AMPAL-AMERICAN ISRAEL CORP - 10-Q Quarterly Report

UNITED STATES
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 June 30, 2003

o	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 0-538

AMPAL-AMERICAN ISRAEL CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

New York		13-0435685

(State or Other Jurisdiction of Incorporation of Organization)		(I.R.S. Employer Identification Number

555 Madison Avenue, New York, New York		10022

(Address of Principal Executive Offices)		(Zip code)

Registrant’s Telephone Number, Including Area Code (212) 593-9842

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 _____

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes _____ No X
The number of shares outstanding of the issuer’s Class A Stock, its only authorized common stock, is 19,722,800 (as of August 6, 2003).

AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES

Index to Form 10-Q

						Page

Part I			Financial Information

	Item 1.		Financial Statements

			Consolidated Statements of Operations

				Six Months Ended June 30, 2003 and 2002		1

				Three Months Ended June 30, 2003 and 2002		2

			Consolidated Balance Sheets			3

			Consolidated Statements of Cash Flows			5

			Consolidated Statements of Changes in Shareholders’ Equity			7

			Consolidated Statements of Comprehensive Gain (Loss)			9

			Notes to the Consolidated Financial Statements.			10

	Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations.			14

	Item 3.		Quantitative and Qualitative Disclosures About Market Risks			22

	Item 4.		Controls and Procedures			23

Part II.			Other Information			23

		Item 1.			Legal Proceedings	23

		Item 2.			Changes in Securities and Use of Proceeds	24

		Item 3.			Defaults upon Senior Securities	24

		Item 4.			Submission to Matters to a Vote of Security Holders	24

		Item 5.			Other Information	24

		Item 6.			Exhibits and Reports on Form 8-K	24

ITEM 1. FINANCIAL STATEMENTS

AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30,	2003		2002

(Dollars in thousands, except per share amounts)	(Unaudited)		(Unaudited)

REVENUES
Equity in earnings of affiliates	$	194	$	1,040
Interest		267		614
Real estate income		4,385		3,656
Realized and unrealized gains (losses) on investments		26,342		(6,837	)
Gain on sale of real estate rental property		-		137
Other		4,739		5,320

Total revenues		35,927		3,930


EXPENSES
Interest		3,634		4,178
Real estate expenses		3,921		3,780
Loss from impairment of investments & real estate		8,133		6,080
Minority interests		1,095		197
Translation loss (gain)		2,313		(957	)
Other (mainly general and administrative)		4,583		3,483

Total expenses		23,679		16,761


Gain (loss) before income taxes		12,248		(12,831	)
Provision for income taxes		4,184		2,502

Net gain (loss)	$	8,064	$	(15,333	)


Basic EPS
Gain (loss) per Class A share	$	0.40	$	(0.79	)


Shares used in calculation (in thousands)		19,698		19,435

Diluted EPS
Gain (loss) per Class A shares	$	0.36	$	(0.79	)


Shares used in calculation (in thousands)		22,103		19,435

The accompanying notes are an integral part of the consolidated financial statements.

ITEM 1. FINANCIAL STATEMENTS

AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30,	2003		2002

(Dollars in thousands, except per share amounts)	(Unaudited)		(Unaudited)

REVENUES
Equity in earnings (losses) of affiliates	$	703	$	(1,007	)
Interest		132		277
Real estate income		2,280		1,817
Realized and unrealized gains (losses) on investments		25,434		(3,977	)
Other		2,444		4,148

Total revenues		30,993		1,258


EXPENSES
Interest		1,417		1,653
Real estate expenses		1,988		1,858
Loss from impairment of investments & real estate		8,133		2,188
Minority interests		586		674
Translation loss (gain)		1,992		-
Other (mainly general and administrative)		2,246		1,868

Total expenses		16,362		8,241


Gain (loss) before income taxes		14,631		(6,983	)
Provision for income taxes		4,400		2,175

Net gain (loss)	$	10,231	$	(9,158	)


Basic EPS
Gain (loss) per Class A share	$	0.52	$	(0.47	)


Shares used in calculation (in thousands)		19,713		19,557


Diluted EPS
Gain (loss) per Class A shares	$	0.46	$	(0.47	)


Shares used in calculation (in thousands)		22,103		19,557

The accompanying notes are an integral part of the consolidated financial statements.

AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

ASSETS AS OF	June 30, 2003		December 31, 2002

(Dollars in thousands)	(Unaudited)		(Audited)

Cash and cash equivalents	$	2,784	$	1,557

Deposits, notes and loans receivable		12,259		10,962

Investments		237,271		215,094

Real estate property, less accumulated Depreciation of $10,069 and $9,166		66,445		65,598

Other assets		29,530		30,488


Total Assets	$	348,289	$	323,699

The accompanying notes are an integral part of the consolidated financial statements.

AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

LIABILITIES AND SHAREHOLDERS’ EQUITY AS OF	June 30, 2003			December 31, 2002

(Dollars in thousands except per share amounts)	(Unaudited)			(Audited)

LIABILITIES
Notes and loans payable	$	135,123		$	114,257
Debentures		4,010			22,546
Accounts payable, accrued expense and others		95,740			86,718


Total Liabilities		234,873			223,521


SHAREHOLDERS EQUITY
4% Cumulative Convertible Preferred Stock, $5 par value; authorized 189,287 shares; issued 134,476 and 139,391 shares; outstanding 131,126 and 136,041 shares		672			697

6-1/2% Cumulative Convertible Preferred Stock, $5 par value; authorized 988,055 shares; issued 698,802 and 706,450 shares; outstanding 576,266 and 583,914 shares		3,494			3,532

Class A Stock; $1 par value; authorized 60,000,000 shares; issued 25,550,324 and 25,502,805 shares; outstanding 19,718,660 and 19,671,141 shares		25,550			25,503

Additional paid-in capital		58,141			58,125

Retained earnings		75,539			67,475

Treasury Stock, at cost		(31,096	)		(31,096	)

Accumulated other comprehensive loss		(18,884	)		(24,058