----

----

----

| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|-----------------------------------------------------------------------------------------|

| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|------------------------------------------------------------------------------------------|

| AMPAL-AMERICAN ISRAEL CORPORATION                      |
|--------------------------------------------------------|
| (Exact Name of Registrant as Specified in Its Charter) |

| New York                                                                          | 13-0435685            |
|-----------------------------------------------------------------------------------|-----------------------|
| (State or Other Jurisdiction of                                                   | (I.R.S. Employer)     |
| Incorporation of Organization)                                                    | Identification Number |
|                                                                              |                  |
| 555 Madison AvenueNew York, NY, USA                                               | 10022                 |
| (Address of Principal Executive Offices)                                          | (Zip code)            |
|                                                                              |                  |
| Registrant’s Telephone Number, Including Area Code (866) 447-8636           |
| Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report. |

|   | Large accelerated filer o                                                  | Accelerated filer o         |
|--------|----------------------------------------------------------------------------|-----------------------------|
|   | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company x |

----

|     |              |                                                                                        |                                                        | Page   |
|----------|-------------------|---------------------------------------------------------------------------------------------|-------------------------------------------------------------|--------|
| Part I   |              | Financial Information                                                                       |                                                        |
|     |              |                                                                                        |                                                        |   |
|     | Item 1.           | Financial Statements (unaudited)                                                            |                                                        |
|     |              |                                                                                        |                                                        |   |
|     |              | Consolidated Balance Sheet                                                                  | 1-2                                                         |
|     |              |                                                                                        |                                                        |   |
|     |              | Consolidated Statements of Operations                                                       | 3                                                           |
|     |              |                                                                                        |                                                        |   |
|     |              | Consolidated Statements of Cash Flows                                                       | 4-5                                                         |
|     |              |                                                                                        |                                                        |   |
|     |              | Consolidated Statements of Changes in Shareholders’ Equity                            | 6-7                                                         |
|     |              |                                                                                        |                                                        |   |
|     |              | Notes to the Consolidated Financial Statements                                              | 8-15                                                        |
|     |              |                                                                                        |                                                        |   |
|     | Item 2.           | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16-22                                                       |
|     |              |                                                                                        |                                                        |   |
|     | Item 4.           | Controls and Procedures                                                                     | 23                                                          |
|     |              |                                                                                        |                                                        |   |
| Part II. | Other Information |                                                                                        |
|     |              |                                                                                        |                                                        |   |
|     |              | Item 1.                                                                                     | Legal Proceedings                                           | 24     |
|     |              |                                                                                        |                                                        |   |
|     |              | Item 1A.                                                                                    | Risk Factors                                                | 24     |
|     |              |                                                                                        |                                                        |   |
|     |              | Item 2.                                                                                     | Unregistered Sales of Equity Securities and Use of Proceeds | 25     |
|     |              |                                                                                        |                                                        |   |
|     |              | Item 3.                                                                                     | Defaults Upon Senior Securities                             | 25     |
|     |              |                                                                                        |                                                        |   |
|     |              | Item 4.                                                                                     | [Removed and Reserved]                                      | 25     |
|     |              |                                                                                        |                                                        |   |
|     |              | Item 5.                                                                                     | Other Information                                           | 25     |
|     |              |                                                                                        |                                                        |   |
|     |              | Item 6.                                                                                     | Exhibits                                                    | 25     |

----

ITEM 1. FINANCIAL STATEMENTS

|                                                                             |   |          |      |   |              |   |
|----------------------------------------------------------------------------------|--------|---------------|-----------|--------|-------------------|--------|
| ASSETS AS OF                                                                     |   | March 31,2011 |      |   | December 31, 2010 |   |
| (U.S. Dollars in thousands)                                                      |   | (Unaudited)   |      |   | (Audited)         |   |
|                                                                             |   |          |      |   |              |   |
| Current assets:                                                                  |   |          |      |   |              |   |
| Cash and cash equivalents                                                        |   | $             | 119,613   |   |              | $      | 33,341 |   |
| Marketable securities                                                            |   |          | 920       |   |              |   | 890 |   |
| Accounts receivable (Net of allowance for doubtful amounts of $2,186 and $2,068) |   |          | 118,581   |   |              |   | 113,837 |   |
| Deposits, notes and loans receivable                                             |   |          | 15,951    |   |              |   | 14,053 |   |
| Inventories                                                                      |   |          | 40,397    |   |              |   | 34,810 |   |
| Other assets                                                                     |   |          | 36,219    |   |              |   | 29,283 |   |
| Held for sale assets                                                             |   |          | --        |   |              |   | 412,239 |   |
|        Total current assets                   |   |          | 331,681   |   |              |   | 638,453 |   |
| Non-current assets:                                                              |   |          |      |   |              |   |   |   |
| Investments                                                                      |   |          | 372,355   |   |              |   | 371,751 |   |
| Fixed assets, less accumulated depreciation of $35,600 and $32,633               |   |          | 199,941   |   |              |   | 196,361 |   |
| Deposits, notes and loans receivable                                             |   |          | 30,703    |   |              |   | 43,338 |   |
| Deferred income taxes                                                            |   |          | 41,820    |   |              |   | 41,422 |   |
| Other assets                                                                     |   |          | 18,043    |   |              |   | 18,617 |   |
| Goodwill                                                                         |   |          | 72,237    |   |              |   | 70,670 |   |
| Intangible assets                                                                |   |          | 15,089    |   |              |   | 17,063 |   |
|        Total Non-current assets               |   |          | 750,188   |   |              |   | 759,222 |   |
|                                                                             |   |          |      |   |              |   |   |   |
| TOTAL ASSETS                                                                     |   | $             | 1,081,869 |   |              | $      | 1,397,675 |   |

----

| LIABILITIES AND  EQUITY AS OF                                                      |   | March 31,2011 |      |   | December 31, 2010 |   |
|----------------------------------------------------------------------------------------------|--------|---------------|-----------|--------|-------------------|--------|
| (U.S. Dollars in thousands, except share amounts)                                            |   | (Unaudited)   |      |   | (Audited)         |   |
|                                                                                         |   |          |      |   |              |   |
| LIABILITIES                                                                                  |   |          |      |   |              |   |
| Current liabilities:                                                                         |   |          |      |   |              |   |
| Notes and loans payable and current maturities                                               |   | $             | 127,502   |   |              | $      | 195,342 |   |
| Accounts payable, accrued expenses and others                                                |   |          | 103,339   |   |              |   | 102,104 |   |
| Debentures – current maturities                                                        |   |          | 47,214    |   |              |   | 14,749 |   |
| Held for sale liabilities                                                                    |   |          | 3,765     |   |              |   | 292,240 |   |
|        Total current liabilities                          |   |          | 281,820   |   |              |   | 604,435 |   |
| Long term liabilities:                                                                       |   |          |      |   |              |   |   |   |
| Notes and loans payable                                                                      |   |          | 232,619   |   |              |   | 218,023 |   |
| Notes to partners                                                                            |   |          | 105,291   |   |              |   | 103,274 |   |
| Debentures                                                                                   |   |          | 241,116   |   |              |   | 265,590 |   |
| Deferred income taxes                                                                        |   |          | 14,038    |   |              |   | 13,775 |   |
| Other long-term liabilities                                                                  |   |          | 14,608    |   |              |   | 14,030 |   |
|        Total long-term liabilities                        |   |          | 607,672   |   |              |   | 614,692 |   |
| Total liabilities                                                                            |   |          | 889,492   |   |              |   | 1,219,127 |   |
|                                                                                         |   |          |      |   |              |   |   |   |
| EQUITY                                                                                       |   |          |      |   |              |   |   |   |
| Ampal's shareholders' equity:                                                                |   |          |      |   |              |   |   |   |
| Class A Stock $1 par value; authorized 100,000,000 and 100,000,000 shares; issued 63,277,321 |   |          |      |   |              |   |   |   |
| and 63,277,321 shares; outstanding 56,133,764 and 56,133,764 shares                          |   |          | 63,277    |   |              |   | 63,277 |   |
|                                                                                         |   |          |      |   |              |   |   |   |
| Additional paid-in capital                                                                   |   |          | 183,055   |   |              |   | 182,924 |   |
|                                                                                         |   |          |      |   |              |   |   |   |
| Accumulated deficiency                                                                       |   |          | (15,070   | )      |              |   | (32,316 | ) |
|                                                                                         |   |          |      |   |              |   |   |   |
| Accumulated other comprehensive income (loss)                                                |   |          | (1,258    | )      |              |   | 103 |   |
|                                                                                         |   |          |      |   |              |   |   |   |
| Treasury stock, at cost                                                                      |   |          | (28,763   | )      |              |   | (28,763 | ) |
|                                                                                         |   |          |      |   |              |   |   |   |
| Total Ampal shareholders’ equity                                                       |   |          | 201,241   |   |              |   | 185,225 |   |
|                                                                                         |   |          |      |   |              |   |   |   |
| Noncontrolling interest                                                                      |   |          | (8,864    | )      |              |   | (6,677 | ) |
|                                                                                         |   |          |      |   |              |   |   |   |
| Total equity                                                                                 |   |          | 192,377   |   |              |   | 178,548 |   |
|                                                                                         |   |          |      |   |              |   |   |   |
| TOTAL LIABILITIES AND  EQUITY                                                      |   | $             | 1,081,869 |   |              | $      | 1,397,675 |   |

----

AMPAL

| THREE MONTHS ENDED MARCH 31,                                         |   | 2011        |    |   |        | 2010(*) |    |
|----------------------------------------------------------------------|--------|-------------|---------|--------|-------------|---------|---------|
| (U.S. Dollars in thousands, except per share amounts)                |   | (Unaudited) |    |   | (Unaudited) |    |
|                                                                 |   |        |    |   |        |    |    |
| REVENUES:                                                            |   |        |    |   |        |    |    |
| Chemical income                                                      |   | $           | 134,544 |   |        | $       | 118,206 |   |
| Real estate income                                                   |   |        | 112     |   |        |    | 74      |   |
| Realized gains on investments                                        |   |        | --      |   |        |    | 104     |   |
| Gain (loss) on sale of fixed assets                                  |   |        | (21     | )      |        |    | 2       |   |
| Realized and unrealized gains on marketable securities               |   |        | 13      |   |        |    | 79      |   |
| Equity in earnings of affiliates                                     |   |        | 181     |   |        |    | 17      |   |
| Interest income                                                      |   |        | 420     |   |        |    | 136     |   |
| Leisure-time income                                                  |   |        | 667     |   |        |    | 661     |   |
| Other income                                                         |   |        | 637     |   |        |    | 2,417   |   |
| Total revenues                                                       |   |        | 136,553 |   |        |    | 121,696 |   |
|                                                                 |   |        |    |   |        |    |    |   |
| EXPENSES:                                                            |   |        |    |   |        |    |    |   |
| Chemical expense - cost of goods sold                                |   |        | 125,348 |   |        |    | 108,728 |   |
| Real estate expenses                                                 |   |        | 176     |   |        |    | 214     |   |
| Interest expense                                                     |   |        | 9,699   |   |        |    | 6,203   |   |
| Translation loss                                                     |   |        | 3,894   |   |        |    | 3,415   |   |
| Marketing expenses                                                   |   |        | 2,574   |   |        |    | 2,232   |   |
| General, administrative and other                                    |   |        | 13,756  |   |        |    | 11,868  |   |
|         Total expenses       |   |        | 155,447 |   |        |    | 132,660 |   |
| Loss from continuing operations before income taxes                  |   |        | (18,894 | )      |        |    | (10,964 | ) |
| Income tax expenses (benefit)                                        |   |        | 129     |   |        |    | (143    | ) |
| Net loss from continuing operations after tax benefits               |   |        | (19,023 | )      |        |    | (10,821 | ) |
| Discontinued operations:                                             |   |        |    |   |        |    |    |   |
| Gain disposal, net of tax                                            |   |        | 28,891  |   |        |    | --      |   |
| Income from discontinued operations, net of tax                      |   |        | 5,175   |   |        |    | 2,160   |   |
|                                                                 |   |        | 34,066  |   |        |    | 2,160   |   |
| Net income (loss)                                                    |   |        | 15,043  |   |        |    | (8,661  | ) |
| Less: Net loss attributable to noncontrolling interests              |   |        | 2,203   |   |        |    | 1,531   |   |
| Net income (loss) attributable to Ampal's shareholders               |   |        | 17,246  |   |        |    | (7,130  | ) |
|                                                                 |   |        |    |   |        |    |    |   |
| Basic and diluted EPS:                                               |   |        |    |   |        |    |    |   |
| Loss from continuing operations attributable to Ampal's shareholders |   |        | (0.30   | )      |        |    | (0.17   | ) |
| Discontinued operations attributable to Ampal's shareholders         |   |        | 0.61    |   |        |    | 0.04    |   |
|                                                                 |   | $           | 0.31    |   |        | $       | (0.13   | ) |
|                                                                 |   |        |    |   |        |    |    |   |
| Shares used in EPS calculation (in thousands)                        |   |        | 56,134  |   |        |    | 56,134  |   |

----

AMPAL

| THREE MONTHS ENDED MARCH 31,                                                                             |   | 2011        |    |   |        | 2010(*) |    |
|----------------------------------------------------------------------------------------------------------|--------|-------------|---------|--------|-------------|---------|---------|
| (U.S. Dollars in thousands)                                                                              |   | (Unaudited) |    |   | (Unaudited) |    |
|                                                                                                     |   |        |    |   |        |    |    |
| Cash flows from operating activities:                                                                    |   |        |    |   |        |    |    |
| Net Income ( loss) for the period                                                                        |   | $           | 15,043  |   |        | $       | (8,661  | ) |
| Net income from discontinued operations                                                                  |   |        | (34,066 | )      |        |    | (2,160  | ) |
| Loss from continuing operations                                                                          |   |        | (19,023 | )      |        |    | (10,821 | ) |
| Adjustments to reconcile net loss for the period to net cash provided by (used in) operating activities: |   |        |    |   |        |    |    |   |
| Equity in earnings of affiliates                                                                         |   |        | (181    | )      |        |    | (17     | ) |
| Realized and unrealized gain on investments, net                                                         |   |        | (13     | )      |        |    | (183    | ) |
| Depreciation and amortization expense                                                                    |   |        | 5,974   |   |        |    | 4,590   |   |
| Loss from sale of fixed assets                                                                           |   |        | 21      |   |        |    | 2       |   |
| Non cash stock based compensation                                                                        |   |        | 131     |   |        |    | 222     |   |
| Translation loss                                                                                         |   |        | 3,894   |   |        |    | 3,415   |   |
| Increase in other assets                                                                                 |   |        | (7,307  | )      |        |    | (3,996  | ) |
| Decrease (increase)  in inventories                                                            |   |        | (4,854  | )      |        |    | 2,339   |   |
| Increase in accounts receivable                                                                          |   |        | (1,461  | )      |        |    | (11,327 | ) |
| Increase  (decrease) in accounts payable, accrued expenses and other                           |   |        | (3,493  | )      |        |    | 6,260   |   |
| Investments made in trading securities                                                                   |   |        | --      |   |        |    | 2       |   |
|                                                                                                     |   |        |    |   |        |    |    |   |
| Net cash used in operating activities                                                                    |   |        | (26,312 | )      |        |    | (9,514  | ) |
|                                                                                                     |   |        |    |   |        |    |    |   |
| Cash flows from investing activities:                                                                    |   |        |    |   |        |    |    |   |
| Deposits, notes and loans receivable collected                                                           |   |        | 11,075  |   |        |    | 5,356   |   |
| Deposits, notes and loans receivable granted                                                             |   |        | --      |   |        |    | (5,408  | ) |
| Purchase and improvements of fixed assets                                                                |   |        | (2,324  | )      |        |    | (1,443  | ) |
| Investments made in affiliates and others                                                                |   |        | --      |   |        |    | (1,029  | ) |
| Investments made in available-for-sale shares                                                            |   |        | --      |   |        |    | (1,764  | ) |
| Proceeds from sale of available-for-sale shares                                                          |   |        | --      |   |        |    | 13,758  |   |
| Proceeds from sale of fixed assets                                                                       |   |        | 243     |   |        |    | 223     |   |
|                                                                                                     |   |        |    |   |        |    |    |   |
| Net cash provided from investing activities                                                              |   |        | 8,994   |   |        |    | 9,693   |   |

----

|                                                                                                     |   |        |    |   |        |    |
|----------------------------------------------------------------------------------------------------------|--------|-------------|---------|--------|-------------|---------|
| THREE MONTHS ENDED MARCH 31,                                                                             |   | 2011        |    |   |        | 2010(*) |   |
| (U.S. Dollars in thousands)                                                                              |   | (Unaudited) |    |   | (Unaudited) |    |
|                                                                                                     |   |        |    |   |        |    |   |
| Cash flows from financing activities:                                                                    |   |        |    |   |        |    |   |
| Proceeds from notes issued and loans received                                                            |   | $           | 5,293   |   |        | $       | 59,565 |   |
| Notes and loans payable repaid                                                                           |   |        | (64,407 | )      |        |    | (3,581 | ) |
| Net cash provided by (used in) financing activities                                                      |   |        | (59,114 | )      |        |    | 55,984 |   |
|                                                                                                     |   |        |    |   |        |    |   |   |
| Effect of exchange rate changes on cash and cash equivalents                                             |   |        | 2,766   |   |        |    | 431 |   |
|                                                                                                     |   |        |    |   |        |    |   |   |
| Cash flows from discontinued operations:                                                                 |   |        |    |   |        |    |   |   |
| Cash provided by operating activities of discontinued operations                                         |   |        | (18,124 | )      |        |    | 12,668 |   |
| Cash provided by (used in) investing activities of discontinued operations                               |   |        | 174,085 |   |        |    | (323,757 | ) |
| Cash provided by (used in) financing activities of discontinued operations                               |   |        | (3,973  | )      |        |    | 211,654 |   |
| Effect of exchange rate changes on cash and cash equivalents of discontinued operations                  |   |        | (901    | )      |        |    | 201 |   |
| Net cash provided by (used in) discontinued operations                                                   |   |        | 151,087 |   |        |    | (99,234 | ) |
|                                                                                                     |   |        |    |   |        |    |   |   |
|                                                                                                     |   |        |    |   |        |    |   |   |
| Net increase (decrease)  in cash and cash equivalents                                          |   |        | 77,421  |   |        |    | (42,640 | ) |
| Cash and cash equivalents at beginning of period (in 2011 including $8,851 from discontinued operations) |   |        | 42,192  |   |        |    | 71,484 |   |
|                                                                                                     |   |        |    |   |        |    |   |   |
| Cash and cash equivalents at end of period                                                               |   | $           | 119,613 |   |        | $       | 28,844 |   |
| Less cash and cash equivalents of discontinued operations at end of the period                           |   |        | --      |   |        |    | 5,428 |   |
| Cash and cash equivalents of continuing operations at end of the period                                  |   |        | 119,613 |   |        |    | 23,416 |   |

----

AMPAL

|                                                             |   | Equity attributable to Ampal-American Israel Corporation shareholders |   |   |   |   |   |                     |   |
|------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|--------|--------|--------|--------|--------------------------|--------|
|                                                             |   | Class A Stock                                                         |   |   |   |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   | Numberof shares*                                                      |   |   | Amount |   |   | Additionalpaid-incapital |   |   | Retainedearnings |   |   | Accumulatedothercomprehensiveincome (loss) |   |   | Treasurystock |   |   | Non-controllinginterests |   |   | Totalequity |   |
|                                                             |   |                                                                  |   |   |   |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE AT JANUARY 1, 2011                                       |   |                                                                  | 63,277 |   |   |   | 63,277 |                     |   |   | 182,924 |   |   |   | (32,316 | ) |   |   | 103 |   |   |   | (28,763 | ) |   |   | (6,677 | ) |   |   | 178,548 |   |
| CHANGES DURING  THE THREE MONTHS ENDED MARCH 31, 2011: |   |                                                                  |   |   |   |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) for the period                                 |   |                                                                  |   |   |   |   |   |                     |   |   |   |   |   |   | 17,246 |   |   |   |   |   |   |   |   |   |   |   | (2,203 | ) |   |   | 15,043 |   |
| Foreign currency translation adjustments                         |   |                                                                  |   |   |   |   |   |                     |   |   |   |   |   |   |   |   |   |   | (1,361 | ) |   |   |   |   |   |   | 16 |   |   |   | (1,345 | ) |
| Total comprehensive income (loss)                                |   |                                                                  |   |   |   |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 13,698 |   |
| Share based compensation expense                                 |   |                                                                  |   |   |   |   |   |                     |   |   | 131 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 131 |   |
| BALANCE AT MARCH 31, 2011                                        |   |                                                                  | 63,277 |   |   |   | 63,277 |                     |   |   | 183,055 |   |   |   | (15,070 | ) |   |   | (1,258 | ) |   |   | (28,763 | ) |   |   | (8,864 | ) |   |   | 192,377 |   |

----

|                                                             |   | Equity attributable to Ampal-American Israel Corporation shareholders |   |   |   |   |   |                          |   |
|------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|--------|--------|--------|--------|-------------------------------|--------|
|                                                             |   | Class A Stock                                                         |   |   |   |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   | Numberof shares*                                                      |   |   | Amount |   |   | Additionalpaid-incapital (**) |   |   | Retainedearnings (**) |   |   | Accumulatedothercomprehensiveincome (loss) (**) |   |   | Treasurystock |   |   | Non-controllingInterests (**) |   |   | Totalequity |   |
|                                                             |   |                                                                  |   |   |   |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE AT JANUARY 1, 2010                                       |   |                                                                  | 63,277 |   |   |   | 63,277 |                          |   |   | 184,287 |   |   |   | 12,426 |   |   |   | (14,598 | ) |   |   | (28,763 | ) |   |   | (75 | ) |   |   | 216,554 |   |
| CHANGES DURING  THE THREE MONTHS ENDED MARCH 31, 2010: |   |                                                                  |   |   |   |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss for the period                                          |   |                                                                  |   |   |   |   |   |                          |   |   |   |   |   |   | (7,130 | ) |   |   |   |   |   |   |   |   |   |   | (1,531 | ) |   |   | (8,661 | ) |
| Unrealized loss from marketable securities                       |   |                                                                  |   |   |   |   |   |                          |   |   |   |   |   |   |   |   |   |   | 54 |   |   |   |   |   |   |   |   |   |   |   | 54 |   |
| Foreign currency translation adjustments                         |   |                                                                  |   |   |   |   |   |                          |   |   |   |   |   |   |   |   |   |   | 1,287 |   |   |   |   |   |   |   | (47 | ) |   |   | 1,240 |   |
| Total comprehensive loss                                         |   |                                                                  |   |   |   |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (7,367 | ) |
| Dividends paid                                                   |   |                                                                  |   |   |   |   |   |                          |   |   | (115 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (115 | ) |
| Share based compensation expense                                 |   |                                                                  |   |   |   |   |   |                          |   |   | 222 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 222 |   |
| BALANCE AT MARCH 31, 2010                                        |   |                                                                  | 63,277 |   |   |   | 63,277 |                          |   |   | 184,394 |   |   |   | 5,296 |   |   |   | (13,257 | ) |   |   | (28,763 | ) |   |   | (1,653 | ) |   |   | 209,294 |   |

----

AMPAL

| 1. | As used in these financial statements, the term the “Company” refers to Ampal-American Israel Corporation (“Ampal”) and its consolidated subsidiaries. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the interim period are not necessarily indicative of the results that may be expected for the full year. You should read these interim condensed consolidated financial statements in conjunction with the audited consolidated financial statements in the Annual Report on Form 10-K for the year ended December 31, 2010, filed with the Securities and Exchange Commission. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3. | Recently Adopted and Recently Issued Accounting Pronouncements |
|----|----------------------------------------------------------------|

| 4.  | Cash and cash equivalents |
|----------|---------------------------|

| 5. | Inventories – mainly chemicals and other materials intended for sale are valued at the lower of cost or market. Cost is determined based on the moving average basis. |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6. | East Mediterranean Gas Company |
|----|--------------------------------|

----

| 7. | Gadot Chemical Tankers and Terminals Ltd. (“Gadot”) |
|----|-----------------------------------------------------------------|

|   | · | Importing, marketing and sale of chemicals and other raw materials in Israel and Europe; |
|--------|--------|------------------------------------------------------------------------------------------|

|   | · | Shipping, primarily between the European ports of the Atlantic Ocean and the Mediterranean sea port and Agency Services for Shipping Companies and Docked Ships; and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Logistical services in Israel and Europe. |
|--------|--------|-------------------------------------------|

----

| 8. | Discontinued operations |
|----|-------------------------|

| 9. | Acquisition of Merhav Agro Ltd. |
|----|---------------------------------|

|   | On July 1, 2010, Gadot, through its subsidiary, completed the acquisition of all of the issued share capital of Merhav Agro Ltd. (“Agro”). Agro is one of the leading suppliers of plant protection products, plant growth regulators and seeds in Israel. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Upon closing, Gadot paid, as consideration, NIS 108 million (approximately $27.8 million). To fund the purchase price, Gadot obtained a long-term credit facility in the aggregate principal amount of NIS 108 million (approximately $27.8 million) from Israel Discount Bank Ltd. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The acquisition of Agro was accounted for as a combination of entities under common control, which is similar to the pooling of interests method of accounting for business combinations. Accordingly, the consolidated financial statements give retrospective effect to this transaction. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | FASB ASC 805, Business Combinations, excludes transfers of net assets or exchanges of equity interests between entities under common control. ASC 805 also states that transfers of net assets or exchanges of equity interests between entities under common control should be accounted for similar to the pooling-of-interests method (as-if pooling-of-interests) in that the entity that receives the net assets or the equity interests initially recognizes the assets and liabilities transferred at their carrying amounts in the accounts of the transferring entity at the date of transfer. Because Gadot and Agro were under common control at the time of the acquisition, the transfer of assets and liabilities of Agro was accounted for at historical cost in a manner similar to a pooling-of-interests. For financial accounting purposes, the acquisition was viewed as a change in reporting entity and, as a result, required reclassification of the Company's financial statements for all periods subsequent to October 18, 2008, the date on which Agro was acquired. Accordingly, the Company's consolidated balance sheet as of December 31, 2010, the consolidated statements of operations for the three months ended March 31, 2010 and the statements of changes in equity and consolidated statements of cash flows for the three months ended March 31, 2010 were reclassified to include Agro. Agro's financial data has been included in the Chemicals segment. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10. | Sugarcane Ethanol Production Project |
|-----|--------------------------------------|

|   | On December 31, 2009, Ampal signed an option exercise agreement (the “Exercise Agreement”) with Merhav pursuant to which it exercised, subject to certain conditions, its option (the “Option”) to convert Ampal’s existing loan to Merhav (consisting of $20 million of principal plus accrued interest) (the “Loan”) into a 25% equity interest in the sugarcane ethanol production project in Colombia (the “Project”) being developed by Merhav. The Loan is evidenced by an Amended and Restated Promissory Note, dated December 25, 2008 (the “Note”), issued by Merhav in favor of Ampal, and is secured by Merhav’s pledge of its shares of Class A Stock of Ampal, pursuant to that certain Pledge Agreement, dated December 24, 2007, between Merhav and Ampal (the “Pledge Agreement”). Merhav’s obligations under the Note are guaranteed by Mr. Yosef A. Maiman pursuant to a personal guaranty, dated as of December 25, 2008 (the “Guaranty”). The Option is evidenced by an Option Agreement, dated December 25, 2007, between Merhav and Ampal, as amended on December 25, 2008 (the “Option Agreement”). The Loan, Option and related transactions are summarized in the Company's previously filed annual and periodic reports. On December 31, 2010 all the rights and obligations of Ampal in the Project were assigned to MAG. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Pursuant to the Exercise Agreement, the Note was amended to extend its maturity date to the earlier of the Qualified Financing Date or December 31, 2011. Additionally, Merhav and Ampal have agreed that, under certain circumstances, each will arrange for loans to Merhav Energies from time to time through third parties, directly or indirectly, for up to $15 million. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | As stated above, as a condition to closing MAG’s purchase of a 25% equity stake in Merhav Energies, Merhav, MAG and Merhav Energies will enter into a Shareholders’ Agreement (the “Shareholders’ Agreement”), to provide for, among other things, (i) restrictions on the transfer of shares of Merhav Energies, (ii) a right of first refusal on transfers of shares of Merhav Energies, (iii) tag-along and drag-along rights on the transfer of shares of Merhav Energies, (iv) preemptive rights on the issuance of new shares of capital stock (or other equity interest) by Merhav Energies, subject to the anti-dilution rights of MAG, and (v) the right of MAGto designate 25% of the directors of Merhav Energies. In addition to preemptive rights under the Shareholders’ Agreement, MAG has been granted anti-dilution protection, which may result in the issuance of additional shares of Merhav Energies to MAG, in the event that, prior to end of the 180 day period following the commencement of the Project’s operations, Merhav sells, or Merhav Energies issues, shares of Merhav Energies at a per share price that is less than the per share price paid by MAG under the Exercise Agreement. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11.  | Services and Management Agreements |
|-----------|------------------------------------|

----

| 12.  | Derivatives and Other Financial Instruments |
|-----------|---------------------------------------------|

|                  |   |         |   | (U.S. Dollars in thousands) |   |
|-----------------------|--------|--------------|--------|-----------------------------|--------|
| Derivative Instrument |   | Location     |   | March 31, 2011              |   |   | December 31, 2010 |   |   | March31, 2010 |   |
| SWAP contracts        |   | Other assets |   |                        | 5,542  |   |   |   | 5,552 |   |   |   | 2,677 |   |

|                                |   |                                          |   | (U.S. Dollars in thousands) |   |
|-------------------------------------|--------|-----------------------------------------------|--------|-----------------------------|--------|
| Derivative Instrument               |   | Location                                      |   | March 31, 2011              |   |   | December 31, 2010 |   |   | March31, 2010 |   |
| SWAP contracts                      |   | Accounts payable, accrued expenses and others |   |                        | 82     |   |   |   | - |   |   |   | - |   |
| Foreign currency exchange contracts |   | Accounts payable, accrued expenses and others |   |                        | 48     |   |   |   | - |   |   |   | 214 |   |

|                                |   |                    |   | (U.S. Dollars in thousands)  |   |
|-------------------------------------|--------|-------------------------|--------|------------------------------|--------|
|                                |   |                    |   | Three months ended March 31, |   |
| Derivative Instrument               |   | Location                |   | 2011                         |   |   | 2010 |   |
| SWAP contract                       |   | Translation (loss) gain |   |                         | (130   | ) |   |   | 82 |   |
| Interest rate SWAP contract         |   | Interest gain           |   |                         | 38     |   |   |   | 446 |   |
| Foreign currency exchange contracts |   | Translation (loss) gain |   |                         | (142   | ) |   |   | (135 | ) |

----

| 13.  | Fair Value Measurements |
|-----------|-------------------------|

|   | Fair value is defined as the price that would be received to sell an asset or paid to transfer the liability (an exit price) in an orderly transaction between market participants and also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value hierarchy used by the Company within ASC 820 distinguishes between three levels of inputs that may be utilized when measuring fair values including Level 1 inputs (using quoted prices in active markets for identical assets or liabilities), Level 2 inputs (using inputs other than Level 1 prices such as quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability) and Level 3 inputs (unobservable inputs supported by little or no market activity based on the Company's own assumptions used to measure assets and liabilities). A financial asset's or liability’s classification within the above hierarchy is determined based on the lowest level input that is significant to the fair value measurement. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The following section describes the valuation methodologies used by the Company to measure derivative contracts at fair value, including an indication of the level in the fair value hierarchy at which each instrument is generally classified. Where appropriate, the description includes details of the valuation models, the key inputs to those models, and any significant assumptions. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Derivative contracts are valued using quoted market prices and significant other observable and unobservable inputs. Such financial instruments consist of aluminum, energy, interest rate, and foreign exchange contracts. The fair values for the majority of these derivative contracts are based upon current quoted market prices. These financial instruments are typically exchange-traded and are generally classified within Level 1 or Level 2 of the fair value hierarchy depending on whether the exchange is deemed to be an active market or not. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Fair Value Measurements as of : |   |          |   |   |              |   |
|---------------------------------|--------|---------------|--------|--------|-------------------|--------|
|                            |   |          |   |   |              |   |
|                            |   | March31, 2011 |   |   | December 31, 2010 |   |
|                            |   | Level 1       |   |   | Level 2           |   |   | Total |   |   | Level 1 |   |   | Level 2 |   |   | Total |   |
| Trading securities *            |   | $             | 388    |   |              | $      | - |   |   | $ | 388 |   |   | $ | 381 |   |   | $ | - |   |   | $ | 381 |   |
| Available for sale securities * |   |          | 532    |   |              |   | - |   |   |   | 532 |   |   |   | 509 |   |   |   | - |   |   |   | 509 |   |
| Derivative assets **            |   |          | -      |   |              |   | 5,542 |   |   |   | 5,542 |   |   |   | - |   |   |   | 5,552 |   |   |   | 5,552 |   |
| Derivative liabilities **       |   |          | -      |   |              |   | (130 | ) |   |   | (130 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| Total                           |   | $             | 920    |   |              | $      | 5,412 |   |   | $ | 6,332 |   |   | $ | 890 |   |   | $ | 5,552 |   |   | $ | 6,442 |   |

|   | Marketable securities that are classified in Level 1 consist of available-for-sale and trading securities for which market prices are readily available. The fair value of derivative assets is determined based on inputs that can be derived from information available in publicly quoted markets. Unrealized gains or losses from available-for-sale securities are recorded in accumulated other comprehensive (loss) income. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | * The trading securities and available-for-sale securities are mainly traded debentures. |
|--------|------------------------------------------------------------------------------------------|

| 14. | Segment information presented below, results primarily from operations in Israel. |
|-----|-----------------------------------------------------------------------------------|

----

|                             |   | THREE MONTHS ENDED MARCH 31, |    |
|----------------------------------|--------|-----------------------------------|---------|
|                             |   | 2011                              |    |   | 2010(*) |   |
|                             |   | (Dollars in thousands)            |    |
|                             |   |                              |    |   |   |   |   |
| Revenues:                        |   |                              |    |   |   |   |   |
| Chemicals                        |   | $                                 | 134,544 |   |   | $ | 118,206 |   |
| Finance                          |   |                              | 1,161   |   |   |   | 2,812 |   |
| Leisure-time                     |   |                              | 667     |   |   |   | 661 |   |
|                             |   |                              | 136,372 |   |   |   | 121,679 |   |
| Equity in earnings of affiliates |   |                              | 181     |   |   |   | 17 |   |
| Total consolidated revenues      |   | $                                 | 136,553 |   |   | $ | 121,696 |   |

| Pre-tax Operating Gain (loss):                       |   |   |    |   |   |   |
|------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Chemicals                                            |   | $      | (1,969  | )      |   | $      | (2,106 | ) |
| Finance                                              |   |   | (17,090 | )      |   |   | (8,962 | ) |
| Leisure-time                                         |   |   | (16     | )      |   |   | 87 |   |
|                                                 |   |   | (19,075 | )      |   |   | (10,981 | ) |
| Equity in  earnings (losses) of affiliates |   |   | 181     |   |   |   | 17 |   |
| Total consolidated pretax loss                       |   | $      | (18,894 | )      |   | $      | (10,964 | ) |

| TOTAL ASSETS AS OF MARCH 31, |   | 2011   |      |   | 2010(*) |   |
|------------------------------|--------|--------|-----------|--------|---------|--------|
| Total Assets:                |   |   |      |   |    |   |   |
| Chemicals                    |   | $      | 489,899   |   |    | $      | 521,545 |   |
| Finance                      |   |   | 591,557   |   |    |   | 569,150 |   |
| Energy                       |   |   | 361,323   |   |    |   | 361,323 |   |
| Leisure-Time                 |   |   | 3,748     |   |    |   | 3,686 |   |
| Inter-segments adjustments   |   |   | (364,658  | )      |    |   | (449,079 | ) |
| Discontinued operations      |   |   | --        |   |    |   | 391,050 |   |
| Total consolidated assets    |   | $      | 1,081,869 |   |    | $      | 1,397,675 |   |

| 15. | The following table summarizes securities that were not included in the calculations of diluted earnings per share of Class A Stock for the periods ended March 31, 2010 and 2010 because such shares are anti-dilutive. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (Shares in thousands)                    |   | Three Months endedMarch 31, |   |
|------------------------------------------|--------|----------------------------------|--------|
|                                     |   | 2011                             |   |   | 2010 |   |
|                                     |   |                             |   |   |   |   |
| Shares resulting from Options and Rights |   |                             | 3,942  |   |   |   | 3,783 |   |

| 16.  | LEGAL PROCEEDINGS: |
|-----------|--------------------|

----

| 17. | Subsequent Events |
|-----|-------------------|

----

ITEM 

|   | · | Revenues arising from the provision of marine transport services proportionally over the period of the marine transport services. As to voyages uncompleted in which a loss is expected, a full provision is made in the amount of the expected loss. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Revenues from chemical brokerage commissions are recognized when the right to receive them is created. |
|--------|--------|--------------------------------------------------------------------------------------------------------|

|   | · | Rental income is recorded over the rental period. Revenues from services provided to country club subscribers are recognized ratably over the contractual period. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Income from other services is recognized over the period during which those services are performed. |
|--------|--------|-----------------------------------------------------------------------------------------------------|

----

|                                              |   | 2011                       |   |   |   | 2010(*) |   |
|---------------------------------------------------|--------|----------------------------|--------|--------|--------|---------|--------|
|                                              |   | (U.S. dollars in millions) |   |
| Chemical income                                   |   | $                          | 134.5  |   |   | $       | 118.2  |   |
| Chemical expense                                  |   | $                          | 125.3  |   |   | $       | 108.7  |   |
| Marketing expense                                 |   | $                          | 2.6    |   |   | $       | 2.2    |   |
| Other expense (mainly general and administrative) |   | $                          | 7.2    |   |   | $       | 7.6    |   |
| Interest expense                                  |   | $                          | 1.2    |   |   | $       | 1.7    |   |
| Pre-tax operating loss                            |   | $                          | 2.0    |   |   | $       | 2.1    |   |

----

|                             |   | 2011                        |    |   |   | 2010(*) |    |
|----------------------------------|--------|-----------------------------|---------|--------|--------|---------|---------|
|                             |   | (U.S. Dollars in thousands) |    |
|                             |   |                        |    |   |   |    |    |
| Revenues:                        |   |                        |    |   |   |    |    |
|                             |   |                        |    |   |   |    |    |
| Chemicals                        |   | $                           | 134,544 |   |   | $       | 118,206 |   |
| Finance                          |   |                        | 1,161   |   |   |    | 2,812   |   |
| Leisure-time                     |   |                        | 667     |   |   |    | 661     |   |
|                             |   |                        | 136,372 |   |   |    | 121,679 |   |
| Equity in earnings of affiliates |   |                        | 181     |   |   |    | 17      |   |
| Total consolidated revenues      |   | $                           | 136,553 |   |   | $       | 121,696 |   |

|         |   |                        |    |   |   |    |
|--------------|--------|-----------------------------|---------|--------|--------|---------|
|         |   | 2011                        |    |   |   | 2010(*) |   |
|         |   | (U.S. Dollars in thousands) |    |
|         |   |                        |    |   |   |    |   |
| Expenses:    |   |                        |    |   |   |    |   |
|         |   |                        |    |   |   |    |   |
| Chemicals    |   | $                           | 136,513 |   |   | $       | 120,313 |   |
| Finance      |   |                        | 18,250  |   |   |    | 11,773 |   |
| Leisure-time |   |                        | 684     |   |   |    | 574 |   |
| Total        |   | $                           | 155,447 |   |   | $       | 132,660 |   |

----

| Client                  |   | Billion Cubic Meters (“BCM”) (annually) |   | Term                |
|-------------------------|--------|-----------------------------------------------------|--------|---------------------|
| Israel Electric Corp.   |   | 2.1                                                 |   | 15 years (+5 years) |
| Israel Corporation Ltd. |   | 1.4                                                 |   | 20 years            |
| Dorad Energy Ltd.       |   | 0.75                                                |   | 17 years (+5 years) |
| Other Contracts         |   | 0.55                                                |   |                |
| Total                   |   | 4.8                                                 |   |                |
| Signed Options          |   | 1.5                                                 |   |                |
| Total including Options |   | 6.3                                                 |   |                |

----

|                         | Series A Debentures           | Series B Debentures       | Series C Debentures           |
|------------------------------|-------------------------------|---------------------------|-------------------------------|
|                         | par value in NIS in thousands | U.S. Dollars in thousands | par value in NIS in thousands | U.S. Dollars in thousands | par value in NIS in thousands | U.S. Dollars in thousands |
| Date of issuance             | November 20, 2006             | April 29, 2008            | September 13, 2010            |
| Linkage                      | Israeli CPI                   | Israeli CPI               | Israeli CPI                   |
| Interest                     | 5.75%                         | 6.60%                     | 6.95%                         |
| Maturity date                | November 2015                 | January 2016              | September 2019                |
| Issuance                     | 250,000                       | 57,978                    | 577,823                       | 166,856 | 170,000 | 45,093 |
| Purchased                    | 20,113                        | 5,198                     | 76,653                        | 20,939 |   |   |
| Balance as of March 31, 2011 | 229,887                       | 75,846                    | 501,170                       | 160,223 | 170,000 | 49,804 |
| Deposits held by trusties    |                          | --                        |                          | 11,006 |   | 11,907 |

----

| Contractual Obligations               |   | Total  |    |   | Less than1 year |   |    | 1 – 3 years |   |   | 3-5 years |   |   | More than5 years |    |
|---------------------------------------|--------|--------|---------|--------|-----------------|--------|---------|-------------------|--------|--------|-----------|--------|--------|------------------|---------|
| Short-Term Debt:                      |   |   |    |   |            |   |    |              |   |   |      |   |   |             |    |
| Gadot - working capital               |   | $      | 109,162 |   |            | $      | 109,162 |              |   |   |      |   |   |             |    |   |   |
| Gadot - current maturities            |   | $      | 5,684   |   |            | $      | 5,684   |              |   |   |      |   |   |             |    |   |   |
| Ampal - revolving credit line         |   | $      | 4,050   |   |            | $      | 4,050   |              |   |   |      |   |   |             |    |   |   |
| Ampal  - current maturities |   | $      | 8,607   |   |            | $      | 8,607   |              |   |   |      |   |   |             |    |   |   |
| Debentures – current maturities |   | $      | 47,214  |   |            | $      | 47,214  |              |   |   |      |   |   |             |    |   |   |
| Long-Term Debt:                       |   |   |    |   |            |   |    |              |   |   |      |   |   |             |    |   |   |
| Ampal                                 |   | $      | 188,350 |   |            |   |    |              |   | $      | 11,285    |   |   | $                | 7,952   |   |   | $ | 169,113 |   |
| Gadot:                                |   |   |    |   |            |   |    |              |   |   |      |   |   |             |    |   |   |   |   |   |
| Vessels                               |   | $      | 65,113  |   |            |   |    |              |   | $      | 13,831    |   |   | $                | 5,818   |   |   | $ | 45,464 |   |
| Other                                 |   | $      | 84,446  |   |            |   |    |              |   | $      | 20,439    |   |   | $                | 20,026  |   |   | $ | 43,981 |   |
| Debentures                            |   | $      | 241,116 |   |            |   |    |              |   | $      | 96,883    |   |   | $                | 111,029 |   |   | $ | 33,204 |   |
| Total Debt                            |   | $      | 753,742 |   |            | $      | 174,717 |              |   | $      | 142,438   |   |   | $                | 144,825 |   |   | $ | 291,762 |   |

| 1. | A $9.3 million guarantee on indebtedness incurred by Bay Heart in connection with the development of property. There can be no guarantee that Bay Heart will generate sufficient cash to repay its outstanding indebtedness without relying on the Company’s guarantee. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | A $32.7 million guarantee of outstanding indebtedness of Gadot. |
|----|-----------------------------------------------------------------|

----

----

ITEM 

----

Part 

| Item 1. | Legal Proceedings: |
|---------|--------------------|

| Item 1A. | RISK FACTORS |
|----------|--------------|

----

| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
|---------|--------------------------------------------------------------|

| Item 3. | Defaults upon Senior Securities |
|---------|---------------------------------|

| Item 4. | [Removed and Reserved] |
|---------|------------------------|

| Item 5. | Other Information. |
|---------|--------------------|

| Item 6. | Exhibits. |
|---------|-----------|

|   | (a) | Exhibits: |
|--------|-----|-----------|

| 11.1 | Schedule Setting Forth Computation of Earnings Per Share of Class A Stock. |
|------|----------------------------------------------------------------------------|

| 31.1 | Certification of Yosef A. Maiman pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|------|---------------------------------------------------------------------------------------------|

| 31.2 | Certification of Irit Eluz pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|------|---------------------------------------------------------------------------------------|

| 32.1 | Certification of Yosef A. Maiman and Irit Eluz pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|               | AMPAL-AMERICAN ISRAEL CORPORATION       |
|--------------------|-----------------------------------------|
|               |                                    |
|               | By: /s/ Yosef A. Maiman                 |   |
|               | Yosef A. Maiman                         |
|               | Chairman of the Board                   |
|               | President & Chief Executive Officer |
|               | (Principal Executive Officer)           |
|               |                                    |
|               | By: /s/ Irit Eluz                       |   |
|               | Irit Eluz                               |
|               | CFO and Senior Vice President,          |
|               | Finance and Treasurer                   |
|               | (Principal Financial Officer)           |
|               |                                    |
|               | By: /s/ Zahi Ben-Atav                   |   |
|               | Zahi Ben-Atav                           |
|               | VP Accounting and Controller            |
|               | (Principal Accounting Officer)          |
|               |                                    |
| Date: May 16, 2011 |                                    |

----

| Exhibit No. | Description |
|------------------|-------------|

| 11.1 | Schedule Setting Forth Computation of Earnings Per Share of Class A Stock. |
|------|----------------------------------------------------------------------------|

| 31.1 | Certification of Yosef A. Maiman pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|------|---------------------------------------------------------------------------------------------|

| 31.2 | Certification of Irit Eluz pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|------|---------------------------------------------------------------------------------------|

| 32.1 | Certification of Yosef A. Maiman and Irit Eluz pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----