SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
[ ] For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number 0-28340
AMERICAN TAX-EXEMPT BOND TRUST
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-7033312
- - ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
625 Madison Avenue, New York, New York 10022
- - ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212)421-5333
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
<PAGE>
AMERICAN TAX-EXEMPT BOND TRUST
Balance Sheets
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Investment in First Mortgage
Bonds - at fair value (Note 2) $ 26,844,814 $ 24,674,787
Cash and cash equivalents 568,819 1,081,939
Marketable securities 400,000 200,000
Organization costs (net of
accumulated amortization of
$35,000 and $27,500, respectively) 15,000 22,500
Accrued interest receivable 177,807 181,696
------------ ------------
Total assets $ 28,006,440 $ 26,160,922
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Due to affiliates $ 606,531 $ 436,197
Accounts payable 23,250 33,150
------------ ------------
Total liabilities 629,781 469,347
------------ ------------
Shareholders' equity:
Beneficial owner's equity-manager (18,615) (14,098)
Beneficial owners' equity-
shareholders (1,485,587
and 1,476,222 shares
issued and outstanding,
respectively) 25,461,941 25,731,175
Treasury shares of beneficial
interest (22,066 and 8,485 shares,
respectively) (419,246) (161,207)
Accumulated other comprehensive
income:
Net unrealized gain on First
Mortgage Bonds 2,352,579 135,705
------------ ------------
Total shareholders' equity 27,376,659 25,691,575
------------ ------------
Total liabilities and shareholders'
equity $ 28,006,440 $ 26,160,922
============ ============
</TABLE>
See Accompanying Notes to Financial Statements.
2
<PAGE>
AMERICAN TAX-EXEMPT BOND TRUST
Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------- --------------------------
September 30, September 30,
1998 1997 1998 1997
-------- -------- ---------- -----------
<S> <C> <C> <C> <C>
Revenues
Interest income:
First Mortgage
Bonds (Note 2) $531,489 $471,881 $1,552,043 $1,216,062
Tax-Exempt
Securities 0 0 0 3,277
Marketable
Securities 7,064 30,530 24,781 162,244
-------- -------- ---------- ----------
Total revenues 538,553 502,411 1,576,824 1,381,583
-------- -------- ---------- ----------
Expenses:
General and
administrative 25,192 26,638 47,842 63,779
General and
administrative-
related parties
(Note 3) 32,349 8,207 65,165 75,015
Loan servicing
fees 14,982 13,556 44,456 34,773
Amortization of
organization
costs 2,500 2,500 7,500 7,500
-------- -------- ---------- ----------
Total expenses 75,023 50,901 164,963 181,067
-------- -------- ---------- ----------
Net income $463,530 $451,510 $1,411,861 $1,200,516
======== ======== ========== ==========
Allocation of net
income
Shareholders 429,474 421,595 1,309,478 1,123,944
Manager 4,338 4,259 13,227 11,353
Special distributions
to Manager
(Note 3) 29,718 25,656 89,156 65,219
-------- -------- ---------- ----------
Net income $463,530 $451,510 $1,411,861 $1,200,516
======== ======== ========== ==========
Basic income per
weighted average
-shareholders $ .29 $ .29 $ .89 $ .77
======== ======== ========== ==========
</TABLE>
See Accompanying Notes to Financial Statements.
3
<PAGE>
AMERICAN TAX-EXEMPT BOND TRUST
Statement of Changes in Shareholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Net
Unrealized
Beneficial Beneficial Treasury Gain on
Owners' Owner's Shares of First
Equity- Equity- Beneficial Mortgage
Total Shareholders Manager Interest Bonds
------------ ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1998 $ 25,691,575 $ 25,731,175 $ (14,098) $(161,207) $ 135,705
Issuance of shares of beneficial interest 177,939 177,939 0 0 0
Net income 1,411,861 1,309,478 102,383* 0 0
Distributions (1,863,551) (1,756,651) (106,900) 0 0
Net unrealized gain on First Mortgage Bonds 2,216,874 0 0 0 2,216,874
Purchase of treasury shares of beneficial interest (258,039) 0 0 (258,039) 0
------------ ------------ --------- --------- ----------
Balance at September 30, 1998 $ 27,376,659 $ 25,461,941 $ (18,615) $(419,246) $2,352,579
============ ============ ========= ========= ==========
</TABLE>
*Includes special distributions of $89,156 to the Manager.
See Accompanying Notes to Financial Statements.
4
<PAGE>
AMERICAN TAX-EXEMPT BOND TRUST
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-----------------------------
1998 1997
----------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,411,861 $ 1,200,516
----------- -----------
Adjustments to reconcile net
income to net cash
provided by operating activities
Amortization expense-
organization costs 7,500 7,500
Amortization expense-loan
origination costs 73,461 48,054
Amortization of REMIC premium 0 476
Changes in operating assets and liabilities:
Decrease (increase) in accrued
interest receivable 3,889 (46,318)
Increase in due to affiliates 170,334 119,238
(Decrease) increase in accounts
payable (9,900) 4,087
----------- -----------
Total adjustments 245,284 133,037
----------- -----------
Net cash provided by operating
activities 1,657,145 1,333,553
----------- -----------
Cash flows from investing activities:
(Purchase) sale of marketable securities (200,000) 8,500,000
Maturity of Tax-Exempt Securities 0 1,900,000
Purchase of Tax-Exempt Securities 0 (1,900,476)
Purchase of First Mortgage Bond 0 (8,150,000)
Increase in deferred costs (26,614) (86,835)
----------- -----------
Net cash (used in) provided by
investing activities (226,614) 262,689
----------- -----------
</TABLE>
See Accompanying Notes to Financial Statements.
5
<PAGE>
AMERICAN TAX-EXEMPT BOND TRUST
Statements of Cash Flows
(continued)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------------------
1998 1997
---------- ------------
<S> <C> <C>
Cash flows from financing activities:
Proceeds from issuance of shares
of beneficial interest 177,939 181,498
Distributions to shareholders (1,863,551) (1,840,149)
Purchase of treasury shares of
beneficial interest (258,039) (127,957)
----------- -----------
Net cash used in
financing activities (1,943,651) (1,786,608)
----------- -----------
Net decrease in cash and
cash equivalents (513,120) (190,366)
Cash and cash equivalents at
beginning of period 1,081,939 836,779
----------- -----------
Cash and cash equivalents at
end of period $ 568,819 $ 646,413
=========== ===========
Supplemental schedule of noncash investing activities:
Decrease in deferred costs $ 0 $ 387,141
Increase in investment in
First Mortgage Bond 0 (387,141)
----------- -----------
$ 0 $ 0
=========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
6
<PAGE>
AMERICAN TAX-EXEMPT BOND TRUST
Notes to Financial Statements
September 30, 1998
(Unaudited)
Note 1 - General
American Tax-Exempt Bond Trust (the "Trust") was formed on December 23, 1993 as
a Delaware business trust for the primary purpose of investing in tax-exempt
first mortgage bonds ("First Mortgage Bonds") issued by various state or local
governments or their agencies or authorities and secured by first mortgage loans
on multifamily residential apartment and retirement community projects. Related
AMI Associates, Inc. is the Manager ("Manager") of the Trust.
Pursuant to the Redemption Plan which became effective October 15, 1996, the
Trust is required to redeem eligible shares presented for redemption for cash to
the extent it has sufficient net proceeds from the sale of shares under the
Reinvestment Plan. As of September 30, 1998, the backlog of shares to be
redeemed is 28,648.
The Trust has invested the Net Proceeds primarily in First Mortgage Bonds issued
by various state or local governments or their agencies or authorities which are
secured by first mortgages and related first mortgage loans financed by such
bonds (collectively, "Mortgage Loans") on multifamily residential apartment
projects owned or to be developed by third-party developers and, to a lesser
extent, by Affiliates of the Manager. The Trust also invested in Tax-Exempt
Securities.
The unaudited financial statements have been prepared on the same basis as the
audited financial statements included in the Trust's Form 10-K/A-1 for the year
ended December 31, 1997. In the opinion of the Manager, the accompanying
unaudited financial statements contain all adjustments (consisting only of
normal recurring adjustments) necessary to present fairly the financial position
of the Trust as of September 30, 1998, the results of operations for the three
and nine months ended September 30, 1998 and 1997 and its cash flows for the
nine months ended September 30, 1998 and 1997. However, the operating results
for the nine months ended September 30, 1998 may not be indicative of the
results for the year.
7
<PAGE>
AMERICAN TAX-EXEMPT BOND TRUST
Notes to Financial Statements
September 30, 1998
(Unaudited)
Certain information and note disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted. It is suggested that these financial statements be read in
conjunction with the financial statements and notes thereto included in the
Trust's Annual Report on Form 10-K/A-1 for the year ended December 31, 1997.
The Trust adopted SFAS No. 130, Reporting Comprehensive Income on January 1,
1998. SFAS No. 130 establishes standards for reporting and displaying
comprehensive income and its components in a financial statement that is
displayed with the same prominence as other financial statements.
Reclassification of financial statements for earlier periods, provided for
comparative purposes, is required. The statement also requires the accumulated
balance of other comprehensive income to be displayed separately from retained
earnings and additional paid-in capital in the equity section of the balance
sheet. Total comprehensive income for the three and nine months ended September
30, 1998 and 1997 was $2,598,030 and $451,510 and $3,628,735 and $1,200,516,
respectively.
The Trust adopted SFAS No. 131, Disclosures about Segments of an Enterprise and
Related Information. SFAS No. 131 establishes standards for reporting
information about operating segments in annual and interim financial statements.
Operating segments are defined as components of an enterprise about which
separate financial information is available that is evaluated regularly by the
chief operating decision maker in deciding how to allocate resources and in
assessing performance. Categories required to be reported as well as reconciled
to the financial statements are segment profit or loss, certain specific revenue
and expense items, and segment assets. The Trust operates in one segment,
Investment in First Mortgage Bonds.
Note 2 - Investment in First Mortgage Bonds
Highpointe Apartments
On September 2, 1997, the Trust purchased Redevelopment Authority of the County
of Dauphin, Multifamily Housing Revenue Bonds (Highpointe Club Apartments
Project) Series 1989 (as
8
<PAGE>
AMERICAN TAX-EXEMPT BOND TRUST
Notes to Financial Statements
September 30, 1998
(Unaudited)
hereinafter referred to as the "Highpointe Bonds") in an aggregate principal
amount of $3,250,000. The Highpointe Bonds are secured by a first Mortgage loan
on Highpointe Apartments (the "Project" or "Highpointe ") a development
consisting of 240 apartment units in Harrisburg, Pennsylvania, with first claim
of cash flow for payment of interest and a pari passu security interest with a
$750,000 priority payment of principal at sale, refinance or maturity with
$8,900,000 Redevelopment Authority of the County of Dauphin, Multifamily Housing
Revenue Bonds (Green Hill Project), Series 1986 (the "1986 Bonds"). The 1986
Bonds are owned by Charter Municipal Mortgage Acceptance Company ("Charter")
whose manager is an affiliate of the Manager. Highpointe is owned and operated
by RHA INV., Inc. (the "Borrower") an affiliate of the Manager. The 1986 Bonds
carry an 8.5% annual base interest rate, however payments are being accepted on
a cash flow basis at a 5.4% annual rate. The difference between the pay rate and
the base rate is accrued and is payable from first available cash flow or
sale/refinancing proceeds. While the Borrower is in technical default under the
terms of the loan agreement as the loan documents do not call for cash flow
mortgage payments on the 1986 Bonds, Charter has indicated it will not exercise
its rights and remedies as defined under the terms of the 1986 Bonds and
mortgage documents.
The Highpointe Bonds bear a fixed current interest of 9.0%, payable monthly in
arrears. As of the date hereof the Borrower is current with respect to all
payments of principal and interest on the Highpointe Bonds. The Highpointe Bonds
mature on June 1, 2006. Upon maturity, sale or refinancing of the Project, the
Highpointe Bonds will receive a $750,000 priority payment of principal prior to
any payment of principal on the 1986 Bonds. Remaining principal on the
Highpointe Bonds and the principal on the 1986 Bonds will be paid pari passu,
that is by a pro rata progression of payments after the payment of interest,
other than interest accrued and unpaid on the 1986 Bonds prior to June 6, 1989.
The cost basis of the First Mortgage Bonds was $24,492,235 and $24,539,082 at
September 30, 1998 and December 31, 1997. The net unrealized gain of $2,352,579
on First Mortgage Bonds consists of gross unrealized gains and losses of
$2,371,167 and $18,588, respectively, at September 30, 1998 and $478,634 and
$342,929, respectively, as of December 31, 1997.
9
<PAGE>
AMERICAN TAX-EXEMPT BOND TRUST
Notes to Financial Statements
September 30, 1998
(Unaudited)
Note 2 - Investment in First Mortgage Bonds
Information relating to investments in First Mortgage Bonds as of September 30,
1998 and December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Accumu-
Date of Outstand- lated
Invest- ing Loan Loan Amorti- Unrealized
ment/Final Balance at Origina- zation at Gain (Loss)
Descrip- Maturity September tion Sept. 30, at Sept. 30,
Property tion Date 30, 1998 Costs 1998 1998
-------- -------- --------- ----------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Reflections
Apartments 336
Casselbury, Apt. 12/95-
Florida (A) Units 12/25 $10,700,000 $293,914 $ (80,827) $ 1,769,950
Rolling Ridge
Apartments 110
Chino Hills, Apt. 8/96-
California(B) Units 8/26 4,925,000 241,725 (52,374) 392,049
Lexington Trails
Apartments 200
Houston, Apt. 5/97-
Texas (C) Units 5/22 4,900,000 123,886 (17,551) 209,168
Highpointe
Apartments
Harrisburg, 240
Pennsylvania Apt. 9/97-
(D) Units 6/06 3,250,000 237,918 (29,456) (18,588)
----------- -------- --------- -----------
$23,775,000 $897,443 $(180,208) $ 2,352,579
=========== ======== ========= ===========
<CAPTION>
Debt
Service
Received Net
Balance at Balance at by the Less 1998 Interest
September December Trust Amorti- Earned
Property 30, 1998 31, 1997 for 1998 zation for 1998
-------- ----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Reflections
Apartments
Casselbury,
Florida (A) $12,683,037 $11,400,660 $ 743,852 $(22,044) $ 721,808
Rolling Ridge
Apartments
Chino Hills,
California(B) 5,506,400 5,124,127 331,527 (21,671) 309,856
Lexington Trails
Apartments
Houston,
Texas (C) 5,215,503 4,900,000 330,750 (9,292) 321,458
Highpointe
Apartments
Harrisburg,
Pennsylvania
(D) 3,439,874 3,250,000 219,375 (20,454) 198,921
----------- ----------- ---------- -------- ----------
$26,844,814 $24,674,787 $1,625,504 $(73,461) $1,552,043
=========== =========== ========== ======== ==========
</TABLE>
(A) The interest rate for the Reflections is 9.00%. In addition to the interest
rate the Trust will be entitled to 25% of the cash flow, as defined.
(B) The interest rate for the Rolling Ridge is 9.00%. In addition to the
interest rate the Trust will be entitled to 30% of the cash flow, as defined.
(C) The interest rate for the Lexington Trails is 9.00%.
(D) The interest rate for the Highpointe is 9.00%.
10
<PAGE>
AMERICAN TAX-EXEMPT BOND TRUST
Notes to Financial Statements
September 30, 1998
(Unaudited)
Note 3 - Related Party Transactions
The costs incurred to related parties for the three and nine months ended
September 30, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
--------------------- ---------------------
<S> <C> <C> <C> <C>
Special distribu-
tions (i) $29,718 $ 25,656 $ 89,156 $ 65,219
Expense reimburse-
ments (iii) 32,349 8,207 65,165 75,015
------- -------- -------- --------
$62,067 $ 33,863 $154,321 $140,234
======= ======== ======== ========
</TABLE>
In accordance with the Trust Agreement, the Manager received or is entitled to
receive (i) special distributions calculated as a percentage of total assets
invested by the Trust; the total amount accrued and unpaid as of September 30,
1998 and December 31, 1997 amounted to $166,203 and $91,906, respectively; (ii)
a subordinated incentive fee based on the gain on the sale of the tax-exempt
First Mortgage Bonds; (iii) reimbursement of certain administrative costs
incurred by the Manager or an affiliate on behalf of the Trust; the total amount
accrued and unpaid as of September 30, 1998 and December 31, 1997 amounted to
$360,899 and $295,733, respectively.
Note 4 - Subsequent Event
In November 1998, it is anticipated that distributions of approximately $585,000
and $6,000 will be paid to the Shareholders and the Manager, respectively,
representing the 1998 third quarter distribution. The distribution will be
funded from cash collections of interest income through approximately the
distribution date, November 13, 1998.
11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Liquidity and Capital Resources
The Trust has invested the Net Proceeds primarily in First Mortgage Bonds issued
by various state or local governments or their agencies or authorities which are
secured by first mortgages and related first mortgage loans financed by such
bonds (collectively, "Mortgage Loans") on multifamily residential apartment
projects owned or to be developed by third-party developers and, to a lesser
extent, by Affiliates of the Manager. The First Mortgage Bonds have maturities
ranging from June 2006 to August 2026, although the Trust anticipates holding
the First Mortgage Bonds for approximately 10 to 12 years and has the right to
cause repayment of the bonds at that time. The Trust also invested in Tax-Exempt
Securities.
During the quarter ended September 30, 1998, the Trust recorded an unrealized
gain on First Mortgage Bonds of $2,134,500. The unrealized gain is a result of
declining mortgage interest rates and a related increase in the Trust's bond
values, due to their higher interest rates and prepayment locks. For a
description of the Trust's investments in First Mortgage Bonds see Note 2 of
Notes to the Financial Statements.
During the nine months ended September 30, 1998, cash and cash equivalents
decreased approximately $513,000 due to the purchase of marketable securities
(200,000), an increase in deferred costs ($27,000), distributions to
shareholders ($1,864,000) and the purchase of treasury shares of beneficial
interest in excess of proceeds from the issuance of shares of beneficial
interest ($80,000) which exceeded cash provided by operating activities
($1,657,000). Included in the adjustments to reconcile the net income to cash
provided by operating activities is amortization in the amount of approximately
$81,000.
Pursuant to the Redemption Plan which became effective October 15, 1996, the
Trust is required to redeem eligible shares presented for redemption for cash to
the extent it has sufficient net proceeds from the sale of shares under the
Reinvestment Plan. As of September 30, 1998, the backlog of shares to be
redeemed is 28,648.
The Trust expects that cash generated from its investments will be sufficient to
pay all of the Trust's expenses in the foreseeable future. However, certain
expense reimbursements totaling approximately $361,000 and $296,000 at September
30, 1998 and
12
<PAGE>
December 31, 1997, respectively, and the payment of a portion of the special
distribution totaling $166,000 and $92,000 at September 30, 1998 and December
31, 1997, respectively, to the Manager have been accrued and are unpaid. Without
the Manager's continued accrual without payment of the aforementioned expense
reimbursements and fees the Trust will not be in a position to meet its
obligations. The Manager has continued allowing the accrual without payment of
these amounts but is under no obligation to continue to do so.
The Trust anticipates that cash generated from the operations of the properties
underlying its investment in First Mortgage Bonds (taking into account its
preferred position relative to other creditors) will be sufficient to meet the
required debt service payments to the Trust with respect to the First Mortgage
Bonds for the foreseeable future.
Distribution Policy
The Trust has completed the offering and acquisition stage and therefore, the
Manager has reviewed and changed the distribution policy. The level of future
distributions will depend upon results of operations. Beginning in 1998 the
Trust's distribution policy calls for quarterly distributions which more closely
reflect collections. Notwithstanding the foregoing, the Trust may continue to
accrue expenses and fees paid to the Manager.
Of the total distributions of $1,863,551 and $1,840,149 made for the nine months
ended September 30, 1998 and 1997, $451,960 ($.30 per share or 24%) and $639,633
($.43 per share or 35%) represents a return of capital determined in accordance
with generally accepted accounting principles. As of September 30, 1998, the
aggregate amount of the distributions made since the commencement of the
Offering representing a return of capital, in accordance with generally accepted
accounting principles, totaled $1,961,684. The portion of the distributions
which constitute a return of capital was significant during the acquisition
stage in order to maintain level distributions to shareholders.
Management expects that cash flow from operations and continued deferral of
payment of the Manager's expense reimbursement, special distribution and loan
servicing fees, will be sufficient to fund distributions at the current level in
the near future.
13
<PAGE>
Results of Operations
The results of operations for the three and nine months ended September 30, 1998
and 1997 consisted primarily of interest income earned on First Mortgage Bonds
and marketable securities, net of general and administrative, general and
administrative-related parties and loan servicing fees.
Interest income from First Mortgage Bonds increased approximately $60,000 and
$336,000 for the three and nine months ended September 30, 1998 as compared to
the corresponding periods in 1997 primarily due to the investment in the
Lexington Trails First Mortgage Bond in May 1997 and the Highpointe First
Mortgage Bond in September 1997.
Interest income from marketable securities decreased approximately $23,000 and
$137,000 for the three and nine months ended September 30, 1998 as compared to
the corresponding periods in 1997 primarily due to the sale of such securities
to purchase the Lexington Trails First Mortgage Bond in May 1997 and the
Highpointe First Mortgage Bond in September 1997.
General and administrative expenses decreased approximately $16,000 for the nine
months ended September 30, 1998 as compared to the corresponding period in 1997
primarily due to a decrease in costs associated with SEC filings in 1998.
General and administrative-related parties increased and (decreased)
approximately $24,000 and ($10,000) for the three and nine months ended
September 30, 1998 as compared to the corresponding periods in 1997. The
increase for the three months is primarily due to higher expense reimbursements
to affiliates of the Manager . The decrease for the nine months is primarily due
to a decrease in such expense reimbursements in 1998.
Loan servicing fees increased approximately $1,000 and $10,000 for three and
nine months ended September 30, 1998 as compared to the corresponding periods in
1997 primarily due to the investment in the Lexington Trails First Mortgage Bond
in May 1997 and the Highpointe First Mortgage Bond in September 1997.
Accounting Standards Issued but not yet Adopted
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 ("SFAS 133") "Accounting for Derivative
Instruments and Hedging Activities".
14
<PAGE>
The Statement establishes accounting and reporting standards for derivative
instruments and hedging activities. This Statement is effective for all fiscal
quarters of fiscal years beginning after June 15, 1999. The adoption of SFAS 133
is not expected to have any impact on the financial position or results of
operations of the Trust.
Year 2000 Compliance
The Trust utilizes the computer services of an affiliate of the Manager. The
affiliate of the Manager is in the process of upgrading its computer information
systems to be year 2000 compliant and beyond. The Year 2000 compliance issue
concerns the inability of a computerized system to accurately record dates after
1999. The affiliate of the Manager recently underwent a conversion of its
financial systems applications and is in the process of upgrading and testing
the in house software and hardware inventory. The workstations that experienced
problems from this process were corrected with an upgrade patch. The affiliate
of the Manager has incurred costs of approximately $1,000,000 to date and
estimates the total costs to be approximately $2,000,000. These costs are not
being charged to the Trust. In regard to third parties, the Trust's Manager is
in the process of evaluating the potential adverse impact that could result from
the failure of material service providers to be year 2000 compliant. A detailed
survey and assessment of third party readiness will be sent to material third
parties in the fourth quarter of 1998. The results of the surveys will be
compiled in early 1999. No estimate can be made at this time as to the impact of
the readiness of such third parties. The Trust's Manager plans to have these
issues fully assessed by early 1999, at which time the risks will be addressed
and a contingency plan will be implemented if necessary.
Quantitative and Qualitative Disclosures about Market Risk
Not applicable for year ended December 31, 1998.
15
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) 3. Exhibits
3(a) Certificate of Trust and Certificate of Amendment of Certificate
of Trust (incorporated by reference to Exhibit 3(a) to the Registration
Statement on Form S-11, File No. 33-73688).
3(b),4 Second Amended and Restated Business Trust (incorporated by
reference to Exhibit 3(b), 4 to the Registration Statement on Form S-11, File
No. 33-73688)
10(a) Escrow Agreement (incorporated by reference to Exhibit 10(a) to
the Registration Statement on Form S-11, File No. 33-73688).
10(b) Fee Agreement (incorporated by reference to Exhibit 10 (b) to
the Registration Statement on Form S-11, File No. 33-73688).
27 Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter ended
September 30, 1998.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
AMERICAN TAX-EXEMPT BOND TRUST
(Registrant)
By: RELATED AMI ASSOCIATES, INC.,
as Manager
Date: November 13, 1998
By: /s/ Alan P. Hirmes
----------------------------------------
Alan P. Hirmes
Senior Vice President and
Principal Financial Officer
Date: November 13, 1998
By: /s/ Glenn F. Hopps
----------------------------------------
Glenn F. Hopps
Treasurer and
Principal Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial information extracted from the financial
statements for American Tax-Exempt Bond Trust and is qualified in its entirety
by reference to such financial statements
</LEGEND>
<CIK> 0000916824
<NAME> American Tax-Exempt Bond Trust
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 968,819
<SECURITIES> 26,844,814
<RECEIVABLES> 177,807
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 28,006,440
<CURRENT-LIABILITIES> 629,781
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 27,376,659
<TOTAL-LIABILITY-AND-EQUITY> 28,006,440
<SALES> 0
<TOTAL-REVENUES> 1,576,824
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 164,963
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,411,861
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,411,861
<EPS-PRIMARY> .89
<EPS-DILUTED> 0
</TABLE>
