UNITED STATES
                                          SECURITIES AND EXCHANGE COMMISSION
                                                WASHINGTON, D.C. 20549

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FORM 10-Q

|(Mark One)                                      
|------------------------------------------------
|[X]                                             
|                                                
|For the quarterly period endedSeptember 30, 2002
|OR                                              
|[  ]                                            
|                                                
|For the transition period fromto                

Commission file number 0-538

|AMPAL-AMERICAN ISRAEL CORPORATION                                                      
|---------------------------------------------------------------------------------------
|                                                                                       
|(Exact Name of Registrant as Specified
        in Its Charter)                         
|New York                                                                               
|                                                                                       
|(State or Other Jurisdiction of                                                        
|Incorporation or Organization)                                                         
|555 Madison Avenue, New York, New York                                                 
|                                                                                       
|(Address of Principal Executive Offices)                                               
|Registrant's Telephone Number, Including Area Code                                     
|                                                                                       
|660 Madison Avenue, New York, New York                                                 
|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.                                                                                                                                                                                                                                                                                                                                                       
|Indicate by check mark whether the registrant is an accelerated
      filer (as defined in                                                                                                                                                                                                                                                                                  
|Rule 12b-2 of the Exchange Act).                                                                                                                                                                                                                                                                                                                                            
|The number of shares outstanding of the issuer's Class A Stock,
      its only authorized common stock, is
      19,661,966 (as of November 8, 2002).                                                                                                                                                                                                                       



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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES


                                                  Index to Form 10-Q

`Page

Part I        Financial Information

    Item 1.      Financial Statements

                Consolidated Statements of Operations

                    Nine Months Ended September 30, 2002 and 2001                                              1

                    Three Months Ended September 30, 2002 and 2001                                             2

                Consolidated Balance Sheets.............................................                       3

                Consolidated Statements of Cash Flows...................................                       5

                Consolidated Statements of Changes in Shareholders'
                  Equity................................................................                       7


                Consolidated Statements of Comprehensive 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.........................................................                      20


    Item 4.     Controls and Procedures ................................................                      21



Part II         Other Information.......................................................                      22

        Item 1.  Legal Proceedings                                                                            22

        Item 2.  Changes in Securities and Use of Proceeds.                                                   23

        Item 3.  Defaults upon Senior Securities.                                                             23

        Item 4.  Submission of Matters to a Vote of Security Holders                                          23

        Item 5.  Other Information.                                                                           23

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



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ITEM 1.  FINANCIAL STATEMENTS


AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

`NINE MONTHS ENDED SEPTEMBER 30,                                   2002                      2001
----------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share amounts)              (Unaudited)               (Unaudited)


REVENUES
Equity in earnings of affiliates........................          1,301                    2,969
Interest................................................            830                    1,046
Real estate income......................................          5,647                    6,927
Realized and unrealized losses on
   investments..........................................         (7,573)                  (3,083)
Gain on sale of real estate rental property.............            141                   10,091
Other...................................................          7,753                    2,864
                                                           ------------                 --------
     Total revenues.....................................          8,099                   20,814
                                                           ------------                 --------


EXPENSES
Interest................................................          6,129                    9,722
Real estate expenses....................................          5,804                    7,226
Loss from impairment of investments.....................         13,561                    4,093
Minority interests......................................            289                   (1,628)
Translation (gain)......................................         (1,877)                  (1,799)
Other...................................................          5,501                    6,033
                                                           ------------                 --------
     Total expenses.....................................         29,407                   23,647
                                                           ------------                 --------


Loss before income taxes................................        (21,308)                  (2,833)
Provision for income taxes..............................          5,464                    3,685
                                                           ------------                 --------
     Net loss...........................................   $    (26,772)                $ (6,518)
                                                           ============                 ========

Basic EPS
   Loss per Class A share...............................   $      (1.38)                $  (0.35)
                                                           ============                 ========
   Shares used in calculation (in thousands)............         19,501                   19,168
                                                           ============                 ========

Diluted EPS
   Loss per Class A share...............................   $      (1.38)                $  (0.35)
                                                           ============                 ========
   Shares used in calculation (in thousands)............         19,501                   19,168
                                                           ============                 ========`

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

1

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ITEM 1.  FINANCIAL STATEMENTS


AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

`THREE MONTHS ENDED SEPTEMBER 30,                                   2002                      2001
----------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share amounts)              (Unaudited)               (Unaudited)

REVENUES
Equity in earnings of affiliates........................            261                      671
Interest................................................            216                      468
Real estate income......................................          1,991                    1,973
Realized and unrealized losses on
   investments..........................................           (736)                  (1,032)
Gain on sale of real estate rental property.............              4                        -
Other...................................................          2,433                      648
                                                           ------------                    -----
     Total revenues.....................................          4,169                    2,728
                                                           ------------                  -------


EXPENSES
Interest................................................          1,951                    2,398
Real estate expenses....................................          2,024                    2,191
Loss from impairment of investments.....................          7,481                      940
Minority interests......................................             92                     (395)
Translation (gain)......................................           (920)                  (1,246)
Other...................................................          2,018                    1,806
                                                           ------------                 --------
     Total expenses.....................................         12,646                    5,694
                                                           ------------                 --------


Loss before income taxes................................         (8,477)                  (2,966)
Provision for income taxes..............................          2,962                      101
                                                           ------------                   ------
     Net loss...........................................      $(11,439)                 $ (3,067)
                                                               ========                 ========


Basic EPS
   Loss per Class A share...............................      $   (0.58)                $  (0.16)
                                                                   ====                     ====
   Shares used in calculation (in thousands)............         19,654                   19,192
                                                                 ======                   ======

Diluted EPS
   Loss per Class A share...............................       $  (0.58)                $  (0.16)
                                                                   ====                     ====
   Shares used in calculation (in thousands)............         19,654                   19,192
                                                                 ======                   ======`

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

2

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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

`September 30,             December 31,
ASSETS AS OF                                                       2002                      2001
----------------------------------------------------------------------------------------------------
(Dollars in thousands)                                        (Unaudited)                (Audited)

Cash and cash equivalents.....................................    1,185                    7,973


Deposits, notes and loans receivable..........................   10,563                   17,172


Investments...................................................  226,158                  260,175


Real estate property, less accumulated
   depreciation of $8,748 and $7,500..........................   65,828                   66,643


Other assets..................................................   22,858                   31,870
                                                               --------                 --------




TOTAL ASSETS.................................................. $326,592                 $383,833
                                                               ========                 ========`

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

3

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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

`LIABILITIES AND                                               September 30,            December 31,
SHAREHOLDERS' EQUITY AS AT                                        2002                      2001
-----------------------------------------------------------------------------------------------------
(Dollars in thousands except per share amounts)               (Unaudited)                (Audited)


LIABILITIES
Notes and loans payable...................................      111,587                  122,805
Debentures................................................       22,408                   23,096
Accounts and income taxes payable, accrued
   expenses and minority interests........................       83,760                   86,712
                                                             ----------                 --------

     Total liabilities....................................      217,755                  232,613
                                                             ----------                 --------

SHAREHOLDERS' EQUITY
4% Cumulative Convertible Preferred Stock, $5
   par value; authorized 189,287 shares; issued
   142,746 and 146,226 shares; outstanding 139,396
   and 142,876 shares.....................................          714                      731

6-1/2% Cumulative Convertible Preferred Stock,
   $5 par value; authorized 988,055 shares; issued
   706,450 and 726,680 shares; outstanding 583,914
   and 604,144 shares.....................................        3,532                    3,633

Class A Stock, $1 par value; authorized
   60,000,000 shares; issued 25,486,030 and
   25,407,940 shares; outstanding 19,654,366
   and 19,247,276 shares..................................       25,486                   25,408

Additional paid-in capital................................       58,125                   58,253

Retained earnings.........................................       84,968                  111,740

Treasury stock, at cost...................................      (31,096)                 (33,238)

Accumulated other comprehensive loss......................      (32,892)                 (15,307)
                                                                -------                  -------

     Total shareholders' equity...........................      108,837                  151,220
                                                                -------                  -------


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY................     $326,592                 $383,833
                                                                =======                  =======`

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

4

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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

`NINE MONTHS ENDED SEPTEMBER 30,                                                          2002                     2001
-------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)                                                               (Unaudited)               (Unaudited)


Cash flows from operating activities:

   Net loss..............................................................              (26,772)                  (6,518)
   Adjustments to reconcile net income to net
   cash provided by operating activities:
   Equity in earnings of affiliates......................................               (1,301)                  (2,969)
   Realized and unrealized losses
   on investments........................................................                7,573                    3,083
   Gain on sale of real estate rental property...........................                 (141)                 (10,091)
   Depreciation expense..................................................                1,618                    1,747
   Amortization expense..................................................                   13                      233
   Loss from impairment of investments and loans.........................               13,561                    4,093
   Translation gain......................................................               (1,877)                  (1,799)
   Minority interests....................................................                  289                   (1,628)
   Decrease in other assets..............................................                8,519                    6,880
   Decrease in accounts and income taxes
   payable, accrued expenses.............................................                4,455                    7,774
   Investments made in trading securities................................               (3,235)                      (7)
   Proceeds from sale of trading securities..............................                4,514                    6,499
   Dividends received from affiliates....................................                   83                   15,655
                                                                                       --------                 --------

    Net cash provided by operating activities............................                7,299                   22,952
                                                                                       --------                 --------

Cash flows from investing activities:

   Deposits, notes and loans receivable collected........................                3,393                    3,149
   Deposits, notes and loans receivable granted..........................               (1,089)                  (7,381)
   Investments made in:
   Available-for-sale securities.........................................                   -                    (1,257)
   Affiliates and others.................................................               (1,726)                  (9,316)
   Proceeds from sale of investments:
   Available-for-sale securities.........................................                   -                     2,964
   Others................................................................                   -                       137
   Proceeds from sale of real estate property,
   net of commissions and transfer taxes.................................                  264                   34,848
   Return of capital by partnership                                                        209                      120
   Capital improvements..................................................               (1,133)                  (1,902)
                                                                                       --------                 --------

    Net cash(used in) provided by investing
     activities..........................................................                  (82)                  21,362
                                                                                      ---------                --------`

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

5

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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

`NINE MONTHS ENDED SEPTEMBER 30,                                                          2002                     2001
-------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)                                                               (Unaudited)               (Unaudited)


Cash flows from financing activities:
   Notes and loans payable received......................................                1,235                    8,140
   Notes and loans payable repaid:
   Related parties.......................................................                    -                   (1,063)
   Others................................................................              (13,114)                 (53,902)
   Proceeds from exercise of stock options...............................                1,974                        -
   Contribution to partnership by minority
   interests.............................................................                    -                    1,295
   Debentures repaid.....................................................               (1,763)                  (1,894)
                                                                                       -------                  -------
    Net cash (used in) financing
     activities..........................................................              (11,668)                 (47,424)
                                                                                       -------                  -------

Effect of exchange rate changes on cash and
   cash equivalents .....................................................               (2,337)                  (1,902)
                                                                                       -------                 --------

Net decrease in cash and cash equivalents................................               (6,788)                  (5,012)
Cash and cash equivalents at beginning of
   period................................................................                7,973                    5,842
                                                                                       -------                  -------

Cash and cash equivalents at end of period...............................              $ 1,185                    $ 830
                                                                                       =======                    =====

Supplemental Disclosure of Cash Flow Information
Cash paid during the period:
   Interest paid to others:..............................................              $ 5,844                  $ 9,997
                                                                                       =======                  =======

   Income taxes paid.....................................................              $   225                  $ 2,955
                                                                                       =======                  =======

Supplemental Disclosure of Noncash Investing and
  Financing Activities:
  Issuance of stock for charitable contribution
  and services...........................................................               $    -                  $    55
                                                                                       =======                  =======`

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

6

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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

`NINE MONTHS ENDED SEPTEMBER 30,                                                          2002                     2001
-------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except share amounts)                                         (Unaudited)               (Unaudited)


4% PREFERRED STOCK
Balance, beginning of year...............................................                $ 731                 $    782
Conversion of 3,480 and 5,562 shares into
   Class A Stock.........................................................                  (17)                     (28)
                                                                                   -----------                 --------
Balance, end of period...................................................                $ 714                 $    754
                                                                                   ===========                 ========

6-1/2% PREFERRED STOCK
Balance, beginning of year...............................................              $ 3,633                 $  3,729
Conversion of 20,230 and 10,948 shares into
   Class A Stock.........................................................                 (101)                     (55)
                                                                                   -----------                 --------
Balance, end of period...................................................          $     3,532                 $  3,674
                                                                                   ===========                 ========

CLASS A STOCK
Balance, beginning of year...............................................             $ 25,408                 $ 25,303
Issuance of shares upon conversion of
   Preferred Stock.......................................................                   78                       57
                                                                                   -----------                 --------
Balance, end of period...................................................          $    25,486                 $ 25,360
                                                                                   ===========                 ========

ADDITIONAL PAID-IN CAPITAL
Balance, beginning of year...............................................             $ 58,253                 $ 58,194
Conversion of Preferred Stock............................................                   40                       25
Issuance of additional shares............................................                                            18
Issuance of shares upon Exercise of
  Stock options..........................................................                 (168)                       -
                                                                                   -----------                 --------
Balance, end of period...................................................          $    58,125                 $ 58,237
                                                                                   ===========                 ========

RETAINED EARNINGS
Balance, beginning of year...............................................          $   111,740                 $118,941
Net loss.................................................................              (26,772)                  (6,518)
                                                                                   -----------                 --------
Balance, end of period...................................................          $    84,968                 $112,423
                                                                                   ===========                 ========`

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

7

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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

`NINE MONTHS ENDED SEPTEMBER 30,                                                          2002                     2001
-------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except share amounts)                                         (Unaudited)               (Unaudited)


TREASURY STOCK

4% PREFERRED STOCK
Balance, end of period...................................................                  (84)                     (84)
                                                                                       -------                   ------

6-1/2% PREFERRED STOCK
Balance, end of period...................................................               (1,853)                  (1,853)
                                                                                       -------                   ------

CLASS A STOCK
Balance, beginning of year - 6,160,664
   and 6,168,164 shares, at cost.........................................              (31,301)                 (31,338)
Issuance of additional shares............................................                                            37
Issuance of shares upon exercise of 329,000
   Stock options.........................................................                2,142                        -
                                                                                       -------                  -------

Balance, end of period - 5,831,664 and 6,160,664
  Shares at cost.........................................................              (29,159)                 (31,301)
                                                                                      --------                  -------

Balance, end of period...................................................             $(31,096)                $(33,238)
                                                                                      ========                 ========

ACCUMULATED OTHER COMPREHENSIVE LOSS

   Cumulative translation adjustments:
   Balance, beginning of year............................................              (20,163)                 (17,217)
   Foreign currency translation adjustment...............................               (2,171)                  (2,794)
                                                                                      --------                 --------
   Balance, end of period................................................              (22,334)                 (20,011)
                                                                                      --------                 --------

   Unrealized gain on marketable securities:
   Balance, beginning of year............................................                4,856                    7,945
   Unrealized (loss), net................................................              (14,713)                  (8,208)
   Sale of available-for-sale securities.................................                 (701)                  (1,791)
                                                                                      --------                 --------
   Balance, end of period................................................              (10,558)                  (2,054)
                                                                                      --------                 --------

Balance, end of period...................................................             $(32,892)                $(22,065)
                                                                                      ========                 ========`

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

8

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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

`NINE MONTHS ENDED SEPTEMBER 30,                                                          2002                     2001
-------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)                                                               (Unaudited)               (Unaudited)

Net loss.................................................................              (26,772)                  (6,518)
                                                                                       -------                  -------

Other comprehensive loss, net of tax:
   Foreign currency translation adjustments..............................               (2,171)                  (2,794)
   Unrealized loss on securities.........................................              (14,713)                  (8,208)
                                                                                       -------                  -------
   Other comprehensive loss..............................................              (16,884)                 (11,002)
                                                                                       -------                  -------

   Comprehensive loss....................................................             $(43,656)               $ (17,520)
                                                                                       =======                  =======

Related tax benefit (expense) of other
   Comprehensive loss:
   Foreign currency translation adjustments..............................             $    120                 $    805
   Unrealized (loss) gain on securities..................................             $ (2,507)                $  5,559`

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

9

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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 the "Company" refers to Ampal-American Israel Corporation
         ("Ampal") and its consolidated subsidiaries.
2. The December 31, 2001 consolidated balance sheet presented herein was derived from the audited December 31,
         2001 consolidated financial statements of the Company.


         Reference should be made to the Company's consolidated financial statements for the year ended December 31,
         2001 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, 2001 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.  All adjustments (of a normal recurring nature) which are, in the opinion of management, necessary
         to a fair presentation of the results of the interim period have been included.
3. On January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142, Goodwill and
         other Intangible Assets (SFAS 142). The adoption of SFAS 142 does not have a material effect on the
         financial statements.


         In May 2002, the FASB issued SFAS NO.145, "Revision of SFAS Nos. 4, 44 and 64, Amendment of SFAS 13 and
         Technical Corrections as of April 2002". SFAS 145 is effective for fiscal periods beginning after May 15,
         2002 (as applicable to the Company, January 1, 2003). The Company does not believe that the adoption of
         SFAS 145 will have any material effect on its consolidated financial statements.

             In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal
         Activities". SFAS 146 addresses financial accounting and reporting for costs associated with exit or
         disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for
         Certain Employee Termination Benefits and other Costs to Exit an Activity (including Certain Costs Incurred
         in a Restructuring)."  SFAS 146 requires that a liability for costs associated with an exit or disposal
         activity be recognized when the liability is incurred rather than when the Company commits to such an
         activity and also establishes fair value as the objective for initial measurement of the liability. The
         Company will adopt SFAS 146 for exit disposal activities that are initiated after December 31, 2002. Upon
         the adoption of SFAS 146, previously issued financial statements shall not be restated. The Company does
         not believe that the adoption of SFAS 146 will have any material effect on its consolidated financial
         statements.

10

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1. Segment information presented below results primarily from operations in Israel.

`NINE MONTHS ENDED SEPTEMBER 30,                                                          2002                     2001
-------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)

         Revenues:
         Finance.........................................................                 (202)                     202
         Real estate.....................................................                5,785                   17,018
         Leisure-time....................................................                1,272                    1,407
         Intercompany adjustments........................................                  (57)                    (782)
                                                                                       -------                  -------
              Total......................................................              $ 6,798                  $17,845
                                                                                       =======                  =======

         Pretax Operating Loss:
         Finance.........................................................              (22,162)                 (15,738)
         Real estate.....................................................                  (19)                   8,192
         Leisure-time....................................................                 (139)                     116
                                                                                       -------                  -------
              Total......................................................             $(22,320)                $ (7,430)
                                                                                       =======                  =======

         Total Assets:
         Finance*........................................................              247,052                  293,356
         Real estate.....................................................               68,565                   74,774
         Leisure-time....................................................               15,406                   14,555
         Intercompany adjustments........................................               (4,431)                  (5,066)
                                                                                       -------                  -------
              Total......................................................             $326,592                 $377,619
                                                                                       =======                  =======`

| | *Includes an investment in MIRS Communications Ltd. of $111 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Corporate office expense is principally applicable to the financing operations and has been charged to that
         segment above.  Revenues exclude equity in earnings of affiliates and pretax operating loss excludes equity
         in earnings of affiliates and minority interests.                                                                                                                                                                                                                                                     
| | The real estate segment consists of rental property owned in Israel and the United States leased to related
         and unrelated parties and of the operations of Am-Hal Ltd., the Company's wholly-owned subsidiary which
         owns and operates a chain of senior citizens facilities located in Israel.   The leisure-time segment
         consists primarily of Coral World International Limited (marine parks located around the world) and Country
         Club Kfar Saba (the company's 51%-owned subsidiary located in Israel).

11

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1. The following table summarizes securities that were outstanding as of September 30, 2002 and 2001, but not
         included in the calculations of diluted loss per Class A share because such shares are antidilutive.

| | (Shares in thousands)  | September 30,
| | ---------------------- | -------------
| |                        | 2002         
| | Options and Rights     | 3,132        
| | 6-1/2% Preferred Stock | 584          
| | 4% preferred stock     | 139          

1. Legal Proceeding:Yakhin Hakal

                        In February 1995, Yakhin Hakal and its affiliates commenced a legal proceeding in Tel Aviv District
         Court seeking to cause Etz Vanir and Yakhin Mataim to redeem the perpetual debentures owned by the Company
         for approximately $700,000 and to require the Company to surrender all of its preferred shares of Etz Vanir
         and Yakhin Mataim for their par value (which is a nominal amount), on the alleged grounds that the
         perpetual debentures are debt and not equity investments. It is the Company's view that its investments in
         these companies, which were made in the 1950's, are equity investments and are not subject to redemption by
         these companies, other than upon liquidation.

                        On July 27, 1998, a Tel Aviv District Court ruled in favor of Yakhin Hakal, the manager and
         co-owner of the Company's 50%-owned affiliates Etz Vanir and Yakhin Mataim.  The judge's decision allows
         Etz Vanir and Yakhin Mataim to redeem debentures owned by the Company for approximately $800,000 and to
         require the Company to surrender all of its preferred shares of Etz Vanir and Yakhin Mataim for their par
         value.  After the redemption and surrender, the Company will no longer have any interest in Etz Vanir or
         Yakhin Mataim.

                        On October 15, 1998, the Company filed an appeal with the Israeli Supreme Court in Jerusalem. On
         September 30, 2001, the Supreme Court dismissed the appeal filed by the Company, on the grounds that the
         Company failed to timely produce a guarantee to cover Yakhin Hakal's expenses in the appeal. On November 1,
         2001, the Company filed a petition to the Israeli Supreme Court, contending that the dismissal of an appeal
         due to a delay in producing guarantees as part of the appeal is unreasonable and that the law allowing this
         should be changed. The petition was withdrawn by the Company on October 6,2002.


                        On December 30, 2001, the Company filed a motion to allow it to file a new appeal in this case. The
         Supreme Court dismissed the motion on September 10, 2002

                        On October 12, 2001, the Company filed a request with the Tel-Aviv District Court for a preliminary
         injunction and other remedies in relation to the validity and enforceability of Etz Vanir's and Yakhin
         Mataim's decisions to redeem the debentures owned by the Company and to require the Company to surrender
         all of its preferred shares in Etz Vanir and Yakhin Mataim. On January 28, 2002, the Tel Aviv  District
         Court dismissed the request. On March 12, 2002, the Company filed an appeal with regard to this decision
         with the Israeli Supreme Court and the appeal is scheduled to be heard on April 9 ,2003.

12

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| | As of the date hereof, the Company cannot predict the outcome of these proceedings.                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Granit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | In arbitration between the Israeli Fuel Authority and the organization of the owners of fuel
         stations, the arbitrator ordered the Fuel Authority to pay the fuel- stations owner's depreciation
         payments. The Fuel Authority demanded that the fuel companies pay such payments. As a result of the
         arbitration, twenty five third-party claims were filed against Sonol (a subsidiary of Granit), in the total
         amount of NIS 40 million ($8 million). All of the claims were dismissed in October 2002.

13

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ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES

Critical Accounting Policies

The Company accounts for a number of its  investments,  including many of its investments in the  high-technology  and
communications  industries,  on the basis of the cost  method.  Application  of this  method  requires  the Company to
periodically  review these  investments  in order to determine  whether to maintain the current  carrying  value or to
write off some or all of the investment.

While the Company uses some objective  measurements in its review,  such as the portfolio  company's  liquidity,  burn
rate,  termination of a substantial number of employees,  and achievement of milestones set forth in its business plan
or projections and seeks to obtain relevant  information from the company under review,  the review process involves a
number of judgments on the part of the Company's  management.  These judgments  include  assessments of the likelihood
of the company under review to obtain additional  financing,  to achieve future milestones,  make sales and to compete
effectively  in its markets.  In making these  judgments  the Company  must also attempt to  anticipate  trends in the
particular  company's  industry as well as in the general economy.  There can be no guarantee that the Company will be
accurate in its  assessments  and  judgments.  To the extent that the Company is not correct in its  conclusion it may
decide to write down all or part of the particular investment.

Results of Operations

Nine months ended September 30, 2002 compared to nine months ended September 30, 2001:

Ampal-American  Israel  Corporation  ("Ampal" or the "Company") and its subsidiaries  recorded a consolidated net loss
of $26.8  million for the nine months  ended  September  30,  2002,  as compared to a net loss of $6.5 million for the
same period in 2001.  The increase in net loss is  primarily  attributable  to the absence in 2002 of the  significant
gains  resulting  from the sale of real estate rental  property in 2001,  higher  unrealized  losses on investments in
marketable  securities,  higher  loss from  impairment  of  investments  and loans,  the  absence in 2002 of the gains
resulting from the sale of investments  in 2001,  and decreases in equity in earnings of affiliates.  These  decreases
were partially offset by higher other income and lower interest expense.

On March 28, 2001,  the Company  concluded  the sale of its interest in a building  located at 800 Second Avenue ("800
Second  Avenue")  in New York City for $33 million  and  recorded a pre-tax  gain of  approximately  $8 million  ($4.3
million net of taxes).
On May 2, 2001, the Company sold its real estate rental  property  located in Bnei Brak and recorded a pre-tax gain of
approximately  $2.1 million  ($1.6 million net of taxes).  There were no comparable  gains in the first nine months of
2002.

14

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In the nine-month  period ended September 30, 2002,  Ampal recorded $7.6 million of realized and unrealized  losses on
investments,  which consisted of $3.3 million of realized and unrealized  losses on investments  classified as trading
securities  and $4.3  million of  unrealized  losses from the  permanent  impairment  in value of  investments  in the
available-for-sale  securities.  In the same  period in 2001,  the  Company  recorded  $3.1  million of  realized  and
unrealized  losses on  investments  which  consisted  of $4.7 million of  unrealized  losses on  investments  and $1.6
million of  realized  gains  from sale of  investments.  The  realized  and  unrealized  losses on trading  securities
recorded in 2002 were  primarily  attributable  to the  Company's  investment in shares of Bank Leumi  Le'Israel  B.M.
("Leumi") ($2.0 million)and mutual funds (0.5 million).  The unrealized losses from the permanent  impairment in value
of the  Company's  investments  in the  available-for-sales  securities  in 2002 were  primarily  attributable  to the
investment  in shares of Sonic  Foundry Inc.  ("Sonic")  ($1.8  million),  Alvarion  ($2.0  million) and Compugen Ltd.
("Compugen")  ($0.5  million).  At September  30, 2002 and September  30, 2001,  the  aggregate  fair value of trading
securities amounted to approximately $4.9 million and $11.1 million, respectively.

Equity in earnings of affiliates  decreased to $1.3 million for the nine months ended  September  30, 2002,  from $3.0
million for the same period in 2001,  as a result of decreased  earnings of affiliates  in 2002,  whose  earnings were
affected by the devaluation of the new Israeli shekel against the U.S. dollar and the economic slowdown in Israel.

The  decrease in real estate  income and  expenses  in 2002 as  compared  to 2001 is  attributable  to the sale of 800
Second Avenue.

The  increase in other income for the nine months ended  September  30, 2002,  as compared to the same period in 2001,
is  attributable  to the $5.3 million income recorded in the first nine months of 2002, with respect to the guaranteed
payment from Motorola (Israel) Ltd., which was not recorded in the same period in 2001.

The Company  recorded  lower  interest  expense in the nine months ended  September  30, 2002, as compared to the same
period in 2001, primarily as a result of lower interest rates.

In the nine-month period ended September 30, 2002, the Company recorded $13.6 million in losses from the impairment
of its investments and loans in the following companies:Bay Heart Limited ("Bay Heart") ($2.9 million), Bridgewave
Communications, Inc.("Bridgewave") ($2.8 million), Shellcase Ltd. ($2.3 million), Oblicore Ltd. ($2.2 million),
Modem Art Ltd. ($1.0 million), Camelot Information Technologies Ltd. ("Camelot") ($0.5 million), Netformx Ltd. ($0.5
million), Enbaya Inc. ($0.5 million), Shiron Satellite Communications (1996) Ltd. ("Shiron") ($0.4 million),
VisionCare Opthalmic Technologies Ltd. ("VisionCare") ($0.3 million),  Tulip Ltd. ($0.1 million), and Babylon Ltd.
($0.1 million), while in the same period in 2001, the Company recorded a $4.1 million loss from the impairment of
its investments.

The  increase in the  effective  income tax rate in 2002,  as  compared  to 2001,  is  primarily  attributable  to the
unrealized losses on investments for which no tax benefits are currently available.

Three months ended September 30, 2002 compared to three months ended September 30, 2001:

The  consolidated  net loss increased to $11.4 million for the three months ended September 30, 2002, as compared to a
net loss of $3.1 million for the same period in 2001.  The increase in net loss is  primarily  attributable  to higher
losses  from  impairment  of  investments  and loans  which were  partially  offset by higher  other  income and lower
interest expense.

In the three-month  period ended  September 30, 2002, the Company  recorded $7.5 million in losses from the impairment
of its investments in Shellcase Ltd. ($2.3 million),  Oblicore Ltd. ($2.2  million),  Bay Heart ($1.4 million),  Modem
Art Ltd. ($1.0 million),  VisionCare ($0.3 million), and Bridgewave ($0.3 million),  while in the same period in 2001,
the Company recorded a $0.94 million loss from the impairment of its investments in Enbaya Inc.

15

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Equity in earnings of  affiliates  decreased to income of $0.3 million for the three months ended  September 30, 2002,
from income of $0.7 million for the same period in 2001.

The increase in other income in the three months  ended  September  30, 2002,  as compared to the same period in 2001,
is attributable to $1.8 million income recorded with respect to the guaranteed payment from Motorola (Israel) Ltd.

The Company  recorded  lower  interest  expense in the three months ended  September 30, 2002, as compared to the same
period in 2001, primarily as a result of lower interest payments.

The  increase  in the  effective  income  tax  rate in 2002 as  compared  to  2001 is  primarily  attributable  to the
unrealized losses on investments for which no tax benefits are currently available.

Liquidity and Capital Resources

Cash Flows

On September  30, 2002,  cash and cash  equivalents  were $1.2  million,  as compared  with $8 million at December 31,
2001.  The  decrease in cash and cash  equivalents  is primarily  attributable  to the  repayments  of notes and loans
payable.

The Company's sources of cash include cash and cash equivalents,  marketable  securities,  cash from operations,  cash
from investing  activities and amounts  available under credit  facilities,  as described  below. The Company believes
that these sources are sufficient to fund the current  requirements  of operations,  capital  expenditures,  investing
activities,  dividends  on  preferred  stock and other  financial  commitments  of the Company for the next 12 months.
However,  to the extent that the  contingencies  and payment  obligations  described  below and in other parts of this
Report,  including the  proceedings  described in "Part II - Item 1. Legal  Proceedings",  require the Company to make
unanticipated  payments,  the Company  would need to further  utilize  these  sources of cash.  To the extent that the
Company  intends to rely on the sale of  marketable  securities  in order to satisfy its cash needs,  it is subject to
the risk of a shortfall in the amount of proceeds  from any such sale as compared with the  anticipated  sale proceeds
due to a decline  in the  market  price of those  securities.  In the event of a decline  in the  market  price of its
marketable  securities,  the Company  may need to draw upon its other  sources of cash,  which may include  additional
borrowing,  refinancing of its existing  indebtedness or liquidating other assets, the value of which may also decline
..In  addition,  the shares of Mirs owned by the Company have  already  been  pledged as security  for  specific  loans
provided to the Company for the purchase of these shares and would  therefore be  unavailable if the Company wished to
pledge them in order to provide an additional source of cash.

Cash flows from operating activities

Net cash provided by operating  activities of approximately  $7.3 million for the nine months ended September 30, 2002
decreased  approximately  $15.7 million from the same period in 2001.  The decrease is primarily  attributable  to the
$15.7 million dividends from affiliates received in 2001, which were absent in 2002.

Cash flows from investing activities

16

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Net cash used in investing  activities  of  approximately  $0.1 million for the nine months ended  September  30, 2002
decreased  approximately  $21.4  million  from the same  period  in  2001.  The  higher  number  in 2001 is  primarily
attributable  to the  investment  in 2001 of the $34.8  million  received  from the sale of 800 Second Avenue and Bnei
Brak real estate  properties in 2001.  Those proceeds were  partially  offset by exceded  investments  made in 2001 in
the amount of $7.6 million and exceded loans granted in 2001 of $6.3 million.

Cash flows from financing activities

Net cash used in  financing  activities  was  approximately  $11.7  million  at  September  30,  2002 as  compared  to
approximately  $47.4  million at September  30, 2001.  The  decrease in the cash used in 2002 is  attributable  to the
lower notes and loans  repayments  ($13.1 million and $53.9 million in 2002 and 2001,  respectively).  Notes and loans
repayments in 2001 include the $15 million loan repayment with respect to the 800 Second Avenue property.

Investments

On September 30, 2002, the aggregate fair value of trading and  available-for-sale  securities was approximately $21.5
million,  as compared to $40.6 million at December 31, 2001. The decrease in both  categories in 2002 is  attributable
to the sales of securities and decreases in the market prices of such securities.

On January 2, 2002,  the Company made a $0.5 million loan to Camelot.  In February  2002,  the Company,  together with
other  Camelot  debtholders,  acted to put  Camelot  into  liquidation  proceedings.  The  Company has written off its
investment in Camelot.

On January 4, 2002 and on August 12, 2002,  the Company made  additional  investments  in an aggregate  amount of $1.0
million in ShellCase  Ltd., a developer  and  manufacturer  of chip size  packaging.  The Company  currently  holds an
approximately 14% equity interest in ShellCase Ltd.

On January 28, 2002 and on August  8,2002 the Company  made  additional  investments  in an  aggregate  amount of $0.7
million in PowerDsine  Ltd., a leading  designer and developer of software  controlled  power  solutions.  The Company
currently holds an approximately 8.1% equity interest in PowerDsine Ltd.

Debt

At September 30, 2002, the Company had in placed unused lines of credit in the aggregate amount $16 million.

In connection  with its investment in MIRS, the Company has two long-term  loans from Bank Hapoalim Ltd.  ("Hapoalim")
and Leumi in the amount outstanding of $37.3 million and $34.9 million,  respectively,  as of September 30, 2002. Both
loans are due on March 31, 2008 and bear interest at a rate of LIBOR plus 0.8%.  Other than as
described in this  paragraph,  the loans are  non-recourse  to the Company and are secured by the Company's  shares in
MIRS.  The  principal  payments are due as follows:  10% on March 31,  2004,  15% on March 31, 2005 and 25% on each of
the  following  dates - March 31, 2006,  2007 and 2008.  Interest  will be paid annually on March 31 of each year from
March 31, 2002 until and including  March 31, 2008.  These loans are subject to the  compliance by MIRS with covenants
regarding its  operations  and  financial  results.  In March 2002,  some of the covenants in the loan from Leumi were
amended to reflect  changes in MIRS'  business.  In connection  with these  amendments,  the Company agreed that Leumi
will have  recourse to the  Company for an amount of up to $3.5  million if  Motorola  (Israel)  Ltd.  does not make a
guaranteed  payment to the Company in March 2003 as is required by the terms of the agreement  under which the Company
purchased  its interest in MIRS from Motorola  (Israel) Ltd. In addition,  Leumi will have recourse to the Company for
an additional $0.5 million beginning in 2006 in relation to the Company's repayment obligations under the loan.

17

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As of September 30, 2002, the Company had $5.3 million in outstanding  debentures  with interest rates of 7.5%.  These
debentures,  which mature in 2005,  are secured by $5.4 million in cash held in a secured  account.  In addition,as of
September 30, 2002, the Company had $18 million  outstanding in 11% discount  debentures,  which mature in 2003. These
debentures  allow for early  redemption by their holders.  In the event of early redemption in 2002, the Company would
not be required to pay $2 million in unamortized  discounts.  If these  debentures are redeemed early, the Company may
need to draw upon  various  sources of cash,  which may include  additional  borrowings,  refinancing  of its existing
indebtedness to pay the $16 million owed. On October 2002 there was an early redemption of $0.5 million.

The Company  financed a portion of the development of Am-Hal,  a wholly-owned  subsidiary  which develops and operates
luxury retirement  centers for senior citizens,  through bank loans from Hapoalim.  At September 30, 2002 and December
31, 2001,  the amounts  outstanding  under these loans were $13.2 million and $14.3 million,  respectively.  The loans
are dollar linked,  mature through 2002 and have interest rates of LIBOR plus 1%. The Company  generally  repays these
loans with the proceeds  received from  deposits and other  payments from the  apartments  in Am-Hal  facilities.  The
loans are secured by a lien on Am-Hal's  properties.  The Company also issued guarantees in the amount of $5.0 million
in favor of clients of Am-Hal in order to secure their deposits.

The Company also finances its general  operations  and other  financial  commitments  through  short-term  borrowings,
mainly from  Hapoalim.  The term of these  borrowings is up to one year. The weighted  average  interest rates and the
balances of these  short-term  borrowings  at September  30, 2002 and December 31, 2001 were 3.5% on $37.2 million and
3.23% on $31.1 million, respectively.

As of September  30,  2002,  the Company had issued  guarantees  on certain  outstanding  loans to its  investees  and
subsidiaries in the aggregate  principal  amount of $9.7 million.  This includes a $4 million  guarantee to Leumi with
respect to the Mirs loan as described  above,  and a $5.7  million  guarantee  on  indebtedness  incurred by Bay Heart
($3.5  million of which was  recorded as a loss in the  Company's  financial  statements  at  September  30,  2002) in
connection  with the  development  of its  property.  Bay  Heart  recorded  increased  losses  in 2002 as a result  of
decreased rental revenues.

Bay Heart's  decreased  rental revenues were due to lower average rental rates on its properties  caused,  in part, by
the general  recession in Israel which  affected the real estate  sector and by the surplus of mall  properties in the
Haifa area.  There can be no  guarantee  that Bay Heart will become  profitable  or that it will  generate  sufficient
cash to repay its outstanding indebtedness without relying on the Company's guarantee.

Other Developments

On April 25, 2002,  Rebar Financial Corp., a corporation  controlled by Raz Steinmetz,  the former President and Chief
Executive  Officer of the  Company,  and  Daniel  Steinmetz,  the former  Chairman  of the Board of  Directors  of the
Company,  completed the sale of  approximately  51% (on a fully-diluted  basis) of the  outstanding  shares of Class A
Stock of the Company to Y.M. Noy Investments Ltd.  ("Y.M.Noy"),  a company  controlled by Yosef A.Maiman,  the current
Chairman of the Board of Directors of the Company.

18

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Additionally,  on April 25, 2002,  certain of Ampal's  employees  sold an aggregate of 329,000 shares of Class A Stock
of the Company to Y.M. Noy.

Foreign Currency Contracts

The  Company's  derivative  financial  instruments  consist of foreign  currency  forward  exchange  contracts.  These
contracts are utilized by the Company,  from time to time,  to manage risk  exposure to movements in foreign  exchange
rates. None of these contracts have been designated as hedging  instruments.  These contracts are recognized as assets
or  liabilities  on the  balance  sheet at their  fair  value,  which is the  estimated  amount at which they could be
settled based on market prices or dealer quotes,  where available,  or based on pricing models.  Changes in fair value
are recognized currently in earnings

Forward-Looking Statements

This Quarterly  Report  (including but not limited to factors  discussed  above, in the  "Management's  Discussion and
Analysis of Financial  Condition and Results of Operations,"  as well as those  discussed  elsewhere in this Quarterly
Report  on Form  10-Q)  includes  forward-looking  statements  (as such  term is  defined  in the  Private  Securities
Litigation  Reform Act of 1995) and  information  relating to the Company that are based on the beliefs of  management
of the Company as well as assumptions  made by and information  currently  available to the management of the Company.
When used in this Quarterly Report, the words "anticipate",  "believe",  "estimate",  "expect",  "intend", "plan", and
similar  expressions,  as they  relate to the  Company or the  management  of the  Company,  identify  forward-looking
statements.  Such  statements  reflect  the  current  views of the  Company  with  respect to future  events or future
financial  performance of the Company,  the outcome of which is subject to certain risks and other factors which could
cause actual results to differ materially from those anticipated by the  forward-looking  statements,  including among
others,  the economic and political  conditions in Israel and the Middle East and in the global  business and economic
conditions in the different sectors and markets where the Company's portfolio companies operate.
Should any of those risks or uncertainties  materialize,  or should  underlying  assumptions  prove incorrect,  actual
results or outcome may vary from those described therein as anticipated,  believed,  estimated,  expected, intended or
planned.  Subsequent written and oral forward-looking  statements attributable to the Company or persons acting on its
behalf are  expressly  qualified in their  entirety by the  cautionary  statements  in this  paragraph  and  elsewhere
described in this quarterly Report and other Reports filed with the Securities and Exchange Commission.

19

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ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISKS AND SENSITIVITY ANALYSIS

The Company is exposed to various  market risks,  including  changes in interest  rates,  foreign  currency  rates and
equity price changes.  The following  analysis presents the hypothetical loss in earnings,  cash flows and fair values
of the  financial  instruments  which were held by the Company at September  30, 2002,  and are sensitive to the above
market risks.

Interest Rate Risks

At September 30, 2002,  the Company had financial  assets  totaling $11.4 million and financial  liabilities  totaling
$134 million.  For fixed rate  financial  instruments,  interest rate changes  affect the fair market value but do not
impact  earnings  or  cash  flows.  Conversely,  for  variable  rate  financial  instruments,  interest  rate  changes
generally do not affect the fair market value but do impact  future  earnings and cash flows,  assuming  other factors
held constant.

At September  30, 2002,  the Company had fixed rate  financial  assets of $7.4  million and  variable  rate  financial
assets of $4 million.  Holding other variables  constant,  a ten percent increase in interest rates would decrease the
unrealized fair value of the fixed financial assets by approximately $0.1 million.

At September 30, 2002,  the Company had fixed rate debt of $31.2 million and variable rate debt of $102.8  million.  A
ten  percent  decrease  in  interest  rates  would  increase  the  unrealized  fair  value of the  fixed  rate debt by
approximately $0.2 million.

The net  decrease  in  earnings  for the next year  resulting  from a ten  percent  interest  rate  increase  would be
approximately $0.5 million, holding other variables constant.

Exchange Rate Sensitivity Analysis

The  Company's  exchange  rate  exposure  on its  financial  instruments  results  from its  investments  and  ongoing
operations in Israel.  To partially hedge this exposure,  the Company  sometimes  enters into various foreign exchange
forward purchase  contracts.  At September 30, 2002, the open foreign exchange forward purchase  contracts amounted to
$12.5 million.  Holding other variables  constant,  if there were a ten percent  devaluation of the foreign  currency,
the Company's  cumulative  translation loss (reflected in the Company's  accumulated other  comprehensive  loss) would
increase by $1.5 million and a net decrease in earnings of approximately $0.4 million.

Equity Price Risk

The Company's  investments  at September  30, 2002 included  marketable  securities  (trading and  available-for-sale)
which  are  recorded  at fair  value of $21.5  million,  including  a net  unrealized  loss of  $25.5  million.  Those
securities have exposure to price risk. The estimated  potential loss in fair value resulting from a hypothetical  10%
decrease in prices quoted by stock exchanges is approximately $2.1 million.

20

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ITEM 4.  CONTROLS AND PROCEDURES

Within the 90-day period prior to the date of this report, the Company
carried out an evaluation, under the supervision and with the participation of
management, including its Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of Ampal's disclosure
controls and procedures.  Based upon that evaluation, Ampal's management, including its Chief Executive Officer and
Chief Financial Officer, concluded that these controls and procedures are effective.

There have been no significant changes in Ampal's internal controls or
in other factors that could significantly affect internal controls subsequent
to the date that the Company carried out its evaluation.

21

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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES

PART II - OTHER INFORMATION

Item 1.           Legal Proceedings.

Yakhin Hakal

In February 1995, Yakhin Hakal and its affiliates commenced a legal proceeding in Tel Aviv District Court
seeking to cause Etz Vanir and Yakhin Mataim to redeem the perpetual debentures owned by the Company for
approximately $700,000 and to require the Company to surrender all of its preferred shares of Etz Vanir and Yakhin
Mataim for their par value (which is a nominal amount), on the alleged grounds that the perpetual debentures are
debt and not equity investments. It is the Company's view that its investments in these companies, which were made
in the 1950's, are equity investments and are not subject to redemption by these companies, other than upon
liquidation.

On July 27, 1998, a Tel Aviv District Court ruled in favor of Yakhin Hakal, the manager and co-owner of the
Company's 50%-owned affiliates Etz Vanir and Yakhin Mataim.  The judge's decision allows Etz Vanir and Yakhin Mataim
to redeem debentures owned by the Company for approximately $800,000 and to require the Company to surrender all of
its preferred shares of Etz Vanir and Yakhin Mataim for their par value.  After the redemption and surrender, the
Company will no longer have any interest in Etz Vanir or Yakhin Mataim.

On October 15, 1998, the Company filed an appeal with the Israeli Supreme Court in Jerusalem. On September
30, 2001, the Supreme Court dismissed the appeal filed by the Company, on the grounds that the Company failed to
timely produce a guarantee to cover Yakhin Hakal's expenses in the appeal. On November 1, 2001, the Company filed a
petition to the Israeli Supreme Court, contending that the dismissal of an appeal due to a delay in producing
guarantees as part of the appeal is unreasonable and that the law allowing this should be changed. The petition was
withdrawn by the Company on October 6,2002.

On December 30, 2001, the Company filed a motion to allow it to file a new appeal in this case. The Supreme
Court dismissed the motion on September 10, 2002

On October 12, 2001, the Company filed a request with the Tel-Aviv District Court for a preliminary
injunction and other remedies in relation to the validity and enforceability of Etz Vanir's and Yakhin Mataim's
decisions to redeem the debentures owned by the Company and to require the Company to surrender all of its preferred
shares in Etz Vanir and Yakhin Mataim. On January 28, 2002, the Tel Aviv  District Court dismissed the request. On
March 12, 2002, the Company filed an appeal with regard to this decision with the Israeli Supreme Court and the
appeal is scheduled to be heard on April 9 ,2003.

As of the date hereof, the Company cannot predict the outcome of these proceedings.

22

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Granit

In arbitration between the Israeli Fuel Authority and the organization of the owners of fuel stations, the
arbitrator ordered the Fuel Authority to pay the fuel- stations owner's depreciation payments. The Fuel Authority
demanded that the fuel companies pay such payments. As a result of the arbitration, twenty five third-party claims
were filed against Sonol (a subsidiary of Granit), in the total amount of NIS 40 million ($8 million). All of the
claims were dismissed in October 2002.

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

The Annual Meeting of shareholders was held on August 16,2002.
The following proposals were adopted by the margins indicated:

To elect seven (7) directors to the Board of Directors for the ensuing year, to
  serve until their successors shall be elected and qualified:

|Names
Yosef A. Maiman
Jack Bigio
Leo Malamud
Dr. Joseph Yerushalmi
Michael Arnon
Yehuda Karni
Eitan Haber | For
12,229,894
12,229,766
12,438,058
12,438,058
12,437,686
12,437,758
12,438,058 | Withheld Authority
220,487
220,615
12,323
12,323
12,695
12,623
12,323
|--------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------- | ---------------------------------------------------------------------

To ratify the nomination of PriceWaterhouseCoopers as the independent auditors of the Company for 2002:

|For
12,444,959 | Against
2,831 | Abstain
2,591
|-------------- | ------------- | -------------

Item 5.  Other Information - None.

23

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|Item 6.                                                                                                                                                        |     | Exhibits and Reports on Form 8-K                                               
|-------------------------------------------------------------------------------------------------------------------------------------------------------------- | --- | -------------------------------------------------------------------------------
|                                                                                                                                                               | (a) | Exhibits:                                                                      
|                                                                                                                                                               |     | 3.1                                                                            
|                                                                                                                                                               |     | 3.2                                                                            
|February 14, 2002. (Filed as Exhibit 3b. to Form 10-K, for
      the year ended December 31,
      2001 and incorporated herein by reference. File No. 0-538).
|                                                                                                                                                               |     | 11.1                                                                           
|Stock.                                                                                                                                                         |     |                                                                                
|                                                                                                                                                               |     | 99.1                                                                           
|adopted pursuant to Section 906 of the Sarbanes-Oxley Act
      of 2002.                                                                                      
|                                                                                                                                                               |     | 99.2                                                                           
|adopted pursuant to Section 906 of the Sarbanes-Oxley Act
      of 2002.                                                                                      
|                                                                                                                                                               | (b) | Reports on Form 8-K:                                                           
|                                                                                                                                                               |     | The following reports on Form 8-K were filed during the Company's
      quarter
|ended September 30, 2002:                                                                                                                                     

On August 30, 2002, the Company filed a Form 8-K under Item 9 relating to the certification pursuant
to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002, executed by each of
Jack Bigio, Chief Executive Officer and Irit Eluz, Chief Financial Officer of the Company, in connection with the
Company's quarterly report on Form 10Q for the period ending June 30, 2002

24

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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.

|Dated:  November 14, 2002 | AMPAL-AMERICAN ISRAEL CORPORATIONBy:/s/ Jack Bigio
                                             Jack Bigio
                                             President and
                                             Chief Executive Officer
                                             (Principal Executive Officer)By:/s/ Irit Eluz
                                             Irit Eluz
                                             CFO and Vice President - Finance
                                             and Treasurer
                                             (Principal Financial Officer)By:/s/ Alla Kanter
                                             Alla Kanter
                                             Vice President - Accounting
          (Principal Accounting Officer)By:/s/ Giora Bar-Nir
                                             Giora Bar-Nir
                                             Controller
                                             (Principal Accounting Officer)
|------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

25

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I, Jack Bigio, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Ampal - American Israel Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material
         fact or omit to state a material fact necessary to make the statements made, in light of the
         circumstances under which such statements were made, not misleading with respect to the period
         covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this
         quarterly report, fairly present in all material respects the financial condition, results of
         operations and cash flows of the registrant as of, and for, the periods presented in this quarterly
         report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining
         disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
         registrant and we have:


         a)
         designed such disclosure controls and procedures to ensure that material information relating to
         the registrant, including its consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this quarterly report is being prepared;

         b)
         evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date
         within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

         c)
         presented in this quarterly report our conclusions about the effectiveness of the disclosure
         controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent
         evaluation, to the registrant's auditors and the audit committee of registrant's board of directors
         (or persons performing the equivalent function):


         a)
         all significant deficiencies in the design or operation of internal controls which could adversely
         affect the registrant's ability to record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in internal controls; and



         b)
         any fraud, whether or not material, that involves management or other employees who have a
         significant role in the registrant's internal controls.

26

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1. The registrant's other certifying officers and I have indicated in this quarterly report whether or
         not there were significant changes in internal controls or in other factors that could
         significantly affect internal controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant deficiencies and material weaknesses.

|Date: | November 14, 2002 | /s/ Jack Bigio                                                                                                         
|----- | ----------------- | -----------------------------------------------------------------------------------------------------------------------
|      |                   |                                                                                                                        
|      |                   | Jack Bigio
                                                                       President and Chief Executive Officer

27

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I, Irit Eluz, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Ampal American Israel Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material
         fact or omit to state a material fact necessary to make the statements made, in light of the
         circumstances under which such statements were made, not misleading with respect to the period
         covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this
         quarterly report, fairly present in all material respects the financial condition, results of
         operations and cash flows of the registrant as of, and for, the periods presented in this quarterly
         report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining
         disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
         registrant and we have:


         a)
         designed such disclosure controls and procedures to ensure that material information relating to
         the registrant, including its consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this quarterly report is being prepared;

         b)
         evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date
         within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

         c)
         presented in this quarterly report our conclusions about the effectiveness of the disclosure
         controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent
         evaluation, to the registrant's auditors and the audit committee of registrant's board of directors
         (or persons performing the equivalent function):


         a)
         all significant deficiencies in the design or operation of internal controls which could adversely
         affect the registrant's ability to record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in internal controls; and

         b)
         any fraud, whether or not material, that involves management or other employees who have a
         significant role in the registrant's internal controls.

28

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1. The registrant's other certifying officers and I have indicated in this quarterly report whether or
         not there were significant changes in internal controls or in other factors that could
         significantly affect internal controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant deficiencies and material weaknesses.

|Date: | November 14, 2002 | /s/ Irit Eluz                                           
|----- | ----------------- | --------------------------------------------------------
|      |                   |                                                         
|      |                   | Irit Eluz
CFO and Vice President - Finance and
Treasurer

29

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AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES

Exhibit Index

|Exhibit No. | Description                                                                                                                                                                                                                                                                    
|----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1         | Amended and Restated Certificate of Incorporation of Ampal-American Israel Corporation, 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).
|3.2         | By-Laws of Ampal-American Israel Corporation as amended, dated February 14, 2002. (Filed as Exhibit
                  3b. to Form 10-K, for the year ended December 31, 2001 and incorporated herein by reference.  File
                  No. 0-538).                         
|11.1        | Schedule Setting Forth Computation of Earnings
                  Per Share of Class A Stock............................................                                                                                                                                        
|99.1        | Certification of Jack Bigio pursuant to 18 U.S.C. Section 1350, as          adopted pursuant to Section
         906 of the Sarbanes-Oxley Act of 2002.                                                                                                                        
|99.2        | Certification of Irit Eluz pursuant to 18 U.S.C. Section 1350, as adopted               pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                             

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Exhibit 11.1

AMPAL-AMERICAN ISRAEL CORPORATION AND SUBSIDIARIES

SCHEDULE SETTING FORTH COMPUTATION OF LOSS PER SHARE OF CLASS A STOCK

`NINE MONTHS ENDED SEPTEMBER 30,                                                          2002                     2001
-------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share amounts)                                    (Unaudited)               (Unaudited)

BASIC EPS
   Net loss (1)..........................................................            $ (26,942)               $  (6,692)

   Loss per Class A Share................................................            $   (1.38)                $   (.35)

   Shares used in calculation (2)........................................               19,501                   19,168

DILUTED EPS
   Net loss (1)..........................................................            $ (26,942)               $  (6,692)

   Loss per Class A share ...............................................            $   (1.38)               $    (.35)

   Shares used in calculation (2)........................................               19,501                   19,168`

|(1) | After deduction of accrued preferred stock dividends of $170 and $174, respectively.                                                                                                        
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | In 2002 and 2001, the conversion of the 4% and 6-1/2% Preferred Stocks and the
   exercise of stock options was excluded from the diluted EPS calculation due to the
   antidilutive effect.

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Exhibit 99.1

CERTIFICATION PURSUANT TO
                                               18 U.S.C. SECTION 1350,
                                                AS ADOPTED PURSUANT TO
                                    SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Ampal-American Israel
Corporation (the "Company") on Form 10-Q for the period ending September 30, 2002 as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, Jack Bigio, Chief Executive Officer of the Company, certify, to
the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.

| | /s/ Jack Bigio                                                                                                                                                               
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                              
| | Jack Bigio
                               President and CEO
                               Ampal-American Israel Corporation
                               November 14, 2002

32

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Exhibit 99.2

CERTIFICATION PURSUANT TO
                                               18 U.S.C. SECTION 1350,
                                                AS ADOPTED PURSUANT TO
                                    SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Ampal-American Israel
Corporation (the "Company") on Form 10-Q for the period ending September 30, 2002 as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, Irit Eluz, Chief Financial Officer of the Company, certify, to
the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.

| | /s/ Irit Eluz                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                          
| | Irit Eluz
                               CFO and Vice President - Finance and Treasurer
                               Ampal-American Israel Corporation
                               November 14, 2002

33

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