SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- - ------- EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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>
June 30, December 31,
1998 1997
---- ----
(Unaudited)
<S> <C> <C>
ASSETS
Investment in First Mortgage
Bonds - at fair value (Note 2) $24,733,600 $24,674,787
Cash and cash equivalents 691,025 1,081,939
Marketable securities 325,000 200,000
Organization costs (net of
accumulated amortization of
$32,500 and $27,500, respectively) 17,500 22,500
Accrued interest receivable 178,643 181,696
----------- -----------
Total assets $25,945,768 $26,160,922
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Due to affiliates $ 528,960 $ 436,197
Accounts payable 17,500 33,150
----------- -----------
Total liabilities 546,460 469,347
----------- -----------
Shareholders' equity:
Beneficial owner's equity-manager (17,045) (14,098)
Beneficial owners' equity-
shareholders (1,482,539
and 1,476,222 shares
issued and outstanding,
respectively) 25,559,551 25,731,175
Treasury shares of beneficial
interest (19,015 and 8,485 shares,
respectively) (361,277) (161,207)
Accumulated other comprehensive
income:
Net unrealized gain on First
Mortgage Bonds 218,079 135,705
----------- -----------
Total shareholders' equity 25,399,308 25,691,575
----------- -----------
Total liabilities and shareholders'
equity $25,945,768 $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 Six Months Ended
June 30, June 30,
-------- --------
1998 1997 1998 1997
--------------------- -----------------------
<S> <C> <C> <C> <C>
Revenues
Interest income:
First Mortgage
Bonds (Note 2) $514,023 $406,179 $1,020,554 $744,181
Tax-Exempt
Securities 0 2,003 0 3,277
Marketable
Securities 8,430 58,972 17,717 131,714
-------- -------- ---------- --------
Total revenues 522,453 467,154 1,038,271 879,172
-------- -------- ---------- --------
Expenses:
General and
administrative 10,193 7,397 22,650 37,141
General and
administrative-
related parties
(Note 3) 19,000 42,748 32,816 66,808
Loan servicing
fees 14,818 11,585 29,474 21,217
Amortization of
organization
costs 2,500 2,500 5,000 5,000
-------- -------- ---------- --------
Total expenses 46,511 64,230 89,940 130,166
-------- -------- ---------- --------
Net income $475,942 $402,924 $ 948,331 $749,006
======== ======== ========== ========
Allocation of net
income
Shareholders 441,761 379,559 880,004 702,349
Manager 4,462 3,833 8,889 7,094
Special distributions
to Manager
(Note 3) 29,719 19,532 59,438 39,563
-------- -------- ---------- --------
Net income $475,942 $402,924 $ 948,331 $749,006
======== ======== ========== ========
Net income per
weighted average share-
shareholders $ .30 $ .26 $ .60 $ .48
======== ======== ========== ========
</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 120,030 120,030 0 0 0
Net income 948,331 880,004 68,327* 0 0
Distributions (1,242,932) (1,171,658) (71,274) 0 0
Net unrealized gain on First Mortgage Bonds 82,374 0 0 0 82,374
Purchase of treasury shares of beneficial interest (200,070) 0 0 (200,070) 0
------------ ------------ -------- --------- --------
Balance at June 30, 1998 $ 25,399,308 $ 25,559,551 $(17,045) $(361,277) $218,079
============ ============ ======== ========= ========
</TABLE>
*Includes special distributions of $59,438 to the Manager.
See Accompanying Notes to Financial Statements.
See Accompanying Notes to Financial Statements.
4
<PAGE>
AMERICAN TAX-EXEMPT BOND TRUST
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six months Ended
June 30,
----------------
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 948,331 $ 749,006
----------- -----------
Adjustments to reconcile net
income to net cash
provided by operating activities
Amortization expense-
organization costs 5,000 5,000
Amortization expense-loan
origination costs 50,175 25,947
Amortization of REMIC premium 0 476
Changes in operating assets and liabilities:
Decrease (increase) in accrued
interest receivable 3,053 (22,880)
Increase in due to affiliates 92,763 93,403
Decrease in accounts
payable (15,650) (12,755)
----------- -----------
Total adjustments 135,341 89,191
----------- -----------
Net cash provided by operating
activities 1,083,672 838,197
----------- -----------
Cash flows from investing activities:
(Purchase) sale of marketable
securities (125,000) 4,600,000
Maturity of Tax-Exempt Securities 0 1,900,000
Purchase of Tax-Exempt Securities 0 (1,900,476)
Purchase of First Mortgage Bond 0 (4,900,000)
Increase in deferred costs (26,614) (14,657)
----------- -----------
Net cash used in investing activities (151,614) (315,133)
----------- -----------
</TABLE>
See Accompanying Notes to Financial Statements.
5
<PAGE>
AMERICAN TAX-EXEMPT BOND TRUST
Statements of Cash Flows
(continued)
(Unaudited)
<TABLE>
<CAPTION>
Six months Ended
June 30,
----------------
1998 1997
---- ----
<S> <C> <C>
Cash flows from financing activities:
Proceeds from issuance of shares
of beneficial interest 120,030 122,287
Distributions to shareholders (1,242,932) (1,222,708)
Purchase of treasury shares of
beneficial interest (200,070) (80,457)
----------- -----------
Net cash used in
financing activities (1,322,972) (1,180,878)
----------- -----------
Net decrease in cash and
cash equivalents (390,914) (657,814)
Cash and cash equivalents at
beginning of period 1,081,939 836,779
----------- -----------
Cash and cash equivalents at
end of period $ 691,025 $ 178,965
=========== ===========
Supplemental schedule of noncash
investing activities:
Decrease in deferred costs $ 0 $ 111,759
Increase in investment in
First Mortgage Bond 0 (111,759)
----------- -----------
$ 0 $ 0
=========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
6
<PAGE>
AMERICAN TAX-EXEMPT BOND TRUST
Notes to Financial Statements
June 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.
As of June 30, 1998 and December 31, 1997, a total of 1,482,539 and 1,476,222
shares have been sold to the public through the Offering and the Trust's
dividend reinvestment plan (the "Reinvestment Plan"). 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.
After October 15, 1996, 21,559 shares were sold through the Reinvestment Plan.
Pursuant to the Redemption Plan as of June 30, 1998, 19,015 shares were redeemed
for an aggregate price of $361,277.
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 June 30, 1998, the results of operations for the three and
six months ended June 30, 1998 and 1997 and its
7
<PAGE>
AMERICAN TAX-EXEMPT BOND TRUST
Notes to Financial Statements
June 30, 1998
(Unaudited)
cash flows for the six months ended June 30, 1998 and 1997. However, the
operating results for the six months ended June 30, 1998 may not be indicative
of the results for the year.
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 six months ended June 30,
1998 and 1997 was $475,942 and $402,924 and $1,030,705 and $749,006,
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.
8
<PAGE>
AMERICAN TAX-EXEMPT BOND TRUST
Notes to Financial Statements
June 30, 1998
(Unaudited)
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 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 and 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 pari
passu after a $750,000 priority 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 and Related Capital Company.
The Borrower is in default under the terms of the $8,900,000 loan agreement due
to certain amounts of unpaid base interest as of June 30, 1998. However, Charter
has indicated it will not exercise its rights to call the mortgage note as
defined under the terms of the agreement.
The Highpointe Bonds bear a fixed current interest of 9.0%, payable monthly in
arrears. The Highpointe Bonds enjoy payment priority over the 1986 Bonds. The
Trust has been informed that, 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. The principal of the Highpointe
Bonds will be payable 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 principal and accrued interest on the 1986 Bonds will be
paid pari passu, that is by an equal progression of payments after the payment
of interest, other than interest accrued and unpaid on the 1986 Bonds on June 6,
1989, and the $750,000 priority amount.
9
<PAGE>
AMERICAN TAX-EXEMPT BOND TRUST
Notes to Financial Statements
June 30, 1998
(Unaudited)
The cost basis of the First Mortgage Bonds was $24,515,521 and $24,539,082 at
June 30, 1998 and December 31, 1997. The net unrealized gain of $218,079 on
First Mortgage Bonds consists of gross unrealized gains and losses of $567,831
and $349,752, respectively, at June 30, 1998 and $478,634 and $342,929,
respectively, as of December 31, 1997.
10
<PAGE>
AMERICAN TAX-EXEMPT BOND TRUST
Notes to Financial Statements
June 30, 1998
(Unaudited)
Note 2 - Investment in First Mortgage Bonds
Information relating to investments in First Mortgage Bonds as of June 30, 1998
and December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Date of Outstanding
Investment/ Loan Loan Accumulated Unrealized
Final Balance at Origina- Amortization Gain (Loss) Balance at
Descrip- Maturity June 30, tion at June 30, at June 30, June 31,
Property tion Date 1998 Costs 1998 1998 1998
-------- ---- --------- -------- -------- --------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Reflections
Apartments 336
Casselbury, Apt. 12/95-
Florida (A) Units 12/25 $10,700,000 $293,914 $ (73,479) $ 567,831 $11,488,266
Rolling Ridge
Apartments 110
Chino Hills, Apt. 8/96-
California(B) Units 8/26 4,925,000 241,725 (46,331) (15,165) 5,105,229
Lexington
Trails
Apartments 200
Houston, Apt. 5/97-
Texas (C) Units 5/22 4,900,000 123,886 (14,453) (112,530) 4,896,903
Highpointe
Apartments
Harrisburg, 240
Pennsylvania Apt. 9/97-
(D) Units 6/06 3,250,000 237,918 (22,659) (222,057) 3,243,202
----------- -------- --------- --------- -----------
$23,775,000 $897,443 $(156,922) $ 218,079 $24,733,600
=========== ======== ========= ========= ===========
<CAPTION>
Debt
Service
Received Net
Balance at by the Less 1998 Interest
December Trust Amorti- Earned
31, 1997 for 1998 zation for 1998
----------- ----------- ------ -------
<S> <C> <C> <C> <C>
Reflections
Apartments
Casselbury,
Florida (A) $11,400,660 $ 484,175 $(14,696) $ 469,479
Rolling Rid
Apartments
Chino Hills
California(B) 5,124,127 219,804 (15,628) 204,176
Lexington
Trails
Apartments
Houston,
Texas (C) 4,900,000 220,500 (6,194) 214,306
Highpointe
Apartments
Harrisburg,
Pennsylvania
(D) 3,250,000 146,250 (13,657) 132,593
----------- ---------- -------- ----------
$24,674,787 $1,070,729 $(50,175) $1,020,554
=========== ========== ======== ==========
</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%.
11
<PAGE>
AMERICAN TAX-EXEMPT BOND TRUST
Notes to Financial Statements
June 30, 1998
(Unaudited)
Note 3 - Related Party Transactions
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 which totaled $29,719 and $19,532 for the three months
ended June 30, 1998 and 1997 and $59,438 and $39,563 for the six months ended
June 30, 1998 and 1997, respectively; the total amount accrued and unpaid as of
June 30, 1998 and December 31, 1997 amounted to $136,485 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 which totaled $19,000 and $42,748 for the three months ended June 30, 1998
and 1997 and $32,816 and $66,808 for the six months ended June 30, 1998 and
1997, respectively; the total amount accrued and unpaid as of June 30, 1998 and
December 31, 1997 amounted to $328,549 and $295,733, respectively.
Note 4 - Subsequent Event
In August 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 second quarter distribution. The distribution will be
funded from cash collections of interest income through approximately the
distribution date, August 14, 1998.
12
<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 having the right
to cause repayment of the bonds at that time. The Trust also invested in
Tax-Exempt Securities.
For a description of the Trust's investments in First Mortgage Bonds see Note 2
of Notes to the Financial Statements.
During the six months ended June 30, 1998, cash and cash equivalents decreased
approximately $391,000 due to the purchase of marketable securities ($125,000),
an increase in deferred costs ($27,000), distributions to shareholders
($1,243,000) 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 ($1,084,000). Included in
the adjustments to reconcile the net income to cash provided by operating
activities is amortization in the amount of approximately $55,000.
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. After October 15, 1996, 21,559 shares were sold through the
Reinvestment Plan, the proceeds of which are restricted for use in connection
with the Redemption Plan and are not included in gross proceeds. Pursuant to the
Redemption Plan as of June 30, 1998, 19,015 shares have been redeemed since
inception of the Redemption Plan for an aggregate price of $361,277.
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
13
<PAGE>
approximately $329,000 and $296,000 at June 30, 1998 and December 31, 1997,
respectively, and the payment of a portion of the special distribution totaling
$136,000 and $92,000 at June 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 Trust 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 adopted a policy of attempting to maintain stable distributions during
the offering period and acquisition stage. In order to accomplish this result, a
portion of the Net Proceeds were invested in Tax-Exempt Securities which matured
during this period. A portion of the proceeds from such repayments were
distributed to the shareholders. The effect of this policy has been the
following: (a) a portion of the distributions have constituted a return of
capital; (b) earlier investors' returns from an investment in the Trust will be
greater than later investors' returns; and (c) there was a decrease in funds
available to be invested in Mortgage Investments.
Of the total distributions of $1,242,932 and $1,222,708 made for the six months
ended June 30, 1998 and 1997, $294,601 ($.20 per share or 24%) and $473,702
($.32 per share or 39%) represents a return of capital determined in accordance
with generally accepted accounting principles. As of June 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 $1,804,325. 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. 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. Withstanding the foregoing
14
<PAGE>
the Trust may continue to accrue expenses and fees paid to the Manager.
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.
Results of Operations
The results of operations for the three and six months ended June 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 $108,000 and
$276,000 for the three and six months ended June 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 $51,000 and
$114,000 for the three and six months ended June 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 $14,000 for the six
months ended June 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 decreased approximately $24,000 and
$34,000 for the three and six months ended June 30, 1998 as compared to the
corresponding periods in 1997 primarily due to a decrease in expense
reimbursements to affiliates of the Manager in 1998.
Loan servicing fees increased approximately $3,000 and $8,000 for three and six
months ended June 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.
15
<PAGE>
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". The Statement establishes accounting and
reporting standards for derivative instruments and hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. If certain conditions are met, a derivative may be specifically
designated as (a) a hedge of the exposure to changes in the fair value of a
recognized asset or liability or an unrecognized firm commitment, (b) a hedge of
the exposure to variable cash flows of a forecasted transaction, or (c) a hedge
of foreign currency exposure of a net investment in a foreign operation, an
unrecognized firm commitment, an available-for-sale security or a
foreign-currency-denominated forecasted transaction. 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
As the year 2000 approaches, an issue has emerged regarding how existing
application software programs and operating systems can accommodate this date
value. Failure to adequately address this issue could have potentially serious
repercussions. The Manager is in the process of working with the Trust's service
providers to prepare for the year 2000. Based on information currently
available, the Trust does not expect that it will incur significant operating
expenses or be required to incur material costs to be year 2000 compliant.
Quantitative and Qualitative Disclosures about Market Risk
Not applicable for year 1998.
16
<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 June
30, 1998.
17
<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: August 3, 1998
By: /s/ Alan P. Hirmes
---------------------------
Alan P. Hirmes
Senior Vice President and
Principal Financial Officer
Date: August 3, 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> 6-mos
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-01-1998
<PERIOD-END> Jun-30-1998
<CASH> 1,016,025
<SECURITIES> 24,733,600
<RECEIVABLES> 178,643
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 25,945,768
<CURRENT-LIABILITIES> 546,460
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 25,399,308
<TOTAL-LIABILITY-AND-EQUITY> 25,945,768
<SALES> 0
<TOTAL-REVENUES> 1,038,271
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 89,940
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 948,331
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 948,331
<EPS-PRIMARY> .60
<EPS-DILUTED> 0
</TABLE>
