ITEM 1. BUSINESS
Johnson Worldwide Associates, Inc. and its subsidiaries (the "Company") are engaged in the manufacture and marketing of recreational products. Until the third quarter of fiscal 1994, the Company also manufactured and marketed marking systems products. In July 1993, the Company announced its intention to sell its marking systems business and, in accordance with this decision, the marking systems business is presented as a discontinued operation in the Company's Consolidated Financial Statements. Additional information regarding the marking systems business is set forth at Note 3 to the Consolidated Financial Statements on page 22 in the Company's 1995 Annual Report, which is incorporated herein by reference. Financial information for the foreign and domestic operations of the Company's recreational business is set forth at Note 13 to the Consolidated Financial Statements on page 26 in the Company's 1995 Annual Report which is incorporated herein by reference.
The Company's primary focus is on marketing and product innovation and design to achieve strong brand names and consumer recognition. Research and development activities for each of the Company's principal businesses emphasize new products and innovations to differentiate the Company's products from those of its competitors.
The Company is controlled by Samuel C. Johnson, members of his family and related entities.
RECREATIONAL PRODUCTS
FISHING AND CAMPING PRODUCTS
The Company's fishing and camping products include MINN KOTA electric fishing motors and accessories, MITCHELL reels and rods, JOHNSON reels, BEETLE SPIN soft body lures, JOHNSON spoons, DECKHAND electric boat anchor systems, EUREKA! and CAMP TRAILS tents and backpacks, OLD TOWN canoes and kayaks, CARLISLE paddles, SILVA compasses, and JACK WOLFSKIN camping tents, backpacks and outdoor clothing. In 1995, the Company acquired the SPIDERWIRE product line, giving it an entry into the "superline" segment of the fishing line market. The Company also acquired the NEPTUNE TECHNOLOGIES product line of electric motors and power accessories, which expands its range of such products.
The overall fishing and camping markets in which the Company competes have grown modestly in recent years. The Company believes it has been able to maintain its share of most markets primarily as a result of the Company's emphasis on marketing and product innovation. Research and development emphasizes new products and innovations to provide demonstrable product differentiation and expanded product lines. Consumer advertising and promotion include advertising on regional television and in outdoor, general interest and sports magazines, in-store displays and sponsorship of fishing tournaments. Packaging and point-of-purchase materials are used to increase consumer appeal and sales.
ELECTRIC FISHING MOTORS. The Company manufactures, under its MINN KOTA and NEPTUNE names, battery powered motors used on fishing boats and other boats for quiet trolling power or primary propulsion. The Company's MINN KOTA and NEPTUNE motors and related accessories are sold primarily in the United States through large retail store chains such as K-Mart and Wal Mart, through catalogs, such as Bass Pro Shops, and through marine dealers.
FISHING LINE. The Company purchases, through a third-party manufacturer, its SPIDERWIRE and SPIDERWIRE FUSION products, which have performance characteristics superior to those of monofilament fishing line. SPIDERWIRE competes in the "superline" segment of the fishing line category, while the recently introduced SPIDERWIRE FUSION is positioned at the high end of the monofilament market. These products are sold through large retail store chains, catalogs and specialty stores.
RODS AND REELS. The Company markets JOHNSON fishing reels, which are primarily closed-face reels, as well as MITCHELL reels, which are open-faced reels. Reels are sold individually and in rod and reel combinations, primarily through large retail store chains in the United States and Canada and specialty fishing shops in Europe. The Company's closed-face reels compete in a segment of the U.S. fishing reel market which is dominated by larger manufacturers. Marketing support for the Company's reels is focused on building brand names, emphasizing product features and innovations and on developing specific segments of the reel market through advertising in national outdoor magazines, through trade and consumer support at retail and through sponsorship of fishing tournaments.
LURE PRODUCTS. The Company's artificial lure products consist of BEETLE SPIN soft body lures, and JOHNSON spoons. These products are sold primarily through large retail store chains.
TENTS AND BACKPACKS. The Company's EUREKA! and CAMP TRAILS tents and backpacks compete primarily in the mid- to high-price range of their respective markets and are sold in the United States through independent sales representatives primarily to sporting goods stores, catalog and mail order houses and camping and backpacking specialty stores. Marketing of the Company's tents and backpacks is focused on building the EUREKA! and CAMP TRAILS brand names and establishing the Company as a leader in product design and innovation. The Company's tents and backpacks are produced by off-shore manufacturing sources.
The Company markets both EUREKA! camping and commercial tents. The Company's camping tents have outside self-supporting aluminum frames allowing quicker and easier set-up, a design approach first introduced by the Company. Most of the EUREKA! tents are made from breathable nylon. The Company's commercial tents include party tents and tents for fairs. Party tents are sold primarily to general rental stores while other commercial tents are sold directly to tent erectors. Commercial tents are manufactured by the Company in the United States.
CAMP TRAILS backpacks consist primarily of internal and external frame backpacks for hiking and mountaineering. The Company's line of CAMP TRAILS backpacks also includes soft back bags, day packs and travel packs. JACK WOLFSKIN, a German marketer of camping tents, backpacks and outdoor clothing, distributes its products primarily through camping and backpacking specialty stores in Germany with additional distribution in other European countries and the United States and, under license, in Japan.
CANOES AND KAYAKS. The Company's watercraft are sold under the OLD TOWN name and consist of whitewater, tripping, touring and general recreational purpose canoes for the high quality and mid-price segments of the canoe market and recreational and higher performance kayaks. The Company has developed a proprietary roto-molding process for manufacturing polyethylene canoes to compete in the higher volume mid-priced range of the market. These canoes maintain many of the design and durability characteristics of higher priced canoes. The Company also manufactures canoes from fiberglass, ROYALEX (ABS) and wood. The Company's canoes are sold primarily to sporting goods stores, catalog and mail order houses such as L. L. Bean, canoe specialty stores and marine dealers in the United States and Europe. The United States' market for canoes is relatively constant, but the Company believes, based on industry data, that it is the leading manufacturer of canoes in the United States in unit and dollar sales. CARLISLE PADDLES,
a manufacturer of composite canoe paddles, supplies certain paddles that are sold with the Company's canoes as well as supplying paddles which are distributed through the same channels as the Company's watercraft.
DIVING AND MARINE PRODUCTS
DIVING. The Company believes that it is one of the world's largest manufacturers and distributors of underwater diving products which it sells under the SCUBAPRO and SNORKELPRO names. The Company markets a full line of snorkeling and underwater diving equipment including regulators, stabilizing jackets, tanks, depth gauges, masks, fins, snorkels, diving electronics and other accessories. SCUBAPRO products are marketed to the high quality, premium priced segment of the market. The Company maintains a marketing policy of limited distribution and sells primarily through independent specialty diving shops worldwide. These diving shops generally provide a wide range of services to divers, including instruction and repair service. SCUBAPRO products are marketed primarily in Europe, the United States and the Pacific Basin.
The Company focuses on maintaining SCUBAPRO as the market leader in innovations and new products. The Company maintains a research and development staff both in the United States and Italy and has obtained several patents on SCUBAPRO products and features. Consumer advertising focuses on building the SCUBAPRO brand name and position as the high quality and innovative leader in the industry. The Company advertises its SCUBAPRO equipment in diving magazines and through in-store displays.
The Company maintains manufacturing and assembly facilities in the United States and Italy. The Company procures a number of its rubber and plastic products and components from offshore sources.
MARINE PRODUCTS. The Company is a leading supplier in Europe of marine products and accessories primarily for sailing, which are sold under the PLASTIMO name. PLASTIMO products and accessories include safety products (such as buoyancy vests and inflatable life rafts), mooring products (such as anchors, fenders and ladders), navigational equipment (such as cockpit instruments, automatic pilots and compasses) and jib reefing systems. PLASTIMO products are sold to a lesser extent in the United States and other markets worldwide.
The Company's line of AIRGUIDE marine, weather and automotive instruments are distributed primarily in the United States through large retail store chains and original equipment manufacturers.
SALES BY CATEGORY
The following table depicts net sales of continuing operations by major product category:
Sales to Wal Mart Stores, Inc. and its affiliated entities totaled $34,902,000 in 1995. No customer accounted for 10% or more of sales in 1994 or 1993.
INTERNATIONAL OPERATIONS
See Note 13 to the Consolidated Financial Statements on page 26 of the Company's 1995 Annual Report which is incorporated herein by reference, for financial information comparing the Company's domestic and international operations.
RESEARCH AND DEVELOPMENT
The Company commits significant resources to research and new product development. The Company expenses research and development costs as incurred. The amounts expended by the Company in connection with research and development activities for each of the last three fiscal years are set forth in the Consolidated Statements of Operations on page 17 of the Company's 1995 Annual Report which is incorporated herein by reference.
COMPETITION
The markets for most of the Company's products are quite competitive. The Company believes its products compete favorably on the basis of product innovation, product performance and strong marketing support, and to a lesser extent, price.
EMPLOYEES
At September 29, 1995, the Company had approximately 1,336 employees working in its businesses. The Company considers its employee relations to be excellent.
PATENTS, TRADEMARKS AND PROPRIETARY RIGHTS
The Company owns no single patent which is material to its business as a whole. However, the Company holds several patents, principally for diving products and roto-molded canoes and has filed several applications for patents. The Company also has numerous trademarks and trade names which the Company considers important to its business.
SOURCES AND AVAILABILITY OF MATERIALS
The Company's products use materials that are generally in adequate supply. In 1995, however, the Company experienced shortages in the supply of magnets, which are key components used in its electric motors. The shortage of magnets hindered the Company's ability to meet customer demand for its electric motor products. The magnet supply situation has been resolved.
SEASONALITY
The Company's business is seasonal. The following table shows total net sales and operating profit of the Company's continuing operations for each quarter, as a percentage of the total year. An inventory writedown of $5.4 million is included as a component of the fourth quarter operating loss in 1994. A restructuring charge of $13.0 million is included as a component of the fourth quarter operating loss in 1993.
EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to General Instruction of G(3) of Form 10-K, the following list is included as an unnumbered Item in Part I of this report in lieu of being included in the Company's Proxy Statement for the January 24, 1996 Annual Meeting of Shareholders.
Mr. Crabb, age 52, became President and Chief Executive Officer in January 1994. He served as President and Chief Operating Officer of the Company from 1992 to January 1994. Mr. Crabb served as Executive Vice President-Regional Director, Consumer Products, Europe of S.C. Johnson and Son, Inc. ("SCJ") from 1990 to 1992 and from 1984 to 1990 was Vice President-Regional Director of Asia/Pacific of SCJ. Mr. Crabb joined SCJ in 1970.
Mr. Blime, age 54, became a Vice President of the Company and President of JWA Europe in 1993. From 1982 to 1993, Mr. Blime was President and Directeur General of Mitchell Sports, S.A., a subsidiary of the Company since 1990.
Mr. Inslee, age 57, became Vice President-Human Resources of the Company in 1991. From 1988 to 1991, Mr. Inslee was Director of Human Resources of the Company. He was Director of Personnel at SCJ from 1981 to 1988. Mr. Inslee joined SCJ in 1960.
Mr. Schmidt, age 39, became Senior Vice President of the Company in May 1995 and has been Chief Financial Officer, Secretary and Treasurer of the Company since July 1994. From July 1994 until May 1995, Mr. Schmidt was a Vice President of the Company. From 1988 to July 1994, he was a partner in the firm of KPMG Peat Marwick LLP.
Ms. Johnson-Leipold, age 38, became Executive Vice President - North American Businesses of the Company in October 1995. From 1992 until October 1995, she was Vice President - Consumer Marketing Services - Worldwide of SCJ and from 1988 to 1992 she was Director of Marketing Services of SCJ.
There are no family relationships between the above executive officers.
ITEM 2.

ITEM 2. PROPERTIES
The Company maintains both leased and owned manufacturing, warehousing, distribution and office facilities throughout the world.
The Company's manufacturing processes are primarily assembly operations and the Company prefers to lease rather than own facilities to maintain operational flexibility and control the investment of financial resources in property. See Note 6 to the Consolidated Financial Statements on Page 23 of the Company's 1995 Annual Report for a discussion of lease obligations.
The Company believes that its facilities are well maintained and have a capacity adequate to meet the Company's current needs.
The Company's principal manufacturing locations and distribution centers are:
The Company's Marking Systems' principal locations were:
The Company's corporate headquarters is located in Mount Pleasant, Wisconsin. The Company's mailing address is Sturtevant, Wisconsin.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS
The Company is subject to various legal actions and proceedings in the normal course of business, including those related to environmental matters. Although litigation is subject to many uncertainties and the ultimate exposure with respect to these matters cannot be ascertained, management does not believe the final outcome will have a significant effect on the Consolidated Financial Statements.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the last quarter of the year ended September 29, 1995.
PART II
ITEM 5.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Information with respect to this item is included on pages 23, 25, 26 and 28 and the inside back cover of the Company's 1995 Annual Report and is incorporated herein by reference.
There is no public market for the Registrant's Class B Common Stock. However, the Class B Common Stock is convertible at all times at the option of the holder into shares of Class A Common Stock on a share for share basis. As of November 15, 1995, the Company had 791 Holders of Record of its Class A Common Stock and 71 Holders of Record of its Class B Common Stock.
The Company has never paid a dividend on its Common Stock.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA
Information with respect to this item is included on page 28 of the Company's 1995 Annual Report and is incorporated herein by reference.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Information with respect to this item is included on pages 13 to 15 of the Company's 1995 Annual Report and is incorporated herein by reference.
ITEM 8.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements and supplemental data of the registrant and subsidiaries, included on pages 16 through 28 of the Company's 1995 Annual Report, are herein incorporated by reference:
Consolidated Balance Sheets - September 29, 1995 and September 30, 1994 Consolidated Statements of Operations - Years ended September 29, 1995, September 30, 1994 and October 1, 1993 Consolidated Statements of Shareholders' Equity - Years ended September 29, 1995, September 30, 1994 and October 1, 1993 Consolidated Statements of Cash Flows - Years ended September 29, 1995, September 30, 1994 and October 1, 1993 Notes to Consolidated Financial Statements Independent Auditors' Report Five Year Financial Summary
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to this item, except for information on the Executive Officers which appears at the end of Part I of this report, is included in the Company's January 24, 1996 Proxy Statement under the headings "Election of Directors" and "Other Matters" and is incorporated herein by reference.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
Information with respect to this item is included in the Company's January 24, 1996 Proxy Statement under the heading "Executive Compensation" and is incorporated herein by reference.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information with respect to this item is included in the Company's January 24, 1996 Proxy Statement under the heading "Stock Ownership of Management and Others" and is incorporated herein by reference.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to this item is included in the Company's January 24, 1996 Proxy Statement under the heading "Certain Transactions" and is incorporated herein by reference.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
A. The following documents are filed as a part of this Form 10-K:
1. Financial Statements:
Included in Item 8 of Part II of this Form 10-K are the following Consolidated Financial Statements, related notes thereto, and independent auditors' report which are incorporated herein by reference from the 1995 Annual Report: Consolidated Balance Sheets - September 29, 1995 and September 30, 1994 Consolidated Statements of Operations - Years ended September 29, 1995, September 30, 1994 and October 1, Consolidated Statements of Shareholders' Equity - Years ended September 29, 1995, September 30, 1994 and October 1, Consolidated Statements of Cash Flows - Years ended September 29, 1995, September 30, 1994 and October 1, Notes to Consolidated Financial Statements Independent Auditors' Report Five Year Financial Summary
2. Financial Statement Schedules and Independent Auditors' Report:
Included in Part IV of this Form 10-K is the following financial statement schedule and independent auditors' report: Independent Auditors' Report Schedule II - Valuation and Qualifying Accounts All other schedules are omitted because they are not applicable, are not required or equivalent information has been included in the Consolidated Financial Statements or notes thereto.
3. Exhibits
See Exhibit Index on page 17.
B. Reports on Form 8-K:
On May 26, 1995, the Company filed a Current Report on Form 8-K dated May 11, 1995 to reflect (under Item 2 of Form 8-K) the Company's acquisition of the assets of the SpiderWireO product line of Safari Land Ltd., Inc. On July 25, 1995, the Company filed an amendment on Form 8-K/A to the Company's Current Report on Form 8-K dated May 11, 1995. The report, as amended, included (under Item 7 of Form 8-K) the following financial statements: Statement of Assets Acquired as of March 31, 1995, Statements of Revenues and Direct Operating Expenses for the year ended September 30, 1994 and the six months ended March 31, 1995, Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1995 and Pro Forma Condensed Consolidated Statements of Operations for the year ended September 30, 1994 and for the six months ended March 31, 1995.
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, in the Town of Mount Pleasant and State of Wisconsin, on the 12th day of December, 1995.
JOHNSON WORLDWIDE ASSOCIATES, INC. (Registrant)
By /S/ JOHN D. CRABB -------------------------------- John D. Crabb President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, the report has been signed by the following persons in the capacities indicated on the 12th day of December, 1995.
INDEPENDENT AUDITORS' REPORT
Shareholders and Board of Directors Johnson Worldwide Associates, Inc.:
Under date of November 8, 1995, we reported on the consolidated balance sheets of Johnson Worldwide Associates, Inc. and subsidiaries as of September 29, 1995 and September 30, 1994, and the related consolidated statements of operations, shareholders' equity and cash flows for each of the years in the three year period ended September 29, 1995, as contained in the 1995 Annual Report. These consolidated financial statements and our report thereon are incorporated by reference in the Annual Report on Form 10-K for the fiscal year 1995. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related consolidated financial statement schedule as listed in Item 14A. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement schedule based on our audits.
In our opinion, such a financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
KPMG Peat Marwick LLP Milwaukee, Wisconsin November 8, 1995
JOHNSON WORLDWIDE ASSOCIATES, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(thousands)
______________________________ (1) Includes the impact of foreign currency fluctuations on these balance sheet accounts.


Item 1. Business. America First Tax Exempt Mortgage Fund Limited Partnership (the "Registrant" or the "Partnership") was formed as a limited partnership on November 11, 1985, under the Delaware Revised Uniform Limited Partnership Act to acquire a portfolio of federally tax-exempt participating first mortgage loans to provide construction and/or permanent financing of multifamily residential apartments. The Registrant's business objectives are to provide its investors: (i) safety and preservation of capital; (ii) regular distributions of tax-exempt interest; and, (iii) potential for an enhanced tax-exempt yield as a result of a participation interest in the net cash flow and net capital appreciation of the real estate financed by the Registrant.
The Registrant registered a total of 15,000,000 Beneficial Unit Certificates (BUCs) representing assignments of limited partnership interests with the Securities and Exchange Commission and sold a total of 9,979,128 BUCs at $20 per BUC for a total net capital contribution of $185,511,989 after the payment of certain organization and offering costs.
The Registrant acquired 14 tax-exempt mortgage loans with an aggregate principal amount equal to $177,196,000. At December 31, 1995, the Registrant continued to hold seven of these mortgage loans with a carrying value, net of allowance for loan losses, equal to $66,026,000.
The tax-exempt mortgage loans that the Registrant had acquired were issued by various state and local housing authorities to provide for the construction and/or permanent financing of 14 multifamily housing properties located in 10 states. The Registrant subsequently acquired seven of the properties (each, an "Acquired Property") through foreclosure or in lieu of foreclosure of the tax-exempt mortgage loans collateralized thereby. The Acquired Properties were transferred to America First REIT, Inc. (the "REIT") on June 1, 1993. Under the terms of the remaining mortgage loans, the principal amounts do not amortize over their terms. The mortgage loans provide for the payment of base interest to the Registrant and for the payment of contingent interest based upon net cash flow and net capital appreciation of the underlying real estate properties. Therefore, the return to the Registrant depends upon the economic performance of the real estate which collateralizes its remaining mortgage loans. For this reason, the Registrant's investments are dependent on the economic performance of such real estate and may be considered to be in competition with other income-producing real estate of the same type in the same geographic areas.
A description of the seven tax-exempt mortgage loans held by the Registrant at December 31, 1995, (and the properties collateralizing such loans) appears in Note 5 of the Notes to Financial Statements filed in response to Item 8 hereof.
The Registrant is engaged solely in the business of providing financing for the acquisition and improvement of real estate. Accordingly, the presentation of information about industry segments is not applicable and would not be material to an understanding of the Registrant's business taken as a whole.
The Registrant has no employees. Certain services are provided to the Registrant by employees of America First Companies L.L.C. which is the general partner of the general partner of the Registrant, and the Registrant reimburses America First Companies L.L.C. for such services at cost. The Registrant is not charged, and does not reimburse, for the services performed by managers and officers of America First Companies L.L.C..
Item 2.

Item 2. Properties. The Registrant had invested in 14 tax-exempt mortgage loans collateralized by first mortgages on multifamily housing properties. Descriptions of the properties collateralizing the mortgage loans held by the Registrant at December 31, 1995, appear in Note 5 of the Notes to Financial Statements filed in response to Item 8 hereof.
Item 3.

Item 3. Legal Proceedings. There are no material pending legal proceedings to which the Registrant is a party or to which any of its property is subject.
Item 4.

Item 4. Submission of Matters to a Vote of Security Holders. No matter was submitted during the fourth quarter of the fiscal year ended December 31, 1995, to a vote of the Registrant's security holders.
PART II
Item 5.

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
(a) Market Information. The BUCs trade on The NASDAQ Stock Market under the trading symbol "AFTXZ." The following table sets forth the high and low final sale prices for the BUCs for each quarterly period from January 1, 1994 through December 31, 1995.
(b) BUC Holders. The approximate number of BUC holders on December 31, 1995, was 6,556.
(c) Distributions. Cash distributions are being made on a monthly basis. Total cash distributions paid or accrued to BUC Holders during the fiscal years ended December 31, 1995, and December 31, 1994, equaled $5,388,730. The cash distributions paid per BUC during the fiscal years ended December 31, 1995, and December 31, 1994, were as follows:
See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, for information regarding the sources of funds used for cash distributions and for a discussion of factors, if any, which may adversely affect the Registrant's ability to make cash distributions at the same level in 1996 and thereafter.
Item 6.

Item 6. Selected Financial Data. Set forth below is selected financial data for the Partnership. The information set forth below should be read in conjunction with the Financial Statements and Notes thereof filed in response to Item 8 hereof.
Item 7.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Liquidity and Capital Resources
The Partnership originally acquired 14 tax-exempt mortgage loans, the proceeds of which were used to provide construction and/or permanent financing for 14 multifamily housing properties. On June 1, 1993, the Partnership transferred to America First REIT, Inc. (REIT) seven real estate properties acquired in foreclosure. At December 31, 1995, the Partnership continued to hold seven tax-exempt mortgage loans with a carrying value, net of allowance for loan losses, equal to $66,026,000.
The following table shows the various occupancy levels of the properties financed by the Partnership at December 31, 1995.
The principal amounts of the tax-exempt mortgage loans do not amortize over their terms. The tax-exempt mortgage loans provide for the payment of base interest at a fixed rate. In addition, the Partnership may earn contingent interest based on a participation in the net cash flow and net sale or refinancing proceeds from the real estate collateralizing the tax-exempt mortgage loans. Currently, the interest payments received on the tax-exempt mortgage loans and interest on temporary cash investments represent the principal sources of the Partnership's income and distributable cash. The Partnership may draw on the reserve to pay operating expenses or to supplement cash distributions to Beneficial Unit Certificate (BUC) Holders.
Distributions to BUC Holders currently consist of interest received from mortgage loans, interest on temporary cash investments and withdrawals from reserves. For the year ended December 31, 1995, a net amount of $298,938 of undistributed income was placed in reserves. The total amount held in reserves at December 31, 1995, was $1,073,700. Future distributions to BUC Holders will depend upon the amount of base and contingent interest received on the mortgage loans, the size of the reserves established by the Partnership and the extent to which withdrawals are made from reserves.
The Partnership believes that cash provided by operating activities and, if necessary, withdrawals from the Partnership's reserves will be adequate to meet its short-term and long-term liquidity requirements, including the payments of distributions to BUC Holders. The Partnership has no other internal or external sources of liquidity. Under the terms of the Partnership agreement, the Partnership is not authorized to enter into short-term or long-term debt financing arrangements or issue additional BUCs to meet short-term and long-term liquidity requirements.
DISTRIBUTIONS
Cash distributions paid or accrued per BUC were as follows:
On May 7, 1993, the Partnership announced the formation of a subsidiary company, America First REIT, Inc., a real estate investment trust. On June 1, 1993, the Partnership transferred the seven real estate properties acquired in settlement of loans along with related debt, cash, and certain of the Partnership's other assets and liabilities to the REIT in exchange for all of the issued and outstanding shares of the REIT's common stock. Thereafter, the Partnership distributed all shares of the REIT to the BUC Holders in the ratio of one share of REIT stock for every four BUCs they held as of the record date, May 21, 1993. The Partnership continues to hold seven tax-exempt mortgage loans in its portfolio and cash distributions are expected to continue on a monthly basis at the annualized rate of $.54 per BUC.
Asset Quality
It is the policy of the Partnership to make a periodic review of the real estate collateralizing the Partnership's mortgage loans in order to establish, when necessary, valuation reserves on mortgage loans. A reserve is established for the difference between the recorded investment in the mortgage loan and the fair value of the underlying collateral. The fair value of the collateral is based on management's best estimate of the net realizable value of the properties; however the ultimate realized values may vary from these estimates. The net realizable value of the properties is determined based on the discounted estimated future cash flows from the properties, including estimated sales proceeds. The calculation of discounted estimated future cash flows includes certain variables such as the assumed inflation rates for rents and expenses, capitalization rates and discount rates. These variables are supplied to the Partnership by an independent real estate appraisal firm based upon local market conditions for each property. In certain cases, additional factors such as the replacement value of the property or comparable sales of similar properties are also taken into consideration. The allowance is periodically reviewed and adjustments are made to the allowance when there are significant changes in the estimated net realizable value of the underlying collateral.
Based on the foregoing methodology, valuations and reviews performed during 1995 indicated that the mortgage loans recorded on the balance sheet at December 31, 1995, required no adjustments to the carrying amounts.
At December 31, 1995, five of the Partnership's seven tax-exempt mortgage loans were classified as nonperforming. The loans will continue to be classified as nonperforming until such time that the properties collateralizing the mortgage loans generate sufficient net cash flow to bring the mortgage loans fully current as to interest payments. The Partnership has a limited amount of influence in controlling the operations of the properties.
Woodbridge Apartments of Bloomington III
Woodbridge Apartments of Bloomington III, located in Bloomington, Indiana, had an average occupancy rate of 93% during 1995, compared to 96% during 1994. Interest is recognized as income on this loan on the modified cash basis. Interest earned in 1995 was $1,139,764 compared to $1,103,086 in 1994 and was approximately $69,000 more than the amount needed to pay the base interest in 1995. The increase in interest earned from 1994 to 1995 is primarily the result of additional interest paid out of the property's cash reserves. The net operating income of the property increased slightly (approximately .7%) from 1994 to 1995.
Ashley Pointe at Eagle Crest
Ashley Pointe at Eagle Crest, located in Evansville, Indiana, had an average occupancy rate of 96% during 1995, compared to 93% during 1994. Interest is recognized as income on this loan on the modified cash basis. Interest earned in 1995 was $417,517 compared to $402,385 in 1994 and was approximately $152,000 less than the amount needed to pay the base interest in 1995. The increase in interest earned from 1994 to 1995 is the result of an increase in cash flow generated by the property resulting from an increase in rental income due to an increase in average occupancy. This increase was partially offset by higher property improvement expenses due to painting the exterior of the property.
Woodbridge Apartments of Louisville II
Woodbridge Apartments of Louisville II, located in Louisville, Kentucky, had an average occupancy rate of 93% during 1995, compared to 96% during 1994. Interest is recognized as income on this loan on the modified cash basis. Interest earned in 1995 was $782,501 compared to $797,958 in 1994. Although the Partnership received approximately $20,000 more than the amount needed to pay the base interest in 1995, the cash flow generated by the property was approximately $15,000 less in 1995 compared to 1994. This decrease is the result of a decrease in average occupancy and an increase in operating expenses, primarily personnel costs.
Northwoods Lake Apartments
Northwoods Lake Apartments, located in Duluth, Georgia, had an average occupancy rate of 97% during 1995, compared to 98% during 1994. Interest is recognized as income on this loan on the modified cash basis. Interest earned by the Partnership in 1995 was $1,932,146 compared to $1,831,556 in 1994 but was approximately $214,000 less than the amount needed to pay the base interest. The increase in interest earned from 1994 to 1995 is due to an increase in the net operating income generated by the property in 1995 compared to 1994. This increase is due to an increase in rental revenue resulting from rental rate increases which was partially offset by increased operating expenses consisting primarily of increases in real estate taxes and personnel costs.
Ashley Square
Ashley Square, located in Des Moines, Iowa, had an average occupancy rate of 98% during 1995, compared to 97% during 1994. Interest is recognized as income on this loan on the modified cash basis. Interest earned in 1995 was $476,308 compared to $427,388 in 1994 but was approximately $76,000 less than the amount needed to pay the base interest in 1995. The increase in interest earned from 1994 to 1995 is due to an increase in rental income resulting from an increase in average occupancy and a decrease in operating expenses primarily due to a decrease in property improvements.
Shoals Crossing
Shoals Crossing, located in Atlanta, Georgia, had an average occupancy rate of 95% during 1995, compared to 96% during 1994. The property was current on its interest payments throughout 1995 and debt service on the mortgage loan was generally made from property cash flow. However, withdrawals of approximately $51,000 were made from the property's cash reserves to keep interest payments current. Withdrawals from reserves were made because the net operating income generated by the property in 1995 was approximately $26,000 less than 1994. This decrease is due to increases in property improvements, personnel and utilities expenses which more than offset an increase in rental income resulting from increases in rental rates.
Arama Apartments
Arama Apartments, located in Miami, Florida, had an average occupancy rate of 99% during 1995 and 1994. Interest on this loan, at the base interest rate, is current. In addition, $166,940 of contingent interest was earned in 1995 compared with $211,319 in 1994. The decrease in contingent interest is due to a decrease of approximately $102,000 in the net operating income for the property from 1994 to 1995. This decrease is a result of a slight decrease in rental income and an increase in operating expenses primarily due to an increase in repairs and maintenance expenses.
Results of Operations
The Partnership ended its tenth full year of operations on December 31, 1995. Due to the transfer of real estate and related debt to the REIT on June 1, 1993, the 1995 and 1994 financial statements do not reflect any real estate operations; the 1993 financial statements only reflect five months of real estate operations. The table below compares the results of operations for each year shown.
Mortgage investment income during 1995 was approximately $186,000 greater than 1994. This increase is attributable to increased cash flow from Northwoods Lake Apartments of $101,000, Ashley Square of $49,000, Woodbridge Apts. of Bloomington III of $36,000 and Ashley Pointe at Eagle Crest of $15,000 offset by a decrease from Woodbridge Apartments of Louisville II of $15,000. The increases in cash flow are generally attributable to increases in rental income due to an increase in average occupancy and/or rental rate increases. See the discussion of each property in the Asset Quality section for additional information.
Mortgage investment income during 1994 was approximately $512,000 greater than 1993. This increase is attributable to increased cash flow from Northwoods Lake Apartments of $275,000, Woodbridge Apts. of Bloomington III of $127,000, Woodbridge Apts. of Louisville II of $105,000 and Ashley Square of $14,000 offset by a decrease in cash flow from Ashley Pointe at Eagle Crest of $9,000. The increase in cash flow from Northwoods Lake Apartments is due to the Partnership receiving twelve monthly interest payments in 1994 whereas the prior owner withheld two monthly payments in 1993. The increase in cash flow from Woodbridge Apts. of Bloomington III and Woodbridge Apts. of Louisville II is primarily attributable to increases in rental income and decreases in repairs and maintenance expenses. The increase in cash flow from Ashley Square is due to an increase in rental income due to an increase in rental rates offset by an overall increase in operating expenses. The decrease in cash flow from Ashley Pointe at Eagle Crest is due to overall increased operating expenses.
The decrease in contingent interest income of $44,379 from 1994 to 1995 and the increase of $18,976 from 1993 to 1994 are attributable to cash flow fluctuations from the Arama Apartments. The decrease in contingent interest income from 1994 to 1995 is a result of a decrease in rental income and an increase in operating expenses primarily due to an increase in repairs and maintenance expenses. The increase in contingent interest income from 1993 to 1994 is attributable to an increase in net operating income due to higher rental income resulting from an increase in rental rates which was partially offset by higher real estate operating expense.
The increase in interest income on temporary cash investments of $18,273 is attributable to an increase in the amount of undistributed income held in reserves and to slightly higher interest rates. The decrease in interest income on temporary cash investments of $7,654 from 1993 to 1994 is attributable to withdrawals made from Partnership reserves during 1994.
General and administrative expenses increased $107,488 from 1994 to 1995 primarily due to increases in salaries and related expenses and insurance expense which were partially offset by decreases in printing and investor servicing expenses. General and administrative expenses decreased $555,270 from 1993 to 1994 due primarily to the transfer of the properties to the REIT and the distribution of the REIT shares to the BUC Holders on June 1, 1993.
Due to the transfer of real estate and related debt to the REIT on June 1, 1993, the 1995 and 1994 financial statements do not reflect any real estate operations and the 1993 financial statements only reflect five months of real estate operations. Accordingly rental income, real estate operating expenses, depreciation and interest expenses all decreased from 1993 to 1994.
The table below segregates the results of operations for the Partnership's tax-exempt mortgage lending activities and real estate operations for each year shown.
Item 8.

Item 8. Financial Statements and Supplementary Data. The Financial Statements of the Registrant are set forth in Item 14 hereof and are incorporated herein by reference. In addition the Financial Statements of Northwood Lake Apartments, L.P. are set forth in Item 14 hereof and are incorporated herein by reference. The financial statements of Northwood Lake Apartments, L.P. are included pursuant to SAB Topic 1I.
Item 9.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. There were no disagreements with the Registrant's independent accountants on accounting principles and practices or financial disclosure during the fiscal years ended December 31, 1995 and 1994.
PART III
Item 10.

Item 10. Directors and Executive Officers of the Registrant. The Registrant has no directors or officers. Management of the Registrant consists of the general partner of the Registrant, America First Capital Associates Limited Partnership Two ("AFCA") and its general partner, America First Companies L.L.C.. The following individuals are the managers and officers of America First Companies L.L.C., and each serves for a term of one year.
Name Position Held Position Held Since
Michael B. Yanney Chairman of the Board, 1985 President, Chief Executive Officer and Manager
Michael Thesing Vice President, Secretary, 1985 Treasurer and Manager, Chief Financial and Accounting Officer
William S. Carter, M.D. Manager 1994 George Kubat Manager 1994 Martin Massengale Manager 1994 Alan Baer Manager 1994 Gail Walling Yanney Manager 1996
Michael B. Yanney, 62, is the Chairman and Chief Executive Officer of various affiliates of AFCA which manage public investment funds which have raised over $1.3 billion since 1984. From 1977 until the organization of the first such fund in 1984, Mr. Yanney was principally engaged in the ownership and management of commercial banks. Mr. Yanney also has investments in private corporations engaged in a variety of businesses. From 1961 to 1977, Mr. Yanney was employed by Omaha National Bank and Omaha National Corporation (subsequently merged into FirsTier Financial, Inc.), where he held various positions, including the position of Executive Vice President and Treasurer of the holding company. Mr. Yanney also serves as a member of the boards of directors of Burlington Northern Sante Fe Corporation, Forest Oil Corporation, MFS Communications Company, Inc., Lozier Corporation, Mid-America Apartment Communities, Inc., and PKS Information Services Inc..
Michael Thesing, 41, has been Vice President and Chief Financial Officer of affiliates of AFCA since July 1984. From January 1984 until July 1984 he was employed by various companies controlled by Mr. Yanney. He was a certified public accountant with Coopers & Lybrand from 1977 through 1983.
William S. Carter, M.D., 69, is a retired physician. Dr. Carter practiced medicine for 30 years in Omaha, Nebraska, specializing in otolaryngology (disorders of the ears, nose and throat).
George Kubat, 50, is the President and Chief Executive Officer of Phillips Manufacturing Co., an Omaha, Nebraska, based manufacturer of drywall and construction materials. Prior to assuming that position in November 1992, Mr. Kubat was a certified public accountant with Coopers & Lybrand in Omaha, Nebraska from 1969. He was the tax partner in charge of the Omaha office from 1981 to 1992.
Martin Massengale, 62, is the President Emeritus of the University of Nebraska. Prior to becoming President in 1991, he served as Interim President from August 1989, as Chancellor of the University of Nebraska-Lincoln from June 1981 through December 1990 and as Vice Chancellor for Agriculture and Natural Resources from 1976 to 1981. Prior to that time, he was a professor and associate dean of the College of Agriculture at the University of Arizona. Dr. Massengale currently serves on the board of directors of Woodmen Accident & Life Insurance Company.
Alan Baer, 73, is presently Chairman of Alan Baer & Associates, Inc., a management company located in Omaha, Nebraska. He is also Chairman of Lancer Hockey, Inc., Baer Travel Services, Wessan Telemarketing, Total Security Systems, Inc. and several other businesses. Mr. Baer is the former Chairman and Chief Executive Officer of the Brandeis Department Store chain which was, until its acquisition, one of the larger retailers in the Midwest. Mr. Baer has also owned and served on the board of directors of several banks in Nebraska and Illinois.
Gail Walling Yanney, 60, is a retired physician. Dr. Walling practiced anesthesia and was most recently the Executive Director of the Clarkson Foundation until October of 1995. In addition, she is a former director of Firstier Bank, N.A., Omaha. Ms. Yanney is the wife of Michael Yanney.
Item 11.

Item 11. Executive Compensation. Neither the Registrant nor AFCA has any directors or officers. None of the managers or executive officers of America First Companies, L.L.C. (the general partner of AFCA) receives compensation from the Registrant and AFCA receives no reimbursement from the Registrant for any portion of their salaries. Remuneration paid by the Registrant to the Registrant's general partner pursuant to the terms of its limited partnership agreement during the year ended December 31, 1995 is described in Note 6 of the Notes to the Financial Statements filed in response to Item 8 hereof.
Item 12.

Item 12. Security Ownership of Certain Beneficial Owners and Management.
(a) No person is known by the Registrant to own beneficially more than 5% of the Registrant's BUCs.
(b) No manager or officer of America First Companies, L.L.C. and no partner of AFCA owns any BUCs.
(c) LBI Group Inc. is the special limited partner of AFCA, with the right to become the managing general partner of AFCA, or to designate another corporation or other entity as the managing general partner, upon the happening of any of the following events: (1) the commission of any act which, in the opinion of LBI Group Inc., constitutes negligence, misfeasance or breach of fiduciary duty on the part of the managing general partner; (2) the dissolution, insolvency or bankruptcy of the managing general partner or the occurrence of such other events which cause the managing general partner to cease to be a general partner under Delaware law; or, (3) the happening of an event which results in the change in control of the managing general partner whether by operation of law or otherwise.
There exists no other arrangement known to the Registrant the operation of which may, at any subsequent date, result in a change in control of the Registrant.
Item 13.

Item 13. Certain Relationships and Related Transactions. The general partner of the Registrant is AFCA and the sole general partner of AFCA is America First Companies L.L.C..
Except as described herein, the Registrant is not a party to any transaction or proposed transaction with AFCA , America First Companies L.L.C. or with any person who is: (i) a manager or executive officer of America First Companies L.L.C.; (ii) a nominee for election as a manager of America First Companies L.L.C.; (iii) an owner of more than 5% of the BUCs; or, (iv) a member of the immediate family of any of the foregoing persons.
During 1995, the Registrant paid or reimbursed AFCA $565,149 or America First Companies L.L.C. for certain costs and expenses incurred in connection with the operation of the Registrant, including legal and accounting fees and investor communication costs, such as printing and mailing charges. See Note 6 to Notes to Financial Statements filed in response to Item 8 hereof for a description of these costs and expenses.
The Registrant has entered into property management agreements with America First Properties Management, Inc. (the "Manager") with respect to the day-to-day operation of Ashley Square and Northwoods Lake Apartments. Such property management agreements provide that the Manager is entitled to receive a management fee equal to a stated percentage of the gross revenues generated by the property under management. Management fees payable to the Manager range from 4.5% to 5% of gross revenues. Because the Manager is an affiliate of AFCA the management fees payable by the Registrant to the Manager may not exceed the lesser of (i) the rates that the Registrant would pay an unaffiliated manager for similar services in the same geographic location or (ii) the Manager's actual cost for providing such services. During the year ended December 31, 1995, the Registrant paid the Manager property management fees of $202,166.
PART IV
Item 14.

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) The following documents are filed as part of this report:
1A. Financial Statements of the Registrant. The following financial statements of the Registrant are included in response to Item 8 of this report:
Independent Accountants' Report dated March 22, 1996.
Balance Sheets of the Registrant as of December 31, 1995, and December 31, 1994.
Statements of Income of the Registrant for the years ended December 31, 1995, December 31, 1994, and December 31, 1993.
Statements of Partners' Capital of the Registrant for the years ended December 31, 1995, December 31, 1994, and December 31, 1993.
Statements of Cash Flows of the Registrant for the years ended December 31, 1995, December 31, 1994, and December 31, 1993.
Notes to Financial Statements of the Registrant.
B. Financial Statements of Northwood Lake Apartments (the "Property"). The following financial statements of the Property are included in response to Item 8 of this report:
Independent Accountants' Report dated January 26, 1996.
Balance Sheet of the Property as of December 31, 1995.
Statement of Income of the Property for the year ended December 31, 1995.
Statement of Partners' Capital of the Property for the year ended December 31, 1995.
Statement of Cash Flows of the Property for the year ended December 31, 1995.
Notes to Financial Statements of the Property.
2. Financial Statement Schedules. The information required to be set forth in the financial statement schedules is shown in the Notes to Financial Statements filed in response to Item 8 hereof.
3. Exhibits. The following exhibits were filed as required by Item 14(c) of this report. Exhibit numbers refer to the paragraph numbers under Rule 601 of Regulation S-K:
3. Articles of Incorporation and Bylaws of America First Fiduciary Corporation Number Five (incorporated herein by reference to Form S-11 Registration Statement filed August 30, 1985, with the Securities and Exchange Commission by America First Tax Exempt Mortgage Fund Limited Partnership (Commission File No. 2-99997)).
4(a).Agreement of Limited Partnership dated November 11, 1985, (incorporated herein by reference to Form 10-K dated December 31, 1986, filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 by America First Tax Exempt Mortgage Fund Limited Partnership (Commission File No. 0-14314)).
4(b).Form of Certificate of Beneficial Unit Certificate (incorporated by reference to Form S-11 Registration Statement filed August 30, 1985 with the Securities and Exchange Commission by America First Tax Exempt Mortgage Fund Limited Partnership (Commission File No. 2-99997)).
24. Power of Attorney.
(b) The Registrant did not file any reports on Form 8-K during the last quarter of the period covered by this report.
Independent Accountants' Report
To the Partners America First Tax Exempt Mortgage Fund Limited Partnership:
We have audited the accompanying balance sheets of America First Tax Exempt Mortgage Fund Limited Partnership as of December 31, 1995 and 1994, and the related statements of income, partners' capital and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of America First Tax Exempt Mortgage Fund Limited Partnership as of December 31, 1995, and 1994, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles.
Omaha, Nebraska March 22, 1996 Coopers & Lybrand L.L.P.
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP BALANCE SHEETS
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP STATEMENTS OF INCOME
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP STATEMENTS OF PARTNERS' CAPITAL FROM DECEMBER 31, 1992 TO DECEMBER 31, 1995
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995
1. ORGANIZATION
America First Tax Exempt Mortgage Fund Limited Partnership (the Partnership) was formed on November 11, 1985, under the Delaware Revised Uniform Limited Partnership Act for the purpose of acquiring a portfolio of federally tax-exempt participating first mortgage loans collateralized by income-producing real estate consisting of multifamily residential apartments. The Partnership will terminate on December 31, 2015, unless terminated earlier under the provisions of the Partnership Agreement. The General Partner of the Partnership is America First Capital Associates Limited Partnership Two (AFCA 2).
On May 7, 1993, the Partnership announced the formation of a subsidiary company, America First REIT, Inc., a real estate investment trust. On June 1, 1993, the Partnership transferred the seven real estate properties acquired in settlement of loans along with related debt, cash, and certain of the Partnership's other assets and liabilities to the REIT in exchange for all of the issued and outstanding shares of the REIT's common stock. Thereafter, the Partnership distributed all shares of the REIT to the BUC Holders in the ratio of one share of REIT stock for every four BUCs they held as of the record date, May 21, 1993.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A)Method of Accounting The financial statements of the Partnership are prepared on the accrual basis of accounting in accordance with generally accepted accounting principles.
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
B)Investment in Tax-Exempt Mortgage Loans The Partnership records its investment in tax-exempt mortgage loans at cost. Accrual of mortgage interest income is excluded from income, when, in the opinion of management, collection of such interest is doubtful. This interest is recognized as income when it is received.
C)Allowance for Loan Losses The allowance for loan losses is a valuation reserve which has been established at a level that management feels is adequate to absorb potential losses on outstanding loans. Reserves are established for loans which the Partnership considers impaired. Loans are considered impaired when it is probable that the Partnership will be unable to collect amounts due according to the contractual terms of the loan agreements. Based on this analysis, all loans were considered impaired at December 31, 1995. A reserve is established for the difference between the recorded investment in the mortgage loan and the fair value of the underlying collateral. Financial Accounting Standard (FAS) No. 114 "Accounting by Creditors for Impairment of a Loan" had no effect on the Partnership's financial statements.
The fair value of the collateral is based on management's best estimate of the net realizable value of the properties; however the ultimate realized values may vary from these estimates. The net realizable value of the properties is determined based on the discounted estimated future cash flows from the properties, including estimated sales proceeds. The calculation of discounted estimated future cash flows includes certain variables such as the assumed inflation rates for rents and expenses, capitalization rates and discount rates. These variables are supplied to the Partnership by an independent real estate appraisal firm based upon local market conditions for each property. In certain cases, additional factors such as the replacement value of the property or comparable sales of similar properties are also taken into consideration. The allowance is periodically reviewed and adjustments are made to the allowance when there are significant changes in the estimated net realizable value of the underlying collateral.
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995
D)Depreciation Depreciation on the real estate properties prior to the transfer to the REIT is based on the estimated useful life of the property (27 1/2 years) using the straight-line method.
E)Income Taxes No provision has been made for income taxes since the Beneficial Unit Certificate (BUC) Holders are required to report their share of the Partnership's taxable income for federal and state income tax purposes. The tax basis of the Partnership's assets and liabilities exceeded the reported amounts by $11,053,597 at December 31, 1995, and December 31, 1994.
F)Temporary Cash Investments Temporary cash investments are invested in federally tax-exempt securities purchased with an original maturity of three months or less.
G)Net Income per BUC Net income per BUC has been calculated based on the number of BUCs outstanding (9,979,128) for all years presented.
3. PARTNERSHIP INCOME, EXPENSES AND CASH DISTRIBUTIONS
The Partnership Agreement contains provisions for the distribution of Net Interest Income and Net Residual Proceeds and for the allocation of income and expenses for tax purposes among AFCA 2 and BUC Holders. Income and expenses will be allocated to each BUC Holder on a monthly basis based on the number of BUCs held by each BUC Holder as of the last day of the month for which such allocation is to be made. Distributions of Net Interest Income and Net Residual Proceeds will be made to each BUC Holder of record on the last day of each distribution period based on the number of BUCs held by each BUC Holder as of such date.
Net Interest Income, as defined in the Limited Partnership Agreement, in each distribution period will be distributed 99% to the BUC Holders and 1% to AFCA 2 until the BUC Holders have received distributions of Net Interest Income equal to a cumulative noncompounded annual return of 11% on their Adjusted Capital Contributions, as defined in the Limited Partnership Agreement, at which point all remaining Net Interest Income for such distribution period will be distributed 90% to the BUC Holders and 10% to AFCA 2.
The portion of Net Residual Proceeds, as defined in the Limited Partnership Agreement, representing a return of principal will be distributed 100% to the BUC Holders. The portion of Net Residual Proceeds representing contingent interest will be distributed 100% to the BUC Holders until the BUC Holders have received distributions from all sources which represent a return of $20 per BUC plus an amount equal to a cumulative noncompounded annual return of 11% on their Adjusted Capital Contributions. Any remaining Net Residual Proceeds representing contingent interest will be allocated 100% to AFCA 2 to the extent of 10% of all Net Residual Proceeds representing contingent interest distributed to all parties exclusive of the following described amounts. Thereafter, any remaining Net Residual Proceeds representing contingent interest will be distributed 90% to BUC Holders and 10% to AFCA 2. Notwithstanding the foregoing, Net Interest Income representing contingent interest and Net Residual Proceeds representing contingent interest in an amount equal to .9% per annum of the principal amount of the mortgage loans on a cumulative basis will be distributed 75% to the BUC Holders and 25% to AFCA 2.
Liquidation Proceeds, as defined in the Limited Partnership Agreement, remaining after repayment of any debts or obligations of the Partnership (including loans from AFCA 2) and after the establishment of any reserve AFCA 2 deems necessary, will be distributed to AFCA 2 and BUC Holders to the extent of positive balances in their capital accounts. Any remaining Liquidation Proceeds will be distributed in the same manner as the Net Residual Proceeds.
Cash distributions are presently made on a monthly basis, but may be made quarterly if AFCA 2 so elects. The cash distributions included in the financial statements represent the actual cash distributions made during each year and the cash distributions accrued at the end of each year.
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995
4. PARTNERSHIP RESERVE ACCOUNT
The Partnership maintains a reserve account which totaled $1,073,700 at December 31, 1995. The reserve account was established to maintain working capital for the Partnership and is available to supplement distributions to BUC Holders or for any other contingencies related to the ownership of the mortgage loans and the operation of the Partnership.
5. INVESTMENT IN TAX-EXEMPT MORTGAGE LOANS
The mortgage loans are issued by various state and local governments, their agencies and authorities to finance the construction or rehabilitation of income-producing real estate properties. However, the mortgage loans do not constitute an obligation of any state or local government, agency or authority and no state or local government, agency or authority is liable on them, nor is the taxing power of any state or local government pledged to the payment of principal or interest on the mortgage loans. The mortgage loans are nonrecourse obligations of the respective owners of the properties. The sole source of the funds to pay principal and interest on the mortgage loans is the net cash flow or the sale or refinancing proceeds from the properties. Each mortgage loan, however, is collateralized by a first mortgage on all real and personal property included in the related property and an assignment of rents.
The mortgage loans provide for the payment of base interest and for the payment of additional contingent interest out of a portion of the net cash flow of the properties or out of a portion of the sale or refinancing proceeds from the properties, subject to various priority payments. The principal of the mortgage loans will not be amortized during the terms of the mortgage loans, but will be required to be repaid in lump sum payments at the expiration of their terms. The Partnership has the right to require prepayment of any mortgage loan at any time after the tenth year of such mortgage loan and each mortgage loan will be prepaid to the Partnership by its terms on the first day of its thirteenth year. The mortgage loans are due and payable upon the sale of the related properties. Accordingly, the Partnership does not expect to hold any mortgage loan for more than 12 years. The Partnership may waive compliance with any of the terms of the mortgage loans.
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995
Descriptions of the tax-exempt mortgage loans owned by the Partnership at December 31, 1995, are as follows:
1 In addition to the base interest rates shown, the notes bear additional contingent interest as defined in each revenue note which, when combined with the base interest, is limited to a cumulative, noncompounded amount not greater than 16% per annum. The Partnership received additional contingent interest from Arama Apartments of $166,940 in 1995, $211,319 in 1994 and $192,343 in 1993.
2 Nonperforming loans are loans which are not fully current as to interest payments. The amount of foregone interest on nonperforming loans was $442,279 in 1995, $606,921 in 1994 and $1,051,772 in 1993.
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995
Unaudited combined condensed financial information of the properties collateralizing the Partnership's investment in tax-exempt mortgage loans is as follows:
AFCA 2 received from property owners administrative fees of $54,450, $54,450 and $54,456 in 1995, 1994 and 1993, respectively. Since these fees are not Partnership expenses, they have not been reflected in the accompanying financial statements. In addition, pursuant to the Limited Partnership Agreement, AFCA 2 is entitled to an administrative fee from the Partnership in the event the Partnership becomes the equity owner of a property by reason of foreclosure. The amount of such fees paid to AFCA 2 was $188,569 for 1993. The Partnership has not paid any administrative fees subsequent to June 1, 1993, when all foreclosed properties were transferred to the REIT. AFCA 2 was entitled to receive approximately $359,000 in administrative fees from the Partnership for the year ended December 31, 1989. The payment of these fees, which has been deferred by AFCA 2, is contingent upon, and will be paid only out of future profits realized by the Partnership from the disposition of assets. This amount will be recorded as an expense by the Partnership when it is probable that these fees will be paid.
An affiliate of AFCA 2 was retained to provide property management services for Ashley Square and Northwoods Lake Apartments. The fees for services provided represent the lower of (i) costs incurred in providing management of the property, or (ii) customary fees for such services determined on a competitive basis, and amounted to $202,166 in 1995, $164,490 in 1994 and $144,285 in 1993. Property management fees of $190,661 were paid from January 1, 1993, through May 31, 1993, for the properties transferred to the REIT.
The Partnership incurred expenses in conjunction with the distribution of REIT stock totaling $259,627 in 1993 ($173,103 was paid by an affiliate and reimbursed by the Partnership and $86,524 was paid directly by the Partnership).
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995
7. Summary of Unaudited Quarterly Results of Operations
The BUCs are quoted on the NASDAQ National Market System under the symbol AFTXZ. The high and low quarterly prices of the BUCs shown were compiled from the Monthly Statistical Reports provided to the Partnership by the National Association of Securities Dealers, Inc. and represent final sale prices.
NORTHWOOD LAKE APARTMENTS, L.P. 	(A Georgia Limited Partnership) 	 	FINANCIAL STATEMENTS
	DECEMBER 31, 1995
-i- T A B L E O F C O N T E N T S
Page
AUDITORS' REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
FINANCIAL STATEMENTS
BALANCE SHEET. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
STATEMENT OF INCOME (UNAUDITED). . . . . . . . . . . . . . . . . . . . .	 3
STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIT) (UNAUDITED). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 		3
STATEMENT OF CASH FLOWS (UNAUDITED). . . . . . . . . . . . . . . . . . . . 		4
NOTES TO FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . .	 5-6
-ii- To the Partners Northwood Lake Apartments, L.P. Omaha, Nebraska
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheet of Northwood Lake Apartments, L.P., (a Georgia Limited Partnership), ("the Partnership"), as of December 31, 1995. This financial statement is the responsibility of the Partnership's management. Our responsibility is to express an opinion on this financial statement based on our audit.
Except as discussed in the following paragraph, we conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheet is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the balance sheet. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall balance sheet presentation. We believe that our audit provides a reasonable basis for our opinion.
This was our first audit of the Partnership's balance sheet, and, in accordance with management's instructions, we did not extend our auditing procedures to enable us to express, and we do not express, an opinion on the consistency of application of accounting principles with the preceding year. Because we were not engaged to audit the statements of income, retained earnings, and cash flows, we did not extend our auditing procedures to enable us to express an opinion on results of operations and cash flows for the year ended December 31, 1995. Accordingly, we express no opinion on them.
In our opinion, the balance sheet referred to above presents fairly, in all material respects, the financial position of Northwood Lake Apartments, L.P., as of December 31, 1995, in conformity with generally accepted accounting principles.
The accompanying balance sheet has been prepared assuming that the Partnership will continue as a going concern. As discussed in Note 8 to the financial statements, the Partnership has experienced recurring losses from operations and has a working capital and a net capital deficiency that raise substantial doubt about the Partnership's ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Mueller, Prost, Purk & Willbrand, P.C. January 26, 1996	 Certified Public Accountants
FINANCIAL STATEMENTS
NORTHWOOD LAKE APARTMENTS, L.P. (A Georgia Limited Partnership) BALANCE SHEET DECEMBER 31, 1995
The Notes to Financial Statements are an integral part of this statement
NORTHWOOD LAKE APARTMENTS, L.P. (A Georgia Limited Partnership) STATEMENT OF INCOME (UNAUDITED) FOR THE YEAR ENDED DECEMBER 31, 1995
NORTHWOOD LAKE APARTMENTS, L.P. STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIT) (UNAUDITED) FOR THE YEAR ENDED DECEMBER 31, 1995
The Notes to Financial Statements are an integral part of this statement NORTHWOOD LAKE APARTMENTS, L.P. (A Georgia Limited Partnership) STATEMENT OF CASH FLOWS (UNAUDITED) FOR THE YEAR ENDED DECEMBER 31, 1995
The Notes to Financial Statements are an integral part of this statement
NORTHWOOD LAKE APARTMENTS, L.P. (A Georgia Limited Partnership) NOTES TO FINANCIAL STATEMENTS
NOTE 1 	ORGANIZATION
Northwood Lake Apartments, L.P., a Georgia Limited Partnership, (the "Partnership"), was formed on February 22, 1993, pursuant to the terms of an Agreement of Limited Partnership (the "Agreement") for the purpose of acquiring and operating the Northwood Lake Apartments complex, a 492-unit apartment complex located in Duluth, Georgia (the "Project"). The Partnership will dissolve on December 31, 2013, unless sooner dissolved pursuant to any provision of the Partnership agreement.
The general partner of the Partnership is First Communities Equities, Inc., a Georgia corporation, which owns a 1% interest. As the limited partner with a 99% interest, Robert L. Johnston's liability is limited to his total amount of capital contributions. The net income or loss of the Partnership is allocated among the partners in accordance with their respective percentage interests.
NOTE 2 	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Method of Accounting
The accompanying financial statements have been prepared on the accrual basis of accounting. The Project reports its operating results for income tax purposes on the cash basis. No provision for income taxes is made because any liability for income taxes is that of the individual partners and not that of the Project.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from estimated amounts.
		Concentration of Credit Risk
The Project maintains the majority of its cash balances in one financial institution. The balances are insured by the Federal Deposit Insurance Corporation up to $100,000. At December 31, 1995, the Project's uninsured cash balances totaled $178,125.
Bad Debts (Unaudited)
The Project records bad debts using the allowance for doubtful accounts method. No bad debt expense was recorded for the period ended December 31, 1995.
		Property and Equipment (Unaudited)
Property and equipment are recorded at cost. Major additions and improvements are capitalized to the property accounts while replacements, maintenance and repairs which do not improve or extend the useful life of the respective assets are expensed currently.
Depreciation is calculated using the straight-line method over estimated useful lives ranging from 10 to 40 years. The total depreciation expensed in 1995 was $677,363.
NOTE 3	 STATEMENT OF CASH FLOWS (UNAUDITED)
For purposes of the statement of cash flows, the Project considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.
Cash paid during the year for:
Interest...............................................	$		1,932,147 NORTHWOOD LAKE APARTMENTS, L.P. (A Georgia Limited Partnership) NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4	 RESTRICTED DEPOSITS AND FUNDED RESERVES
Taxes and insurance escrow reserves, consisting of money market funds, are maintained under the control of the mortgage note holder for the benefit of the Project in an interest-bearing account with a federally insured financial institution. Disbursements from the escrow are for real estate taxes and insurance premiums. Interest earned on the funds is transferred to operating cash quarterly.
Reserve for Replacements are maintained under the control of the mortgage noteholder for the benefit of the Project in an interest bearing account with a federally insured financial institution. The mortgage requires a monthly payment of $5,260 to be used for future major capital improvements to the Project.
NOTE 5	 ACCRUED INTEREST PAYABLE
Since 1990, the Project's cash flows have been insufficient to pay the base interest due on the mortgage payable. The $2,094,629 accrued interest payable at December 31, 1995, represents the cumulative shortfall to date.
NOTE 6	 MORTGAGE PAYABLE
The financing of the condominium complex has been provided by America First Tax Exempt Mortgage Fund Limited Partnership, utilizing proceeds of the Multi-Family Mortgage Revenue Note, Series 1985, issued by the Housing Authority of the City of Buford, Georgia.
The note is secured by a Deed of Trust on the income producing property, assignment of rents and a security agreement. The note, amended as of April 1, 1991, has a term of 10 years from the date of the amendment. The note bears interest at 8.5% and contingent interest at 16%. The accrued base interest will be paid according to the priority of cash flows set forth in the amended note. Any contingent interest that is not paid will be deferred without interest and paid in arrears.
NOTE 7	 MANAGEMENT FEE TRANSACTIONS (UNAUDITED)
The Project is required to pay America First Properties Management, Inc. a management fee of 4.5% of gross collected receipts. Management fees amounted to $162,552 for the year ended December 31, 1995. Included in accounts payable at December 31, 1995, is $8,645 due to America First Properties Management, Inc.
America First Properties Management, Inc., also charges an administrative service charge of $1 per unit per month to offset the costs of providing management and administrative services to the Project. Administrative service charges for 1995 are $15,567.
NOTE 8	 GOING CONCERN CONSIDERATIONS
The Partnership has recurring losses, a working capital deficiency and a $3,647,052 deficit in partners' capital at December 31, 1995. In addition, the mortgage payable is delinquent and accrued interest is not being paid in full each year. These considerations raise substantial doubt about the Partnership's ability to continue as a going concern for a reasonable period of time.
Management has stated that the mortgagee has elected not to foreclose on the mortgage due to current satisfaction of yield and a desire to keep the bonds current. Furthermore, although there is a large interest accrual, the mortgagee has no intention of accelerating the debt.
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.
AMERICA FIRST TAX EXEMPT MORTGAGE FUND LIMITED PARTNERSHIP
By America First Capital Associates Limited Partnership Two, General Partner of the Registrant
By America First Companies L.L.C., General Partner of America First Capital Associates Limited Partnership Two
By /s/ Michael Thesing Michael Thesing, Vice President
Date: March 27, 1996
Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Date: March 27, 1996 By /s/ Michael B. Yanney* Michael B. Yanney, Chairman of the Board, President, Chief Executive Officer and Manager
Date: March 27, 1996 By /s/ Michael Thesing Michael Thesing, Vice President, Secretary, Treasurer and Manager, (Chief Financial and Accounting Officer)
Date: March 27, 1996 By /s/ William S. Carter, M.D.* William S. Carter, M.D., Manager
Date: March 27, 1996 By George Kubat, Manager
Date: March 27, 1996 By /s/ Martin Massengale* Martin Massengale, Manager
Date: March 27, 1996 By /s/ Alan Baer* Alan Baer, Manager
Date: March 27, 1996 By /s/ Gail Walling Yanney* Gail Walling Yanney Manager
*By Michael Thesing, Attorney-in-Fact
/s/ Michael Thesing Michael Thesing
EXHIBIT 24
POWER OF ATTORNEY
POWER OF ATTORNEY
The undersigned hereby appoints Michael Thesing as his agent and attorney-in-fact for the purpose of executing and filing all reports on Form 10-K relating to the year ending December 31, 1995, and any amendments thereto, required to be filed with the Securities and Exchange Commission by the following persons:
		America First Tax-Exempt Mortgage Fund Limited Partnership 		America First Tax-Exempt Mortgage Fund 2 Limited Partnership 		America First Participating/Preferred Equity Mortgage Fund 		America First PREP Fund 2 Limited Partnership 		America First PREP Fund 2 Pension Series Limited Partnership 		Capital Source L.P. 		Capital Source II L.P.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on the 10th day of March, 1996.
							 /s/ Michael B. Yanney 							Michael B. Yanney
POWER OF ATTORNEY
The undersigned hereby appoints Michael Thesing as his agent and attorney-in-fact for the purpose of executing and filing all reports on Form 10-K relating to the year ending December 31, 1995, and any amendments thereto, required to be filed with the Securities and Exchange Commission by the following persons:
		 America First Tax-Exempt Mortgage Fund Limited Partnership 		 America First Tax-Exempt Mortgage Fund 2 Limited Partnership 		America First Participating/Preferred Equity Mortgage Fund 		America First PREP Fund 2 Limited Partnership 		America First PREP Fund 2 Pension Series Limited Partnership
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on the 2nd day of March, 1996.
							 /s/ William S. Carter 							William S. Carter, M.D.
POWER OF ATTORNEY
The undersigned hereby appoints Michael Thesing as his agent and attorney-in-fact for the purpose of executing and filing all reports on Form 10-K relating to the year ending December 31, 1995, and any amendments thereto, required to be filed with the Securities and Exchange Commission by the following persons:
		 America First Tax-Exempt Mortgage Fund Limited Partnership 		America First Tax-Exempt Mortgage Fund 2 Limited Partnership 		America First Participating/Preferred Equity Mortgage Fund 		America First PREP Fund 2 Limited Partnership 		America First PREP Fund 2 Pension Series Limited Partnership
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on the 25th day of March, 1996.
					 /s/ Gail Walling Yanney 							Gail Walling Yanney
POWER OF ATTORNEY
The undersigned hereby appoints Michael Thesing as his agent and attorney-in-fact for the purpose of executing and filing all reports on Form 10-K relating to the year ending December 31, 1995, and any amendments thereto, required to be filed with the Securities and Exchange Commission by the following persons:
		 America First Tax-Exempt Mortgage Fund Limited Partnership 		America First Tax-Exempt Mortgage Fund 2 Limited Partnership 		America First Participating/Preferred Equity Mortgage Fund 		America First PREP Fund 2 Limited Partnership 		America First PREP Fund 2 Pension Series Limited Partnership
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on the 2nd day of March, 1996.
							 /s/ Martin Massingale 							Martin Massingale
POWER OF ATTORNEY
The undersigned hereby appoints Michael Thesing as his agent and attorney-in-fact for the purpose of executing and filing all reports on Form 10-K relating to the year ending December 31, 1995, and any amendments thereto, required to be filed with the Securities and Exchange Commission by the following persons:
		 America First Tax-Exempt Mortgage Fund Limited Partnership 		America First Tax-Exempt Mortgage Fund 2 Limited Partnership 		America First Participating/Preferred Equity Mortgage Fund 		America First PREP Fund 2 Limited Partnership 		America First PREP Fund 2 Pension Series Limited Partnership
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on the 3rd day of March, 1996.
							 /s/ Alan Baer 							Alan Baer