reconcile net income to net cash
provided by operating activities:
Change in market value of trading securities 303 (1,488)
Purchase of trading securities (10,692) (6,599)
Proceeds from sale of trading securities 8,026 6,344
Equity in net income of Affiliated Companies (24,005) (16,877)
Gain on sales of investments in Affiliated Companies (5,639) (3,202)
Net gain on sales of trading securities (3,538) (1,544)
Net (gain) loss on investment in partnerships (1,350) 120
Income of consolidated subsidiaries (490) (481)
Net loss (gain) on issuance of shares by Affiliated Companies 92 (1,304)
Dividends from Affiliated Companies 12,994 3,191
Decrease in other assets 1,033 1,786
Provision for deferred income taxes 348 1,946
Increase in other liabilities 93 912
-------- --------
Net cash provided by operating activities 2,674 1,680
-------- --------
Cash Flows from Investing Activities:
Repayment of municipal bonds - 3,015
Repayment of bonds and notes receivable 317 789
Purchase of notes receivable (2,301) (2,668)
Proceeds from sale of equity interests 19,654 7,810
Purchase of equity interests (7,531) (18,787)
Return of capital 302 -
-------- --------
Net cash provided by (used in) investing activities 10,441 (9,841)
-------- --------
Net increase (decrease) in Cash and Cash Equivalents 13,115 (8,161)
Cash and Cash Equivalents, beginning of period 7,044 14,703
-------- --------
Cash and Cash Equivalents, end of period $ 20,159 $ 6,542
-------- --------
-------- --------
Supplemental Disclosures of Cash Flow information:
Cash paid during period for income taxes $ 7,183 $ 1,271
-------- --------
</TABLE>
The accompanying notes are an integal part of these
consolidated financial statements.
Page 5 of 16 Pages
<PAGE>
PEC ISRAEL ECONOMIC CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
1. The December 31, 1996 balance sheet presented herein was derived
from the audited December 31, 1996 consolidated financial statements of
PEC Israel Economic Corporation and subsidiaries (the "Company").
2. These financial statements have been prepared in accordance
with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q
and Rule 10-01 of Regulation S-X. The financial statements
should be read in conjunction with the audited consolidated
financial statements of the Company for the year ended
December 31, 1996 for a description of the significant
accounting policies, which have continued without change, and
other footnote information.
3. In February 1997, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards
No. 128, Earnings per Share ("FAS 128"), which requires the
replacement of primary earnings per share with a presentation
of basic earnings per share. In addition, FAS 128 requires
the presentation of diluted earnings per share for all
entities with complex capital structures. FAS 128 is
effective for reporting periods ending subsequent to December
15, 1997. The Company believes that the adoption of FAS 128
will not have a material effect on the Company's consolidated
financial statements for the year ending December 31, 1997.
4. In June 1997, the FASB issued Statement of Financial
Accounting Standards No. 130, Reporting Comprehensive Income
("FAS 130"), which requires the reporting and display of
comprehensive income and its components in an entity's
financial statements for reporting periods beginning
subsequent to December 15, 1997, although earlier adoption is
permitted. Comprehensive income includes all changes in
equity during a period except those resulting from investments
by, and distributions to, owners. The difference between
comprehensive income and net income is primarily attributable
to the inclusion in comprehensive income of cumulative
translation adjustments, minimum pension liabilities and
unrealized gains/losses on available for sale securities that
Page 6 of 16 Pages
<PAGE>
Notes to Consolidated Financial Statements (continued)
(Unaudited)
are currently reported as separate components of shareholders'
equity. The adoption of FAS 130 will not have a material
effect on the Company's financial position or results of
operations.
5. El-Yam Financial Holdings (Hamigdal) Ltd. ("Hamigdal"), a
corporation in which the Company owns a 10.1% interest that
the Company accounts for on the equity method, was named among
the defendants in an action instituted in the Tel-Aviv District
Court in Israel on August 5, 1997 against Discount Investment
Corporation Ltd. ("DIC") and 19 other defendants. The defendants
also include IDB Holding Corporation Ltd. ("IDBH"), the owner of
approximately 71% of IDB Development Corporation Ltd. ("IDBD"),
which in turn owns approximately 55% of DIC. The plaintiff in
the action alleges, among other things, that IDBH and Hamigdal
(the owner of approximately 37.1% of IDBH), as indirect controlling
shareholders of DIC, breached various obligations under law allegedly
applying to them, including provisions relating to fiduciary duty
and norms of conduct of controlling shareholders, in connection
with DIC's sale on August 3, 1997 of all of DIC's shares in
Is. H. Ltd. (which is the controlling shareholder of Iscar Ltd.),
Blades Technology International Inc. and Blades Technology Ltd.
for total consideration valued at approximately $242 million. The
plaintiff requests that the action be approved as a class action
for all of DIC's shareholders other than IDBD, and that the court
award all the class members damages from the defendants of at least $142
million or, alternatively, (i) order the defendants other than DIC
to pay to DIC damages of at least $471 million or (ii) cancel the
sales. Hamigdal, IDBH and DIC have each announced that it denies
the allegations against it and intends to vigorously defend itself
and to oppose the request to approve the action as a class action.
At this time, the Company is unable to determine what effect, if any,
the action will have on its financial position and results of operations.
6. Certain reclassifications have been made to the financial
statements for the three and six months ended June 30, 1996 to
conform with the financial statements as of and for the three
and six months ended June 30, 1997.
7. All adjustments (recurring in nature) which are, in the
opinion of management, necessary for a fair presentation of
the results of the interim periods have been included. The
results of the interim periods are not necessarily indicative
of the results for the full year.
Page 7 of 16 pages
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three Months Ended June 30, 1997 Compared to Three Months Ended
June 30, 1996
- ---------------------------------------------------------------
Consolidated net income for the three months ended June 30, 1997 rose to
$12.5 million, up from $8.5 million for the three months ended June 30, 1996.
The rise in net income reflected increases of $4.0 million in equity in net
income of Affiliated Companies, $1.8 million in net gain on sales, and change
in market value, of trading securities and $1.6 million in other income. The
increase attributable to these items was partially offset by a decrease of
$1.6 million in net gain on sales of investments in Affiliated Companies and
an increase of $1.7 million in the provision for income taxes.
Equity in net income of Affiliated Companies for the second quarter of
1997 rose to $12.0 million, up from $8.0 million for the corresponding 1996
period. The increase in equity in net income of Affiliated Companies
reflected PEC's increased net income in respect of some of its Affiliated
Companies, particularly Cellcom (of which PEC's share was $2.4 million
compared to a net loss of $866,000 for the corresponding 1996 period),
Property & Building (of which PEC's share was $3.3 million compared to $1.2
million for the corresponding 1996 period) and Elron. This increase was
partially offset by PEC's reduced net income in respect of some of its other
Affiliated Companies, especially Super-Sol (substantially arising from a
change in accounting relating to a financing transaction) and Tambour, and a
net loss in respect of DEP Technology Holdings Ltd. (the holding company
through which PEC holds its equity interest in RDC).
PEC realized a net gain on sales of investments in Affiliated Companies
of $564,000 for the second quarter of 1997 compared to $2.2 million for the
corresponding 1996 period. During the three months ended June 30, 1997, PEC
realized a net gain of $783,000 on the sale of 0.4% of Nice (reducing PEC's
ownership interest in Nice to 3.1% at the end of the second quarter) and a
net loss of $236,000 on the sale of its entire
Page 8 of 16 pages
<PAGE>
2.6% interest in Delek (on a tax basis, PEC realized a profit of $1.5 million
on the sale of its interest in Delek). During the second quarter of 1996,
PEC realized net gains of $1.3 million and $900,000 on sales of 1.3% of Nice
and 0.6% of Super-Sol, respectively.
PEC's other income increased to $1.8 million for the three months ended
June 30, 1997, up from $199,000 for the corresponding 1996 period,
principally because of greater income from partnerships in which PEC is a
partner, particularly Gemini Israel Fund L.P. ("Gemini").
PEC's provision for income taxes for the second quarter of 1997 rose to
$4.3 million from $2.7 million for the corresponding quarter of 1996
principally because of increased income.
Six Months Ended June 30, 1997 Compared to Six Months Ended June
30, 1996
- ----------------------------------------------------------------
Consolidated net income for the six months ended June 30, 1997 rose to
$25.5 million, up from $18.9 million for the six months ended June 30, 1996.
The rise in net income reflected increases of $7.1 million in equity in net
income of Affiliated Companies, $2.4 million in net gain on sales of
investments in Affiliated Companies, $1.7 million in other income and
$203,000 in net gain on sales, and change in market value, of trading
securities. The rise attributable to these items was partially offset by a
decrease of $1.4 million in net gain on issuance of shares by Affiliated
Companies and an increase of $3.4 million in the provision for income taxes.
Equity in net income of Affiliated Companies for the six months ended
June 30, 1997 rose to $24.0 million, up from $16.9 million for the
corresponding 1996 period. The increase in equity in net income of
Affiliated Companies for the first six months of 1997 reflected increased net
income in respect of some of PEC's Affiliated Companies, principally Cellcom
(of which PEC's share was $4.8 million compared to a net loss of $1.1 million
for the corresponding 1996 period), Property & Building (of which PEC's share
was $6.0 million compared to $2.8 million for the corresponding 1996 period),
DIC and PEC Cable TV Ltd. (the holding company through which PEC holds its
equity interest in Tevel) and Elron. This increase was partially offset by
PEC's reduced net income in respect of some of its other Affiliated
Companies, particularly Super-Sol (substantially arising from a change in
accounting relating to a financing transaction) and Tambour, and a net loss
in respect of DEP Technology Holdings Ltd.
Page 9 of 16 pages
<PAGE>
PEC did not realize any net gain on issuance of shares by Affiliated
Companies for the six months ended June 30, 1997 while it realized a net gain
of $1.3 million for the corresponding 1996 period. In January 1996, Nice
sold American Depositary Shares representing ordinary shares of Nice in a
public offering in the United States and PEC realized a net gain on issuance
of shares by Nice of $745,000. In March 1996, Logal sold ordinary shares in
an initial public offering in the United States and PEC realized a net gain
on issuance of shares by Logal of $470,000.
PEC realized a net gain on sales of investments in Affiliated Companies
of $5.6 million for the first half of 1997, up from $3.2 million for the
first half of 1996. During the first half of 1997, PEC realized net gains of
$2.9 million and $2.8 million on sales of 1.4% of Super-Sol and 1.9% of Nice,
respectively, and a net loss of $236,000 on the sale of its equity interest
in Delek. During the first half of 1996, PEC realized net gains of $1.7
million, $1.3 million and $210,000 on sales of 1.1% of Super-Sol, 1.3% of
Nice and 1.4% of VocalTec.
PEC's other income increased to $2.3 million for the first half of 1997
compared to $573,000 for the first half of 1996. PEC's other income for the
first half of 1997 reflected increased income from partnerships in which PEC
is a partner, particularly Gemini, and greater management fees.
As discussed in Note 2 of the Notes to the Consolidated Financial
Statements for the year ended December 31, 1996 (the "1996 Notes"), PEC does
not provide deferred income taxes with respect to undistributed earnings of,
and gains on issuances of shares by, Affiliated Companies that are more than
50% owned by the IDB Group or in which the IDB Group has effective control
("Majority-Owned Affiliated Companies"). Such amounts are currently expected
to be permanently reinvested in the Majority-Owned Affiliated Companies.
PEC's provision for income taxes for the first half of 1997 rose to $8.3
million from $4.9 million for the first half of 1996 principally because of
increased income and a decrease in the proportion of income from
undistributed earnings of Majority-Owned Affiliated Companies.
Page 10 of 16 pages
<PAGE>
SHAREHOLDERS' EQUITY
The unrealized gain, net of taxes, from "available-for-sale securities"
that was included in shareholders' equity as of June 30, 1997 increased to
$7.3 million from $1.9 million as of December 31, 1996. Of this increase,
$3.7 million resulted from PEC no longer accounting for its holdings in Nice
on the equity method, due to a reduction of PEC's interest in Nice, and
treating its holdings in Nice as "available-for-sale securities" and $1.4
million resulted from increases in the market value of other
"available-for-sale securities".
As discussed in Note 2 of the 1996 Notes, translation differences are
reflected in shareholders' equity as a "Cumulative Translation Adjustment".
The exchange rate of the New Israel Shekel declined approximately 10.3%
against the U.S. dollar as of June 30, 1997 compared to December 31, 1996.
As of June 30, 1997, the Cumulative Translation Adjustment reduced
shareholders' equity by $43.6 million compared to a reduction of $26.3
million at the end of 1996.
NEW ACCOUNTING STANDARDS
As discussed in Note 3 of the Notes to PEC's unaudited Consolidated
Financial Statements for the three months and six months ended June 30, 1997
(the "June 1997 Notes"), in February 1997, the Financial Accounting Standards
Board ("FASB") issued Statement of Financial Accounting Standards No. 128,
Earnings per Share ("FAS 128"), which requires the replacement of primary
earnings per share with a presentation of basic earnings per share. PEC
believes that the adoption of FAS 128, which is effective for reporting
periods ending subsequent to December 15, 1997, will not have a material
effect on the Company's consolidated financial statements for the year ending
December 31, 1997.
As discussed in Note 4 of the June 1997 Notes, in June 1997, the FASB
issued Statement of Financial Accounting Standards No. 130, Reporting
Comprehensive Income ("FAS 130"), which requires the reporting and display of
comprehensive income and its components in an entity's financial
statements for reporting
Page 11 of 16 pages
<PAGE>
periods beginning subsequent to December 15, 1997. The adoption of FAS 130
will not have a material effect on PEC's financial position or results of
operations.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1997, PEC's liquid assets (consisting of cash, money
market funds, and marketable securities of U.S. companies) totaled
approximately $47.0 million.
For the six months ended June 30, 1997, PEC received cash dividends
and interest totaling $14.0 million (including $13.0 million of cash
dividends received from Affiliated Companies, which do not affect PEC's net
income for financial statement purposes), which substantially exceeded PEC's
general and administrative expenses. During the first half of 1997, PEC also
generated cash totaling $28.0 million, of which $19.7 million was realized
from the sale of shares of Affiliated Companies (Delek (representing all of
PEC's shares of Delek) -$7.7 million, Super-Sol - $6.9 million, Nice - $3.8
million and Lipman - $1.1 million), $8.0 million was realized from the sale
of marketable securities of U.S. companies and approximately $317,000 was
realized from the sale of bonds and the collection of a capital note.
During the first half of 1997, PEC purchased for $10.7 million
marketable securities of U.S. companies, purchased for $3.0 million a limited
partnership interest in a partnership that purchases and sells marketable
securities of U.S. companies, purchased for $1.0 million an interest in a
U.S. corporation engaged in satellite photography and purchased for $5.8
million equity and debt securities of several new and existing Affiliated
Companies, including $3.6 million of securities purchased during the second
quarter of 1997. The $3.6 million consisted primarily of $2.2 million for a
5% equity interest in Libit Signal Processing Ltd. (a developer of modem
technologies and products for advanced digital communication applications),
$650,000 of debt and equity securities of DEP Technology Holdings Ltd. (the
company through which PEC holds its equity interest in RDC), $250,000 for a
capital note convertible into 4% of the equity of Soundesigns, $212,000 of
capitalized interest of Cellcom and $204,000 of debt and equity securities of
Soreq Development Corporation (S.D.C.) Ltd. (formerly named Nitzanim
Initiative Center Limited).
Page 12 of 16 pages
<PAGE>
In April 1997, PEC purchased a limited partnership interest in Gemini
Israel II Limited Partnership, a newly established fund managed by Gemini
Capital Fund Management Ltd. that will acquire interests in early stage
companies, primarily companies engaged in industrial technology
export-oriented activities in the fields of electronics, telecommunications,
health care, environment, energy and alternative energy. Gemini Israel II is
the sister fund to Gemini Israel Fund L.P. which has committed all of its
capital to its existing holdings. PEC will contribute up to $1.5 million to
Gemini Israel II, of which PEC contributed $150,000 in July 1997.
During July 1997, PEC sold for $1.6 million a 1.8% equity interest
in VocalTec Communications Ltd., realizing a gain of approximately $700,000
and reducing its ownership interest in VocalTec to 2.2%.
Page 13 of 16 pages
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
At the Annual Meeting of Shareholders on June 3, 1997, the shareholders
elected eleven directors, each for a term of one year. Proxies for the
meeting were solicited pursuant to Regulation 14A of the Securities Exchange
Act of 1934, as amended. A total of 17,748,420 shares were voted with
respect to the election of directors, and there were no broker non-votes. The
tabulation of the votes cast for each nominee for director was as follows:
NUMBER OF SHARES
-----------------------------------------
NAME OF NOMINEE WITHHELD AUTHORITY
FOR DIRECTOR VOTED FOR TO VOTE
- --------------------------------------------------------------------------------
Raphael Recanati 17,571,646 176,774
Frank J. Klein 17,733,446 14,974
Robert H. Arnow 17,734,694 13,726
Alan R. Batkin 17,735,246 13,174
Joseph Ciechanover 17,735,346 13,074
Eliahu Cohen 17,735,046 13,374
Alan S. Jaffe 17,734,246 14,174
Hermann Merkin 17,734,746 13,674
Harvey M. Meyerhoff 17,735,346 13,074
Oudi Recanati 17,735,146 13,274
Alan S. Rosenberg 17,735,346 13,074
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
a. Exhibit 27 Financial Data Schedule, which is page 16
of this report.
b. The registrant filed on April 21, 1997 a report on Form
8-K dated April 16, 1997, and filed on April 25, 1997
an amendment to that report, reporting under Item 4 of
such report a change in the registrant's auditors.
Page 14 of 16 pages
<PAGE>
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.
PEC ISRAEL ECONOMIC CORPORATION
--------------------------------
(Registrant)
/s/ Frank J. Klein
------------------------------
Frank J. Klein
President
/s/ William Gold
------------------------------
William Gold
Treasurer, Principal Financial
Officer and Principal
Accounting Officer
Page 15 of 16 pages
Date: August 14, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997 AND THE CONSOLIDATED STATEMENT OF
INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 20,159
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 423,301
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 31,952
<OTHER-SE> 355,573
<TOTAL-LIABILITY-AND-EQUITY> 423,301
<SALES> 0
<TOTAL-REVENUES> 39,677
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,881
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 33,796
<INCOME-TAX> 8,297
<INCOME-CONTINUING> 25,499
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,499
<EPS-PRIMARY> 1.38
<EPS-DILUTED> 1.38
</TABLE>
